Understanding Multiple Locations
When setting up the chart of accounts, first determine how many General Ledger locations you need. Locations can be either inventory locations (pulling locations) or G/L (general ledger) locations (profit centers).
Note: If you have only one profit center and one inventory location, you do not need to set up locations. Your assets, liabilities, and sales are automatically tracked in location 1.
An inventory location is a physical location, a place where you get merchandise. For example, if you have a commercial office supply business, your warehouse is an inventory location. If you have a retail business with three stores, each store is an inventory location.
In DDMS, you use G/L locations to define profit centers. A profit center is its own entity or individual business. You have separate accounts receivable, bank accounts, and so forth for each profit center. A profit center may be, but is not necessarily, a physically separate location. You may have a main warehouse with a commercial or retail branch across town. Typically these two physically separate parts of your business would be treated as two G/L locations. However, you may have one main warehouse that houses four parts of your business. In this case you could treat the facility as one G/L location or as four.
To determine how to define your G/L locations, consider what you need to know about your business. Do you need a separate balance sheet of accounts (assets and liabilities) for each profit center, or do you simply want to know the profitability (sales, cost of goods sold, and expenses) of the different parts of your business? If you need a separate balance sheet of accounts, you need to define separate G/L locations. To track the profitability of different parts of your business, you can do this by defining departments.
Note: If you define departments and you want to use them to track profit and loss for different parts of your business, you need to create a custom chart of accounts before going live on general ledger. Customizing your chart of accounts requires a thorough knowledge of the accounting functions in DDMS; you can learn to do this yourself, or hire ECi to do it for you.
Next, consider how your company is set up. Here are two examples:
One company, with four parts: office supplies, contract furniture, office machines, and printing. You need only one G/L location. To track the different parts, you create four departments. The number of inventory locations you have depends on the number of physical locations you have. If you have one warehouse that services all four parts, for example, you need only one inventory location.
Two office supply businesses in different cities—each business has its own building. In this case, you create a separate G/L location for each of these businesses. Because each business has a single building, each one has a single inventory location.
Note: When there is one inventory location for each G/L location, as in the second example, you do not need to customize your chart of accounts. However, if you do the bookkeeping for both businesses at a single location, it is more complex than for a single G/L location. Suppose you do accounts receivable, accounts payable, and payroll for both businesses at a single location. For example, the A/R Trial Balance Report, which you print daily, has separate postings for each G/L location. In addition, when you are preparing bank deposits, or looking for cash-in-bank figures, you must find the figures for each G/L location and add them together.
About location-specific information
Four types of information in the Item window tabs and dialog boxes can be set differently for each location: pricing, column pricing, inventory usage (see Item History), and hazard forms. This information is location-specific. The inventory usage can show different information for each inventory location. The pricing, column pricing, and hazard forms information can be set differently for each G/L location. For example, you may have different pricing strategies for an item when you sell it in your retail store than when you sell it commercially. You can specify retail pricing for G/L location 1, for example, and commercial pricing for G/L location 2.
Note: If you want to use the same pricing for each location, specify Y in the Default to Loc 1 for "I-COLUMNS" and Default to Loc 1 for "I-PRICE" field in the (LE1) Inventory Parameters continuation screen. When you specify Y in these two fields, the pricing information for location 1 is used for all locations. This avoids setting duplicate pricing information for every location. For information about these fields, see Parameters.
The remaining information about the item, such as the item number, company, vendor, and selling unit of measure, is not location specific and thus is available to all locations.
Setting Up Locations
You set up G/L locations by terminal. After specifying as many G/L locations as necessary, you can define your inventory locations. You do this by specifying an inventory location for each G/L location in the (LE1) Inventory Parameters continuation screen. Specify the G/L location in the G/L Location field. Then specify the inventory location for this G/L location in the Inventory Pulling Location field. The inventory location you specify becomes the default inventory location for the specified G/L location. Each time the G/L location is entered in a box or screen, the Inventory Pulling Location field is checked for the inventory location. For information about using the (LE1) screen, see Parameters.
Tracking with Locations
Setting up separate profit centers lets you create separate financial statements. DDMS uses a complete set of General Ledger account numbers to track the information. Every G/L account is identified by its own unique, seven-digit account number in the form xx-xxx-xx. These numbers consist of four parts: the G/L location, the book, the major, and the minor. The first two digits indicate the profit center, the middle three digits indicate the book and the major, and the last two digits indicate the minor number (inventory department).
Note: A complete set of General Ledger account numbers for location 01 is provided. See Default Chart of Accounts.
If you define more than one G/L location, the information for each location is broken down according to book (assets, liabilities, and so forth). These categories are all handled separately and flow automatically to your balance sheet of accounts.
Note: There are two exceptions to this: inventory value and cost of goods sold. You obtain these figures by printing reports. Depending on how you set up DDMS, these figures may flow to General Ledger, or you may have to post them yourself. For more information, see General Ledger Posting.
If you set up separate G/L locations, you can print specific reports for evaluating each location. You can also set different parameters for each G/L location, if needed. Parameters for your terminal’s location are searched first. If there are none, the parameters for location 1 are used. Suppose you have three G/L locations. First, set parameters for G/L location 1. Unless you set different parameters for G/L locations 2 and 3, they automatically use the parameters for G/L location 1. If G/L location 2 needs different parameters in some screens, for example, you can set different parameters for G/L location 2 in each of the appropriate parameter screens.
The flow of information begins when you place an order in the Order Entry window. The G/L location and inventory location are set for the life of the order. These locations act as a flag or marker as the order flows through the system. Orders are separated by location, and a separate balance sheet of accounts is automatically kept for each location. The G/L location flag controls which profit center the balance sheet of accounts posts to. The inventory flag controls how items are allocated to customer orders, purchase orders, and on-hand quantities.
However, to tie the inventory items to the appropriate G/L minor number, you must set up inventory department numbers. For more information on departments and tracking with departments, see About Item Departments.
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