Segments vs. Dimensions in Microsoft Dynamics

Blog / Segments vs. Dimensions in Microsoft Dynamics

The concept of dimensions is growing in popularity with accounting software of all types.

What exactly are dimensions?
How do they differ from traditional accounting setups?

This article will explain what dimensions are, their pros and cons, and how they work within Microsoft Dynamics GP and NAV.

Traditional Account Structures

Financial reporting in accounting systems is largely driven by the general ledger account structure. Traditional account structures are usually based on a segmented series of numbers or alpha-numeric characters.

For example, 5010-300-200 could refer to postage expenses for the sales department at a satellite location. In this case, the segments would be defined as follows:

Segment 1 is the natural account. The natural account represents things like cash, accounts receivable, accounts payable, various revenues and expenses, etc.
Segment 2 is the department code.
Segment 3 is the location code.

When you use a segmented chart of accounts, you generally have to “generate” account combinations based on the various natural account and segment values that you have decided to use. This sometimes results in account combinations that you may never use. You also must select values for the natural account and all segments when posting transactions.

Dynamics GP Account Selection Screen

Dimension Account Structure

Dimensions do away with segments and just keep the natural account. In order to capture information such as department, location, and whatever else you might need, you instead select a dimension(s) with each transaction.

By having the segment moved out of the account structure you generally end up with a much smaller account list since you don’t have so many combinations of the same natural account with all of the various segments.

Dimensions can also be setup to be required or optional. This allows you more flexibility in how you code your entries and allows you to only enter the information you need.

Dynamics NAV Dimension Setup Screen

Segments and Dimensions in Microsoft Dynamics GP

Microsoft Dynamics GP provides a general ledger account structure with 66 alphanumeric characters that can be divided into 11 segments. You can just use this or you can also use plus dimensions. GP offers dimension capability via the Analytical Accounting module. With Analytical Accounting you set up dimension categories and assign values.

One advantage that GP has over a lot of other systems when it comes to dimensions is that you can also add metadata to the transaction. This metadata need not be financial. For example, let’s say you have a code set up for events. In addition to capturing the name of the event, you could also capture attendance, weather, etc., and then use this metadata in your financial reporting to provide additional insight.

The biggest con, and it is not really that big, is that you have to pop open a second screen to enter the dimension data in GP. It is easy to do but some people complain about it. I have done several deals however where we bypass the data entry screens altogether and just import transactions, complete with dimension data, straight into the general ledger.

Meta Data Dimension Setup in Microsoft Dynamics GP

Segments and Dimensions in Microsoft Dynamics NAV

Microsoft Dynamics NAV provides for a 20-character alphanumeric natural account and up to eight dimensions. You can set up the dimensions as you see fit, make them required or not, create dimension combinations and perhaps most importantly, enter them right on transaction entry screens without having to pop open a second window. This makes transaction entry smooth and quick.

Since dimensions are fundamental to the way that NAV works, they are very well handled when it comes to queries and reporting. The entire system is structured around allowing you to slice and dice your data by dimension pretty much everywhere. The way the dimensions are setup also allows you to use very descriptive text-based values, instead of numeric codes, to make it easy to select the right value when entering transactions.

Values for a Business Group dimension in Microsoft Dynamics NAV

Using Segments and Dimensions

The decision to use segments or dimensions depends on your specific needs. If you have a simple chart of account structure with not too many accounts, a traditional segmented format might be fine. Where dimensions really start to shine is when the number of possible values increases. Especially if you have a lot of one time values (like with the event example above) that would really start to bog down a segmented chart of account structure over time.

If you would like to learn more or have any questions please feel free to contact us.