What is GL Coding and How to Automate It - CoreIntegrator

What are Ledger Codes? GLcodingistheapplicationofgeneralledgercode(GLCode),astringofalphanumericcharactersassignedtoeachfinancialentryinanorganization’sgeneralledger. Thesecodesindicatebasicinformationsuchasadebitorcreditbylocation,ortheycanprovidemorespecificdetailsaboutanentrythroughaGLstring–acombinationofnumbersandgroupsofnumbersthat–whenapplieduniformly–categorizeeverypointofinformationforanentry. Soundcomplicated? It’snot!ReadontoseehowsimpleGLcodingcanbe–especiallywhenyouautomatetheledgercodeprocess! TableofcontentsWhatisaGeneralLedger?WhatareLedgerCodes?NaturalAccountNumbersTakingGLCodingtotheNextLevel–GLSegmentsTheBiggestPainPointInGLCodingCanGLCodingbeAutomated?HowDoesGLCodingAutomationWork?BeyondGLCodingAutomationBottomLine–WhatisGLCodingandHowtoAutomateIt WhatisaGeneralLedger? Let’sstartwiththebasics.Ageneralledgerisasimplelistingofyouractualincomeandexpenses. Abudgetlistsyourexpectedincomeandexpenses. Areceivablesorpayablesreportshowswhatyouoweorareowed. Butageneralledgerrecordstransactionsonlyastheyhappen. Evenifyouonlyhaveonebankaccountyouuseforyourbusiness,it’sagoodideatokeepageneralledgertospotanymistakesyouoryourbankmightmake.Dothisbyperformingamonthlyreconciliation–acomparisonofyourledgertoyourbankstatement. Butmostbusinessesandorganizationshaveseveralcheckingaccounts,credit-cardsandlinesofcredittopaytheirbills.Soageneralledgerletsyoukeepallofyourexpensesinonedocument. USEOURSAVINGSCALCULATORTOHOWMUCHYOUCANSAVE! WhatareLedgerCodes? Ledgercodesarenumeralsyouusetodesignateapayableorreceivablebytypeinachartofaccounts. NaturalAccountNumbers The naturalaccountnumber isthatportionoftheledgerstringthatidentifieswhatthefinancialactivityisinpureaccountingterms:revenue,expense,asset,liability,etc. Thesimplestwaytoassigngeneralledgercodesistostartwithnaturalaccountnumbers.Typicallyaniceroundnumberlike1000.Thenyouassigneachsubsequentpureaccountingcategoryanumeralthataddsonemorenumeraltothefirstnumber.Soyourfirstfivenaturalaccountswouldbe1000,2000,3000,4000and5000. Forexample,youcanassignrevenueaccountnumbersinthe1000sandallexpenditureinthe2000s.Thismakesitsimpletoquicklyseeallofyourrevenueandexpenditures. YourchartofaccountscategorizesallsortsofcategoriesinyourGLwiththesenaturalaccountnumbers.Theaccountsthatyoulistwilldependonthenatureofyourbusiness.Forexample,aretailbusinessmightincludeaninventoryaccountsinceinventoryisanimportantformofassettothatbusiness.Buthereisasimplechartofaccounts: ASimpleGeneralLedgerChartofNaturalAccounts Nowyoucancodeallactivitybasedonwhetheritisrevenue,expenditures,etc. Whichthenallowsyoutoeasilyreportoneachcategoryfromyourgeneralledger. TakingGLCodingtotheNextLevel–GLSegments IntheirmostbasicformGLcodesarethatsimple. Theygetmorecomplicated.Butthat’sagoodthingbecauseyourGLcodingsystemwillgrowandshrinktomeetyourfinancialreportingneeds.Thewaytodothisissegmentation. A segment isasectionofyour chartofaccounts structurethattypicallyrepresentsanelementofyourbusinessstructure,suchasadepartment,location,branch,region,division,department,orproductcategory. Each segment isseparatedfromtheother segments andcanbereportedonindividuallyorincombinationwithother segments. GLsegmentationstartswithacompleteunderstandingofwhatyouwanttoreportonbasedonyourorganizationalstructure.Itallcomesdowntofinancialreporting:decidewhatdoyouwanttoknow.Thenstarttrackingbythatinformation. Butbecareful!It’stemptingtosegmentbyeverypossiblecriteria.Butyoudon’twantridiculouslylongGLstrings.Sticktowhat’simportanttoknow.Andmakethemsegmentsthatwillnotchangeveryoften. Withthesecodesinplace,youcancombinethemwithyournaturalaccountnumberstocreateanumericdescriptionofledgerentries.Andthenreportonthosetypesofentries. Forexample,ifyournaturalaccountrevenuecodeis1000,yourNewEnglandregioncodeis300,andyourwidgetproductlineis500then: 1000-300representsrevenuegeneratedbytheNewEnglandregion.1000-300-500representsrevenuegeneratebytheNewEnglandregionsellingwidgets. Andyoucandolimitlessstringsofcodes.Italldependsonhowyouwanttosort,sum,average,oranalyzeyourgeneralledgerentries. That’salotofnumbers.ButeachnumberiscriticaltotheGLcodeandtheGLstring. TheBiggestPainPointInGLCoding Giventheamountofnumbersinvolved,themostimportantpartofGLcodingisaccuracy.IfyouenteranumberwrongthenyourGLwillbethrownoff.ThismeansthateveryreceiptandpaymentmustbemeticulouslyassociatedwiththecorrectGLcodeorstring.Andthatcodeorstringhastobeassociatedwiththattransactioninthegeneralledger. Thatcanbeanincrediblytime-consumingprocess.Andispronetohumanerror. SowhileGLcodingiscriticaltorunningadatadrivenorganization,manualGLcodingrequiresmassiveadditionalhumancapital.Andeventhenyou’llneverget100%accuracy. CanGLCodingbeAutomated? Yes,GLcodingcanbe–andSHOULDBE–automated! Ledgercodeautomationwillsaveyourorganizationanincredibleaboutoftimeandmoney.Anditwillincreasetheaccuracyofledgercodingtonearly100%. HowDoesGLCodingAutomationWork? CoreIntegratorsolutions,forexample, includeSmartAProboticprocessautomation(RPA)thatautomatesGLcoding. SmartAPRPAisatoolthatlearnshowyouGLcodeinvoicesbasedonafew“keyvalues”.ThesekeyvaluesareindicatorstoSmartAP.Tellingithowyouwantthedataentrycompleted.  Forexample,let’ssayyoualwayscodeyourinvoices basedonthevendor.Then vendor isyourkeyfieldandSmartAPauto-populatesyoursystembasedonhowyouGLcodedaninvoicefromthatvendorbefore. Butsometimesyourprocessisn’tquitethatsimple.MaybeyouGLcodeinvoicesbasedonkeyvaluesthatareacombinationoffields,suchas companyname,then vendor aswellasthe departmentorfacility theinvoiceshouldbechargedto.  Nowyouhavethreekeyfields.But onceyouenterthosekeyvalues,theGLcodeorstringwillauto-populatebasedonhowyouprocessedtheinvoicewiththosethreekeyvaluesthelasttime. SmartAPcanalsoautomateGLcodingcombinations,GLdistributionpercentages,andotherGLcodingtasks.Itcanalsoautomatechangesandexceptions. AndSmartAPdoesn’tmake‘fatfinger’mistakes.Onceithaslearnedhowtocodebasedonkeyvalues,itcodescorrectlyeverysingletime! REQUESTAPERSONALDEMOTODAY! BeyondGLCodingAutomation Butend-to-endprocuretopayautomationdoessomuchmorethanjustautomatedgeneralledgercoding. Itincludes: AutomatedVerifiedInvoiceDataCaptureInvoiceFraudProtectionAutomatedInvoiceApprovalsAutomatedePaymentsMuch,MuchMore! BottomLine–WhatisGLCodingandHowtoAutomateIt GLcodingissimpleonceyouunderstandthebasicsofwhatageneralledgerisandhowyouwanttokeeptrackofyourGLcategories. Butledgercodingrequiresmeticulous,careful,andtime-consumingmanualentry. SowhynotletAPautomationcandothatcodingandentryforyou? CoreIntegratorSmartAProboticprocessautomationisbuiltinto CoreIntegratorAPautomationsolutions providingdynamicandintelligentautomatedGLcoding. AndtheSmartAPautomationtechnologyisfullycustomizabletoyourAPprocessesbasedonanyvariableyouchooseincludingvendor,company,department,GLcode(andmanymore).Orevenanycombinationofthosevariables! SmartAPisGLcodingautomationthatjustworks!Clickheretorequestafree,nopressure,andnoobligationdemotoday! 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