2. Expert Tips for Preparing for a Successful SapphireOne Implementation

Preparing for Implementation Overview

When establishing your organisations new ERP, Financial Management System many decisions need to be made in order to gain the maximum benefit, while maintaining a practical means of operation. The types of decisions that need to be made will vary from each organisation. This article ‘Preparing for Implementation’ has been formulated to assist in preparation and is designed to help in the decision making process.

When implementing a new ERP or financial management system, there are many decisions that need to be made to ensure that your organization benefits fully while maintaining practical operation. The specific types of decisions that must be made will vary based on the unique needs of each organization.

To help in this process, we have created this article, “Preparing for Implementation,” which aims to assist in the preparation stage and guide decision-making. By following the guidelines outlined in this article, your organization can ensure a successful implementation and achieve maximum benefits from your new system.

Some of the key decisions that need to be made during implementation include:

1. Defining the scope of the project: This involves identifying the specific areas of your organization that will be affected by the new system and determining the goals and objectives of the implementation.
2. Selecting the right software: Choosing the right ERP or financial management software can be challenging. It is important to assess various options, consider the features and functionalities of each system, and ensure compatibility with existing systems and infrastructure.
3. Establishing a budget: Implementation costs can vary widely depending on the size and complexity of the project. Establishing a budget early on and sticking to it can help prevent cost overruns and ensure that resources are allocated effectively.
4. Identifying implementation team members: Establishing a cross-functional implementation team with members from different departments and levels can help ensure a successful rollout and ensure that the new system meets the needs of all stakeholders.
5. Defining processes and workflows: It is essential to document existing processes and workflows and identify areas where improvements can be made. This can help ensure that the new system aligns with your organization’s business practices and streamlines operations.
6. Developing a training plan: Adequate training for employees is critical to ensure a smooth transition to the new system. A comprehensive training plan should be developed and implemented to ensure that all employees are prepared and comfortable with the new system.

By considering these and other critical decisions during the implementation process, your organization can achieve a successful transition to a new ERP or financial management system. This will result in maximum benefits while ensuring that the new system is practical and fits the unique needs of your organisation.

Thank you for reading our article on “Preparing for Implementation.” We understand that making decisions related to a new ERP or financial management system can be complex and take time. Our intention with this article was to prompt thoughts and ideas to guide your decision-making process. We recognize that you may need additional guidance and support in implementing your new system.

If you would like to discuss setting up your ERP or financial management system with a SapphireOne Management Consultant, please do not hesitate to contact us. We can arrange a meeting to discuss your needs further and provide you with additional guidance and support. You can reach us via phone at +61 2 8362 4500 or email us at sales@sapphireone.com. We look forward to hearing from you and assisting with your implementation process.

When establishing your organisations new ERP, Financial Management System many decisions need to be made in order to gain the maximum benefit, while maintaining a practical means of operation. The types of decisions that need to be made will vary from each organisation. This article ‘Preparing for Implementation’ has been formulated to assist in preparation and is designed to help in the decision making process.

It is not expected that all decisions will be made on the first reading of this document. It is intended to prompt thoughts and ideas. If after reading this document you would like to discuss setting up your ERP, Financial Management System with a SapphireOne Management Consultants, please contact us for a meeting via +61 2 8362 4500 or sales@sapphireone.com.

Additional considerations that need to be addressed when implementing SapphireOne ERP financial management system:

• Reporting Requirements: It is essential to determine the level of reporting required and the hierarchy of reporting. This will depend on the needs of your stakeholders, including shareholders, stakeholders, governments, agencies, NGOs, and others. Additionally, you may need to identify any additional reports required as per Memorandum of Incorporation.
• Coding Structure and Departments: To ensure efficient and accurate accounting and reporting, it is important to establish a coding structure that is appropriate for your organization’s needs. This may include determining the specific departments required and whether you need to track branch performance. If your organization has several companies, it is important to be aware of each entity’s individual reporting requirements.
• Transaction Types: There are various types of transactions that your organization will need to identify and track within your new ERP or financial management system. It is important to have a comprehensive understanding of these transaction types and ensure that your system can handle them effectively. Some examples of transaction types include sales transactions, purchase transactions, inventory transactions, and payroll transactions. For example, Accounts mode, Receivables – Client Receipt (CR), Client Invoice (CI), Client Credit (CC), Client Journal (CJ), Client Refund (CR), Money Receipt (MR); Accounts Payables – Vendor Payment (VP), Vendor Invoice (VI), Vendor Credit (VC), Vendor Journal (VJ), Vendor Refund (VR), Money Payment (MP); General Ledger – General Ledger Journal (GLJ). Inventory mode, Sales – Quote Client Invoice (QCI), Order Client Invoice (OCI), Sales Client Invoice (SCI), Sales Client Credit (SCC), Sales Money Receipt (SMR), Sales Money Payment (SMP); Purchases – Requisition Vendor Invoice (RVI), Order Vendor Invoice (OVI), Purchase Inwards Goods Journal (PIGJ), Purchase Vendor Invoice (PVI), Purchase Vendor Credit (PVC), Purchase Money Payment (PMP), Purchase Money Receipt (PMR); Inventory – Adjustment Journal (AGJ), Transfer Journal (TGJ), Order Build Journal (BGJ), Build Journal (BGJ); POS – Till Client Invoice (TCI), Hire Client Invoice (HCI). Job Projects mode, Costs – Order Vendor Invoice (OVI), Purchase Inwards Goods Journal (PIGJ), Purchase Vendor Invoice (PVI), Purchase Vendor Credit (PVC), Purchase Money Payment (PMP), Job Project Vendor Invoice (JVI); Resources – Resource Time Sheet (RTS), Job Project Time Sheet (JPTS), Open Time Sheet (OTS), Job Projects – Job Projects Client Invoice, Job Projects Client Credit; Inventory – Inventory Allocation Journal (IAJ). Assets mode – Depreciation Tax Journal (DTJ), Depreciation Company Journal (DCJ), Sales Disposal Journal (SDJ), Purchase Journal (PJ), Valuation Journal (VJ), Depreciation Repair Purchase (DRP), Depreciation Service Return (DSR), Depreciation Loan (DL), Depreciation Notes (DN).

In addition, these are also important questions that need to be considered when implementing SapphireOne ERP financial management system.

1. Invoices, Credit Notes, and Statements: It is essential to determine the specific types of invoices, credit notes, and statements that your organization requires. This will depend on the nature of your business and customer needs. Examples of these include standard invoices, proforma invoices, commercial invoices, and credit notes.
2. Standard Charges: If your organization provides services and maintenance contracts or rentals, it is important to establish a system for generating and managing these charges. This may include defining service and maintenance contract terms and billing cycles.
3. Sales Analysis: To better understand your sales trends and performance, it is important to determine your sales analysis requirements. This may include weekly, monthly, quarterly, half-yearly, or last year comparisons.
4. Inventory Management: Inventory management requirements may vary depending on the nature of your business. It is important to determine whether you require the ability to track inventory by serial number or batch tracking, as well as the specific costing method required. Additionally, if your business requires Bill of Materials (BOM) inventory items, then you will need a system that can track and manage BOM items effectively.

By considering these factors, you can help ensure that your new ERP or financial management system meets the unique needs of your organisation and supports your business processes effectively.

SapphireOne recommends seeking the advice of your accountant regarding inventory costing. This can help ensure that you select an appropriate costing method, such as FIFO, LIFO, or weighted average, which accurately reflects the value of your inventory and aligns with your business needs.

• SapphireOne recommends utilising Open Item for Accounts Receivable and Accounts Payable to simplify the reconciliation process.
• Other important considerations to keep in mind when implementing an ERP or financial management system include:
• Foreign currency requirements: Do you need to manage transactions in multiple currencies? If so, you’ll need to ensure that your system can handle foreign currency transactions and conversions.
• Inter-Company requirements: If your organization has multiple entities or subsidiaries that need to interact with each other, you may need to establish inter-company accounts and ensure that your system can handle inter-company transactions.
• Multiple companies in a single data file: Do you need to manage multiple companies within a single data file? If so, you’ll need to ensure that your system can handle multiple entities and that you can track and report on each company separately.
• Job Costing: Do you need to track costs related to specific facets of your business, such as projects or jobs? If so, you’ll need to establish a job costing system that can accurately track costs and expenses.
• Fixed Asset management: Do you need to track servicing, repairs, or loans of fixed assets within your business? If so, you’ll need a system that can manage and report on fixed asset activities.
• Payroll management: Do you need to maintain a payroll for your employees? If so, you’ll need a system that can handle payroll processing, tax calculations, and compliance reporting.
• By considering these factors and ensuring that your ERP or financial management system can handle these requirements, you can help ensure a successful implementation and effective management of your organization’s financials.

SapphireOne recommends setting up your Financials module before establishing your Payroll and Assets modules. This is because the Financials module forms the foundation of your accounting system, and setting it up first can help ensure accurate financial reporting and facilitate the smooth integration of the Payroll and Assets modules.

By establishing the Financials module first, you can set up your chart of accounts, establish your accounting periods, and configure your general ledger, accounts payable, and accounts receivable. This will enable you to accurately track your organization’s financial activities and generate financial statements and reports.

Once your Financials module is established, you can then proceed to set up your Payroll and Assets modules. This will allow you to accurately manage your payroll and fixed assets, and ensure that all financial transactions are recorded correctly in your accounting system.

Overall, it is important to establish a systematic approach to implementing your ERP or financial management system to ensure that all modules are properly integrated and configured to meet the specific needs of your organisation.

As you begin setting up your SapphireOne ERP financial management system, it is crucial to consider these elements to ensure that the options can be utilised easily as required. By doing so, you can ensure that your system is configured to meet your specific needs and that you can take advantage of its power functions as and when required.

Establishing a clear understanding of your organization’s unique requirements and workflows is critical in ensuring that your system is configured correctly. By doing so, you can ensure that you have access to all of the necessary tools and functionalities to support your business operations effectively.

While it is important to consider these elements during the initial setup of your system, it is worth noting that power functions can be activated and utilized as and when required. This means that you can continue to optimize and customise your system over time to meet the evolving needs of your organisation.

Designing Your Chart of Accounts for General Ledger Implementation

General Ledger Structure

The General Ledger has been a fundamental part of accounting since its inception. Historically, it referred to a large, leather-bound book that contained columns in which all financial transactions were recorded. Although the structure of accounting has evolved since then, the General Ledger remains at the heart of the accounting system.

With the advent of personal computers, accounting has moved out of the back room and into the front office. However, the importance of the General Ledger remains constant. It serves as a central repository for all financial information, both in detailed and summarized form, providing a comprehensive view of the company’s financial position.

In addition, SapphireOne allows for the storage of a large volume of historical information regarding your company’s finances. This makes it possible to perform comparison reports between current and previous years with ease, enabling you to analyze trends and make informed financial decisions.

Overall, the General Ledger remains a critical component of any ERP accounting software, and SapphireOne offers robust functionality for managing this essential aspect of you ERP financial management.

Chart of Accounts

A Chart of Accounts is essential for viewing your income and expenditure during a specific time frame. It is crucial to consider what is important to you and your business, including the requirements of your external accountant. Below are two suggested approaches for creating your Chart of Accounts:

Approach 1:

1. Obtain your Chart of Accounts from your accountant or accounts staff. This chart will include the code numbers and descriptions of your General Ledger accounts. If it doesn’t include your Class and Department codes, you may need to obtain additional reports for this information.
2. Obtain both the current and previous financial year’s Profit and Loss Statement and Balance Sheet reports (by period), if possible. These reports will provide you with the necessary balances for each account.
3. Review your Chart, Class, and Department data to enhance this information and provide the backbone for powerful, relevant reporting.

Approach 2:

1. Collate your own Chart, Class, and Department by compiling a list containing the typical transactions that occur within your business on a monthly basis.
2. Identify which Class and Department the account will belong to.
3. Contact your accountant for assistance with your Chart, or schedule an appointment with one of our consultants.

Overall, it is essential to carefully consider your Chart of Accounts and ensure that it accurately reflects the financial activities of your organization. By doing so, you can generate powerful, relevant reports and gain a comprehensive understanding of your company’s financial position.

In SapphireOne, the General Ledger accounts are held at the Department level within each company. This means that you can create and manage General Ledger accounts specific to each department within your organization. This allows for more granular control over your accounting processes and enables you to accurately track financial activities at the department level.

By holding General Ledger accounts at the Department level, SapphireOne makes it easy to generate department-specific financial reports and analyze financial data at a more detailed level. This can help you identify trends, manage costs, and make informed financial decisions to improve the overall financial health of your organization.

Overall, the ability to hold General Ledger accounts at the Department level is an essential feature of SapphireOne’s financial management solution, providing greater flexibility and control over your accounting processes.

To help ensure clarity and consistency in your Chart of Accounts, it is recommended that you use a numeric coding structure. This can make it easier to organise and navigate your accounts, as well as facilitate more efficient reporting and analysis.

Typically, the first one or two digits of the account code will indicate where it falls in the order of accounts. For example:

• Accounts starting with 1 may indicate assets.
• Accounts starting with 2 may indicate liabilities.
• Accounts starting with 3 may indicate equity.
• Accounts starting with 4 may indicate revenue.
• Accounts starting with 5 may indicate expenses.

By adopting a consistent coding structure, you can ensure that your accounts are organised in a logical and intuitive manner. This can make it easier to track financial transactions and generate accurate financial reports.

Overall, using a numeric coding structure for your Chart of Accounts can help simplify your accounting processes and provide a strong foundation for effective financial management.

To effectively set up and manage the General Ledger in SapphireOne, it is essential to have a basic understanding of its structure. The General Ledger serves as the central repository for all financial information within your organisation and includes a range of associated items that can be configured to meet your specific needs.

The structure of the General Ledger in SapphireOne includes several key components, including:

• Chart of Accounts: The Chart of Accounts provides a list of all the accounts used by your organization, along with their associated codes and descriptions.
• General Ledger accounts: These accounts are used to record and track financial transactions, including income, expenses, assets, and liabilities.
• Departments: Departments allow you to organize your accounts by business unit, team, or other functional area within your organization.
• Classes: Classes enable you to group your accounts by type, such as sales, marketing, or administrative expenses.
• Job/Project Costing: This module enables you to track the costs associated with specific jobs or projects, including labor, materials, and other expenses.
• Budgets: Budgets allow you to set financial targets for your organization and compare actual performance against these targets.

By understanding the structure of the General Ledger and associated items in SapphireOne, you can configure your system to meet your specific needs and track your financial activities effectively. This can help you make informed financial decisions, manage costs, and improve the overall financial health of your organisation.

Designing Effective Accounts Group for Successful Implementation in SapphireOne

The General Ledger is a multi-level structure in SapphireOne, with the lowest denominator being the ID or Code, and the highest denominator being the Account Group. This hierarchical structure helps organise your financial data and group it in a meaningful way for generating key financial reports, such as the Income Statement (also known as the Profit and Loss Statement) and Balance Sheet.

SapphireOne includes twelve predefined Account Groups that you can use to organise your financial information. These groups are defined as follows:

1. Assets: This group includes all accounts related to assets, such as cash, inventory, and property.
2. Liabilities: This group includes all accounts related to liabilities, such as loans and accounts payable.
3. Equity: This group includes all accounts related to equity, such as retained earnings and capital contributions.
4. Income: This group includes all accounts related to income, such as sales and revenue.
5. Cost of Sales: This group includes all accounts related to the cost of goods sold, such as materials and labor.
6. Expenses: This group includes all accounts related to expenses, such as rent and utilities.
7. Current Assets: This subgroup includes all accounts related to short-term assets, such as accounts receivable and inventory.
8. Non-Current Assets: This subgroup includes all accounts related to long-term assets, such as property, plant, and equipment.
9. Current Liabilities: This subgroup includes all accounts related to short-term liabilities, such as accounts payable and taxes payable.
10. Non-Current Liabilities: This subgroup includes all accounts related to long-term liabilities, such as loans and bonds.
11. Other Income: This subgroup includes all accounts related to income sources that do not fit into the Income group, such as interest income and royalties.
12. Other Expenses: This subgroup includes all accounts related to expenses that do not fit into the Cost of Sales or Expenses groups, such as depreciation and amortization.

By using these predefined Account Groups, you can quickly and easily organise your financial data and generate meaningful reports that provide insights into your organization’s financial performance.

Components of an Income Statement 

Income  [Cr]	Income refers to the primary source of revenue for your company. To gain a better understanding of your organisation’s financial performance, it may be necessary to define the specific activities that generate this income. For instance, your company may generate income from sales of machinery and installation services. By identifying these specific sources of income, you can more effectively analyse your financial data and make informed decisions to improve the overall financial health of your organisation.
Cost of Sales  [Dr]	The Cost of Sales group includes all accounts related to the direct costs involved in generating your company’s standard operating income. These accounts are located in the Income Statement and are subtracted from the Income Group to calculate your company’s Gross Profit. Examples of accounts that may be included in the Cost of Sales group include the cost of raw materials, labor costs, and manufacturing overheads. By tracking these costs, you can determine the true profitability of your products or services and make informed decisions to optimize your business operations. Overall, the Cost of Sales group is a crucial component of your company’s financial reporting, enabling you to accurately calculate your Gross Profit and gain a comprehensive understanding of your organization’s financial performance.
Other Income  [Cr]	Other Income refers to the group of accounts used to record any miscellaneous or sundry income earned by your company that does not fall under the primary source of revenue. These accounts are located in the Income Statement and are added to the Gross Profit to arrive at your company’s Net Income. Examples of accounts that may be included in the Other Income group include interest income, rental income, and gains from the sale of fixed assets. By tracking these sources of income, you can gain a more comprehensive view of your organization’s financial performance and make informed decisions to improve profitability. Overall, the Other Income group is an important component of your company’s financial reporting, providing valuable insights into additional sources of income that may contribute to your overall financial health.
Expenses  [Dr]	Expenses refer to the group of accounts used to record all of the costs and expenses incurred by your company in the course of its operations. These accounts are located in the Income Statement and are subtracted from the Gross Profit to calculate your company’s Operating Profit. Examples of accounts that may be included in the Expenses group include rent, utilities, salaries and wages, marketing expenses, and depreciation expenses. By tracking these expenses, you can gain a clear understanding of the costs associated with running your business and make informed decisions to optimize your operations and improve profitability. Overall, the Expenses group is a critical component of your company’s financial reporting, enabling you to accurately calculate your Operating Profit and gain insights into your organization’s financial performance.
Appropriation  [Dr]	Appropriation refers to the group of accounts used to allocate your company’s profits or losses. This group includes accounts such as dividend payments, transfers to reserves, revaluation of assets, company tax payments, company tax benefits, and tax provisions. Transactions that fall under the Appropriation group occur before the Net Profit/Loss is transferred to your Balance Sheet in the form of retained earnings. These accounts are located in the Income Statement and are subtracted from the Operating Profit to calculate the Net Profit. By tracking your company’s Appropriation transactions, you can ensure that profits are allocated appropriately and that all required payments, such as taxes and dividends, are made in a timely manner. This can help improve the financial health of your organization and ensure compliance with relevant regulations. Overall, the Appropriation group is a crucial component of your company’s financial reporting, enabling you to accurately calculate your Net Profit and make informed decisions about how to allocate your company’s financial resources.

The Appropriation Accounts are an area in which your accountant will perform general journal entries that are appropriate for your business. These entries will help to allocate your company’s profits or losses, as well as make any necessary adjustments to your financial statements.

For example, your accountant may use the Appropriation Accounts to transfer profits to reserves, pay dividends to shareholders, or make tax payments on behalf of the company. These transactions help to ensure that your company’s finances are properly allocated and accounted for, and that all required payments and distributions are made in a timely and accurate manner.

Overall, the Appropriation Accounts are an important aspect of your company’s financial reporting, and working closely with your accountant to ensure that they are managed effectively can help to improve the financial health of your organization.

Components of a Balance Sheet

Current Assets  [Dr]	The Current Assets section includes all accounts used to record your company’s assets that are expected to be converted into cash within a period of twelve months. In simple terms, a current asset is defined as an asset that is highly liquid and can be easily converted to cash. Examples of accounts that may be included in the Current Assets section are Accounts Receivable, Provision for Doubtful Debts, Work in Progress, Raw Materials, Finished Goods, Stock on Hand, and Petty Cash. By tracking these assets, you can gain a clear understanding of the short-term liquidity of your organization and make informed decisions to manage your cash flow effectively. Overall, the Current Assets section is a critical component of your company’s financial reporting, enabling you to monitor your short-term financial health and make informed decisions to improve your organization’s overall financial performance.
Non-Current Assets  [Dr]	The Non-Current Assets section includes all accounts used to record your company’s assets that are not expected to be converted into cash within a period of twelve months. In simple terms, a non-current asset is defined as an asset that is expected to be used in the operations of your organization for a prolonged period of time. Examples of accounts that may be included in the Non-Current Assets section are Fixed Assets, such as Motor Vehicles, Furniture and Fittings, Plant and Machinery, and Office Equipment, as well as Accumulated Depreciation, Goodwill, and Work in Progress greater than twelve months. By tracking these assets, you can gain a comprehensive understanding of the long-term investments made by your company and make informed decisions to optimize the use of these assets. Additionally, managing non-current assets effectively can help to ensure the ongoing success and sustainability of your organization. Overall, the Non-Current Assets section is an important component of your company’s financial reporting, enabling you to gain insights into your long-term investments and make informed decisions to improve your organization’s financial performance.
Current Liabilities  [Cr]	The Current Liabilities section includes all accounts used to record your company’s liabilities that are expected to require payment within a period of twelve months. In simple terms, a current liability is defined as a debt or obligation that is due in the near future. Examples of accounts that may be included in the Current Liabilities section are Accounts Payable, PAYE Clearing, GST Clearing, Lease Liabilities less than twelve months, and Bank Overdrafts. By tracking these liabilities, you can gain a clear understanding of your short-term financial obligations and make informed decisions to manage your cash flow effectively. Overall, the Current Liabilities section is a critical component of your company’s financial reporting, enabling you to monitor your short-term financial health and make informed decisions to improve your organization’s overall financial performance.
Non-Current Liabilities  [Cr]	The Non-Current Liabilities section includes all accounts used to record your company’s liabilities that are not expected to require payment within a period of twelve months. In simple terms, a non-current liability is defined as a debt or obligation that is due over a prolonged period of time. Examples of accounts that may be included in the Non-Current Liabilities section are Loans, Mortgages, and Lease Liabilities greater than twelve months. By tracking these liabilities, you can gain a comprehensive understanding of your long-term financial obligations and make informed decisions to manage your cash flow and financial resources effectively. Overall, the Non-Current Liabilities section is an important component of your company’s financial reporting, enabling you to gain insights into your long-term financial obligations and make informed decisions to improve your organization’s financial performance.
Bank Assets  [Dr]	The Bank Assets section includes all accounts used to record your company’s bank assets. This section typically includes accounts that you wish to reconcile, such as Credit Cards, Managed Funds, and Company Bank Accounts. Depending on the type of account, it may be classified as either a Current Asset or a Current Liability. By tracking your bank assets, you can gain a clear understanding of your company’s liquidity and cash flow. Reconciling these accounts on a regular basis can also help to ensure the accuracy of your financial records and prevent errors or discrepancies from occurring. Overall, the Bank Assets section is an important component of your company’s financial reporting, enabling you to monitor your cash flow and financial health and make informed decisions to improve your organization’s overall financial performance.
Equity  [Cr]	The Equity section includes all accounts used to record your company’s equity and reserves. This section typically includes accounts that represent the ownership interest in your company, such as Ordinary Shares Issued, Paid Up Capital, Revaluation Reserves, and Retained Earnings. By tracking your company’s equity and reserves, you can gain a clear understanding of the value of your company and its overall financial health. Equity represents the residual interest in the assets of your company after all liabilities have been deducted, and is an important metric for investors and stakeholders. Overall, the Equity section is a critical component of your company’s financial reporting, enabling you to monitor the value of your company and make informed decisions to improve your organization’s overall financial performance.

Efficient Implementation of General Ledger Classes for Organised Financial Reporting

SapphireOne’s General Ledger Classes provide the classification for your Account Groups, allowing you to organize your financial information in a structured manner. Each Class identifies which side of the General Ledger an account linked to that Class will appear on. Additionally, a Class can be assigned a Project Setting, which will classify the type of transaction within Projects Mode.

The position of accounts for your Financial Statements is also determined by the General Ledger Class, making it an essential component in your financial reporting. Before using one of SapphireOne’s General Ledger Account groups, it must have at least one General Ledger Class assigned to it.

The Account Group to which a Class is linked mainly influences the side of the General Ledger on which the Account will appear. For example, most General Ledger accounts belonging to the Income Account group are placed on the credit side of the General Ledger, as they are credit accounts. However, some accounts within an Account group may require placement on the opposite side of the ledger from normal, such as Discount Given, which is a debit account within the Income Account group.

The Debit or Credit flag set within the Class determines how SapphireOne will display a General Ledger balance. For example, a debit balance for an Account with a Class attached with a Debit flag is shown as a positive value, while a credit balance for the same Account is shown as a negative value with brackets around it. This provides clarity and consistency in how financial information is presented, allowing for easy interpretation and analysis.

Departments

In some cases, it may be necessary for your business to further classify your financial information beyond the Account Groups and Classes. This is where SapphireOne Departments come in.

Departments operate independently of the classification structure and provide a way to group and track financial information based on specific areas of your business. Each individual General Ledger Account must belong to a Department, which can be up to four characters in length.

While Departments operate independently, they are still tied to the Account ID and affect the position of the account within your financial statements. The Department coding structure is attached to the Account ID, allowing for easy grouping and analysis of financial data based on different areas of your business.

It is important to note that the General Ledger in each company must have at least one Department – typically the master (or principal) Department coded as 00. By using Departments in conjunction with Account Groups and Classes, you can gain a deeper understanding of your company’s financial performance and make more informed business decisions.

Sample Department Income Statement 

Sydney (-00) 

Debit	Credit
Income
0100-00	Sales – Sydney	8,000
0200-00	Cost of Sales – Sydney	5,500
0205-00	Freight Inwards – Sydney	150	5,650
0299-00	Gross Profit – Sydney	2,350
Less: Expenses
0400-00	Operating Expenses	400
0500-00	Marketing Expenses	100
0600-00	Administrative Expenses	200
0700-00	Financial Expenses	50	750
Operating Profit	1,600
Less: Appropriation
0900-00	Less: Dividends Paid	900
Net Profit Sydney	700

Sample Department Income Statement 

Melbourne (-01) 

Debit	Credit
Income
0100-01	Sales – Melbourne	8,000
0200-01	Cost of Sales – Melbourne	5,500
0205-01	Freight Inwards – Melbourne	150	5,650
0299-01	Gross Profit – Melbourne	2,350
Less: Expenses
0400-01	Operating Expenses	400
0500-01	Marketing Expenses	100
0600-01	Administrative Expenses	200
0700-01	Financial Expenses	50	750
Operating Profit	1,600
Less: Appropriation
0900-01	Less: Dividends Paid	900
Net Profit Melbourne	700

Chart of Accounts Flow Chart

What an Income Statement is comprised of? 

What Gross Profit is comprised of? 

What Operating Profit is comprised of? 

What Net Profit is comprised of? 

What a Balance Sheet is comprised of? 

What a Current Asset is comprised of? 

What a Non-Current Asset is comprised of? 

What an Intangible Asset is comprised of? 

What a Current Liability is comprised of? 

What a Non-Current Liability is comprised of? 

What Equity and Reserves is comprised of? 

Excel Format

SapphireOne comes with a sample Excel™ General Ledger Import File located in the SapphireOne Folder Sample Data file. The file name is GLIMPORT.TXT. This file can be opened in Excel™, providing you with a range of tools to easily manipulate your Accounting Database.

Using Excel™, you can easily import, export, and format your financial data in a way that best suits your business needs. This can include creating custom reports, charts, and graphs to analyze your financial performance.

By leveraging the power of Excel™ in conjunction with SapphireOne, you can streamline your accounting processes, save time, and make more informed business decisions based on accurate and up-to-date financial data.

To ensure seamless integration between your Excel™ import files and SapphireOne, it is recommended to closely follow the screen design within SapphireOne. This is particularly important when there are drop-down menus in the screen from which you need to select an option.

In such cases, it is crucial to match the exact numbering used in SapphireOne. For instance, the first option in the drop-down menu will be numbered as 1, the second as 2, and so on. Failing to match the numbering exactly can lead to errors and discrepancies in your financial data.

By following the screen design in SapphireOne, you can ensure that your import files are accurately formatted and seamlessly integrated with your accounting system, saving you time and improving the accuracy of your financial data.

Historical Data

Historical data refers to the financial record of all transactions performed in previous financial periods before the current one. This information is split into two parts: Last Year’s Totals (LYTD) and Year To Date (YTD), with a running total called Total To Date (TTD) since SapphireOne was started. The number of periods per financial year will depend on your business requirements. Historical data is used by SapphireOne to generate comparative reports and graphs, enabling you to analyze your business’s performance for a given period against the performance in a prior year. To use historical data, it must be entered into SapphireOne by importing transactions into the previous year’s periods.

It is our suggestion you contact SapphireOne to arrange for a SapphireOne Consultant to assist in this function. 

Income Statement

An Income Statement shows your company’s financial performance over a specific period, usually a year or a quarter. It displays your company’s revenue and expenses and indicates your company’s profitability during that period.

Your company’s operating income usually comes from the sale of goods and/or services. If you are selling products, the cost of sales will include the direct costs incurred in obtaining the product and any direct distribution costs incurred to get the product to the customer. If selling services, the cost of sales will include the wages, annual leave, sick leave, etc., of those who performed the service, while the administration wages would be treated as an expense.

The sum of the Gross Profit and the Expense accounts will show Operating Profit. Appropriation Accounts will then perform the necessary adjustments as per your Accountant prior to sending the Net Profit to Retained Earnings/Retained Losses.

If you start using SapphireOne at any time other than the first period of your financial year, you will need to enter the previous period totals for each account into SapphireOne. If you have detailed information, you can enter the data on a period by period basis. Otherwise, enter the combined total for all periods this year (excluding the current one) into the period prior to the current one. There are no opening balances for Income Statement accounts.

Balance Sheet 

The Balance Sheet provides a snapshot of your company’s financial position by showing the value of your assets and how they are funded through liabilities and equity. It is an essential report that helps you assess the financial health of your business.

Balance Sheet accounts have opening balances because they contain information that carries over from one period to another, unlike Income Statement accounts which start fresh each period. Having accurate opening and period balances in your Balance Sheet ensures that your financial records reflect the true value of your assets and liabilities, and helps avoid the need for time-consuming journal transactions to correct any discrepancies later on.

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