My acquaintance Bob is a talented and hardworking cost accounting professional. However, he relies on paperwork, Microsoft Excel, and a dated ERP system to create reports and perform his daily accounting tasks. Despite his best efforts, redundant work ends up taking a lot of his time and energy without an effective outcome. Even with his skills and accounting knowledge, he noticed he made errors occasionally — at the end of the day, he is only human. In the long-term, these persistent issues made him frustrated and demotivated. Do you know a Bob, or does one work for you? Even worse, Are you a Bob?
If any of the above is true, this blog about Microsoft Dynamics 365 ERP cost management functionality is for you. Before we jump into the technical aspects of this functionality, let us take a step back to understand the purpose of cost management.
Cost accounting has gone through an evolution to become essential for the financial strategy and structure of an organization. Here are the top reasons why your organization should have robust cost accounting:
As cost accounting is an on-going process, this functionality of the Microsoft Dynamics ERP simplifies your daily accounting and reporting tasks. With cost management you can source real-time and accurate data from multiple sections— budgets, general ledger, sub-ledger and statistical data.
Apart from making the tactical cost accounting operations easy and hassle-free, this functionality provides necessary tools and features for you to effectively analyze, evaluate, interpret, and summarize the cost data. Such a comprehensive analysis with updated data would help your leadership and management to make informed decisions on critical aspects of the business like budgets, cost control, and price updates.
Now that you know what is cost accounting in Dynamics 365 Supply Chain Management and Dynamics 365 Finance (Formerly Finance and Operations) and its benefits, let us look at the critical features of this module that can help you in your day-to-day operations:
Financial dimensions are the account segments for charts of accounts of two types — custom dimensions and entity-backed dimensions. Creating and managing these financial dimensions can be challenging without the help of advanced technological tools. The cost accounting functionality in Dynamics 365 ERP allows you to create, customize, activate, and delete these financial dimensions within a few steps. Also, you could align these financial dimensions with multiple entities and customize them for each legal entity with a specific set of rules. The wide range of customizations you could perform with financial dimensions makes having Dynamics 365 ERP worthwhile.
However, this feature comes with its limitations. For instance, a few reports do not include financial dimensions, and if you need to report by financial dimensions, you would need to modify the reports. Additionally, the sales tax functionality is only available to use with legal entities and not financial dimensions.
Facilitating effective budgeting is one of the primary functions of cost accounting. However, it is easy said than done. Creating a realistic budget would need it to be data-driven— difficult when done in the absence of the right software support. The cost accounting functionality of Dynamics 365 Supply Chain Management and Dynamics 365 Finance helps you create budget reports or load them from third party solutions with minimum configuration. The budget codes of this functionality can support multiple budget types — original, transfer, revision, encumbrance, pre-encumbrance, and carry-forward budgets.
It is common knowledge that accounting data is highly security-sensitive. Hence, apart from the performance of Dynamics 365 for cost accounting, it also essential to evaluate this functionality based on security. The cost control workspace does not only help the cost managers to get a performance overview of the cost objects but also control the access to this data. Based on the need of the staff member, you can assign and configure the level of access to the workspace.
These features, as mentioned above, are just the tip of the iceberg. Cost accounting functionality in Dynamics 365 considerably eases overhead calculation, expense management, cost element dimensions, account structure, and allocation bases. Bob could use a tool like this to make his life easy. What about you?