Getting a Better Read on Your Company's Financial Health

Measuring a company's financial health relies on financial data. That measurement often runs into a lack of quality data, usually caused by an information system that isn't flexible enough when it comes to capturing and reporting financial data. Microsoft Dynamics AX 2012 marks a major step forward in this respect.

When it comes to capturing financial data, AX 2012 brings the following new features compared to previous versions:

An Unlimited Number of Financial Dimensions

The basic financial dimension on an accounting transaction is the general ledger account. Beyond that, information systems typically work with financial dimensions such as Cost Center, Department, or Project. In AX 2012, you can now record an unlimited number of financial dimensions on an accounting transaction, letting you break posting information down into much greater detail. Was the revenue generated online or in a brick-and-mortar store? Which store and which till recorded it?  Which salesperson closed the sale? Product, Product Group, Vendor, Fixed Asset.. these are just a few examples of the most commonly used financial dimensions, and AX 2012 offers more than 30 of them. On top of that, you can create your own custom financial dimensions with your own values.

Rules for Populating Financial Dimensions

An unlimited number of financial dimensions can complicate data entry – the more dimensions a user has to fill in, the more time it takes.

The new financial dimensions and organizational hierarchies platform lets you track your company's financial health right down to the smallest detail, while also viewing financial data from any angle you like.

That's why AX 2012 fills in financial dimensions automatically wherever it can, taking the sales channel, store, and employee straight from the sales order, for example. On top of that, there's a tool for managing the rules that govern how financial dimension values get filled in. This lets you require different financial dimensions for revenue accounts than for expense accounts, and for some accounts financial dimensions won't be tracked at all.

Organizational Hierarchies (Financial Dimension Groups)

As an extension of financial dimensions, AX 2012 lets you build organizational hierarchies – tree structures of financial dimensions and their groups. A typical example from our retail experience is the way our customer BCC Elektro, an electronics retailer in the Netherlands, looks at its stores from different angles (read more about the AX 2012 R3 implementation at BCC Elektro)

• stores by size (Small, Medium, Large)
• stores by location (North, South, West, East)
• stores by sales channel (brick-and-mortar store, web, call center..)

There's no limit to the number of user-defined organizational hierarchies. In reporting, you can display financial data for any node of any organizational hierarchy and view your financial results from any angle you choose.

In short, when it comes to capturing financial data, you'll get real value from the new financial dimensions and organizational hierarchies platform, which lets you:

• track your company's financial health right down to the smallest detail
• view financial data from any angle you choose

So how can these new features be put to use in financial reporting? Let's take a look at two more new features in AX 2012:

Management Reporter

The Management Reporter reporting tool, with online access to the AX 2012 database, lets you report on 100% up-to-date data. You can work with data from a single company, or just as easily work with data from all the companies you run in AX 2012 at once. Reports can be defined by the user and, for example, sent to you by email automatically every morning at a set time.

Management Reporter can work with the financial dimensions and organizational hierarchies mentioned above, so you can switch the level of detail right inside the report: for a specific store, for all large stores (hierarchy by size), for stores in the north of the country (hierarchy by location), or for the whole company. Drill-down is a given, of course – letting you view detail right down to individual accounting transactions.

Dashboards

Now imagine your company's prosperity and financial health being signaled by a traffic light on a large LCD panel in your office – much like how modern IT support providers signal the state of your infrastructure. Green for "all good," orange for "watch out," and red for "danger." You'll see this traffic light – or rather a whole set of them – right on the AX 2012 home page, so access to them is very quick. A simple glance at the colors instantly tells you where things stand. When one turns red, you can click through to explore further detail, specific figures, and so on.

That's how the so-called Dashboards work. Technologically, they're built on analytical reports, which you may already know from previous versions of AX.

Analytical reports are designed for a more detailed analysis of business data and for spotting trends – AX 2012 offers 15 data cubes for this purpose. Besides raw data for analysis, these data cubes also contain calculated financial indicators, which can be displayed in AX 2012 through Dashboards.

Use Dashboards – your "traffic lights" – for a quick visual check of your company's financial health.

In short, the key new AX 2012 features in reporting are:

• Management Reporter and its ability to display financial data at any level of detail – down to specific financial dimensions, user-defined financial dimension groups, or the whole company
• Dashboards for getting an instant read on your company's current status

Let's wrap up by recapping how AX 2012 helps you get a better read on your company's financial health:

• when capturing data
  • lets you track greater detail using financial dimensions and their groups
• when reporting
  • makes use of the stored financial dimension detail in Management Reporter or other reporting tools
  • allows a quick visual check of financial health through Dashboards

Interested in getting a better read on your company's financial health? Find out more about our  Dynamics AX solution for retail, wholesale, and logistics on our website.

Filip Rozsíval is a Senior AX Consultant at Blue Dynamic.