Since we introduced them 10 years ago, Account Trees have been one of the more popular features of Calxa. As with most areas, they have evolved and improved over that time. Here are some examples of how to use them to group, summarise and sub-total the rows in your management reports.
How to Use Advanced Account Trees
Here’s a selection of uses to give you some ideas.
1. Move Credit Cards to Liabilities
In some accounting systems, notably Xero, bank feeds are only available on Asset accounts. This means that many people set up credit cards and loans as Assets, when they should really be Liabilities. With our new, improved Account Trees, just drag the account from the Assets section to the Liabilities section where it rightfully belongs. Done!
You can move accounts between any account type within your Account Trees and we will ensure the accounting integrity is maintained.
2. Inter-Company Eliminations
When you’re consolidating multiple company files, it makes sense to exclude the inter-company transactions, so you don’t inflate the reported results. In the past you’ve needed to record journals for them in a separate file and include that in your organisation group. Now, if you’re eliminating entire accounts, simply create a new Header in the Account Tree for Eliminations. Then, move the inter-company sales, cost of sales, expense, asset and liability accounts there.
When you’ve set up the rest of the Account Tree the way you want it, copy it to each of the other companies and allocate the accounts there as well.
Set the Eliminations header to Summary Only so that, if all is correct and sums to zero, that line won’t show. If there’s an error, you’ll see it instantly on that line. If you want to get clever, customise the report template so the Elimination line is formatted a special colour.
The P&L Comparison and Balance Sheet Comparison reports are useful to review the values in the Elimination account for each entity and troubleshoot any discrepancy.
3. Managing Departments in the Chart of Account
If you manage your departments through your accounts (rather than Tracking Categories or Jobs), create an Account Tree Category for the department income, one for the department expenses and then another called Hidden. Move the department accounts to the relevant income and expense category and everything else to the Hidden category. In the settings for this one, turn off the “Show in Reports” option and you’ll have just your departmental P & L.
Another scenario would be the change of standard accounting terminology. You can now rename anything at the Category level in your Account Tree. Terminology like Surplus or Deficit can easily be renamed. This includes the running totals like Income, Expense, Gross, Profit, Net Profit, etc. Change them to the wording that your audience is familiar with and make it easier for them to read and understand the reports.
4. Contribution Margin
While the standard Profit & Loss layout of Income, Cost of Sales, Gross Profit, Expenses, Operating Profit works well for many businesses, some want more. Especially in retail and manufacturing, it’s common to split the expenses into variable and fixed costs. The P & L would then show Income, Cost of Sales, Gross Profit, Variable Expenses, Contribution Margin, Fixed Expenses, Operating Profit.
You can now create this layout with Advanced Account Trees. Simply add a new category for Variable Expenses with a Running Total for Contribution Margin. Rename the standard Expenses category to Fixed Expenses and move the detail accounts into the right section.
Many accountants (and some banks) love to include EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) as a sub-total in their reports. With our Account Trees, that’s easy in Calxa by creating a couple of new categories. Set up one with a running total for EBITDA and one for the ITDA component.
6. Grant Reports to include Capital Purchases
Many of our Not-for-Profit customers need to report on grants. Sometimes, these grants include the purchase of capital equipment. Now you can move the Asset accounts into the Expense section and include their movements in your report. To get a better picture of how Calxa can help with grant reporting, have a read of our Streamlining Grant Acquittals.
7. Summary Only Lines in your Management Reports
Sometimes in your management reports there are sections where you want to always show a single-line summary. To do this, add a new Header to your Account Tree, and make it Summary Only. The detail accounts under it will be summarised into one line. While your imagination is the limit, here’s a few more suggestions and ideas.
Summary of Accounts
As an example, you may have several accounts for motor vehicle expenses (fuel, registration, repairs, insurance, etc) but you just want to show one line for Motor Vehicle Expense. Make that the Header, drag the detail accounts under it and mark it as Summary Only.
Handling Offset Accounts
Use a summary line anywhere you want to offset accounts such as matching income and expense lines. This could be for the purpose of grant reporting or when handling auspicing services. Simply, for any form of reconciliation reason.
Excluding Non-Cash Accounts
Use a summary line to exclude non-cash accounts from the Bank Movement reports. If the accounts total to zero, the line won’t show on your report. This could used for the likes of depreciation, amortisation or contra accounts.
Getting Started with Advanced Account Trees
If you haven’t used Account Trees before, you’ll find the setup under Reports, Report Tools. Then it’s as simple as applying this Account Tree on the reports.
One final quick tip for you. If you are sharing Calxa with colleagues, you can restrict their access to editing Account Trees in the user permissions.