07 Jun Get True Performance Insights with Dynamic Allocations
Allocating, or attributing, revenue and expenses across dimensions helps you better understand the whole operational picture of your organization. It provides clearer insight into the performance of business units, departments, products, projects, funds, and more since you can derive the complete picture of revenue and costs, both direct and indirect. For instance, you can see the full cost of employees attributed to a department beyond just their salary when you factor in indirect expenses, such as fringe benefits. With a more comprehensive view of operations, organizational leaders can make better-informed decisions. In this guide, we discuss how to get true performance insights with dynamic allocations.
Many companies turn to spreadsheets for their allocations. However, there are significant limitations to calculating your allocations outside of Sage Intacct, including high effort, the potential for errors, and incomplete or delayed insights.
Here are some signs that it might be time to look into automation for allocations.
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You spend half a day or more to calculate and record allocations
Performing manual allocations is time-consuming and carries the risk of spreadsheet error. It usually means you have to apply a complex model within a spreadsheet—often by using a tedious process that has multiple steps. Something as seemingly simple as splitting the cost of a shared service like IT might need to be split 12 different ways to account for different departments—first by department square footage, then by headcount.
This single expense may mean you need to take the following steps:
- Run a report
- Manually extract data
- Manually calculate bases
- Manually input bases into Excel
- Manually import data into the spreadsheet
- Extract data and record entry into the general ledger
Since you have 2 layers of allocations, you would need to run through these steps twice. Not only are you introducing many opportunities for manual error, but you also need to ensure you’re calculating your allocations in the correct order. Any post-period adjustments in headcount, timesheets, or other allocation basis factors, mean you also need to take time to incorporate corrections. A post-period adjustment can be a recipe for a pounding headache and a late night at the office.
Run multiple layers of allocations in minutes, not hours or days
Dynamic Allocations allows you to generate allocations without the spreadsheet gymnastics. So, when splitting IT costs, you can now begin by allocating facilities costs to the IT department based on square footage. Next, you could allocate IT personnel fringe benefits using direct salaries as the basis. Once all costs have been allocated to the IT department, you can then allocate to other departments based on headcount or another basis measure, all while preserving the views of IT departmental costs.
Dynamic Allocations pulls source balances automatically and distributes them across dimensions based on chosen parameters. You have the flexibility to specify source accounts, set up allocation splits, and target accounts. You can even set up layers of allocations and group allocations to run in specific orders.
Allocations can be set to run automatically. That means you don’t need to lift a finger to run your allocations after the initial setup. You simply monitor them to make sure they’re running correctly and update with any changes to your accounts, dimensions, or allocation strategy. A process that used to take hours or days can be streamlined into minutes, allowing you to allocate more frequently for accurate insight when you need it—even as often as biweekly payroll.
Drop us a line on 011 792 9521, and we could guide you further on how to get true performance insights with dynamic allocations.