Dimensions in Business Central: getting management accounting right

When a company moves to Business Central, one of the first questions from management is always the same: “Will we be able to see margins by department, by job, by channel?” The answer is yes, but it depends almost entirely on how you set up dimensions at the start. A good structure keeps analysis simple for years; an improvised one produces reports nobody trusts.

What dimensions are, and why they aren’t accounts

Dimensions are tags added to entries to classify them: the department that incurred a cost, the project an invoice belongs to, the area where a sale took place. Each dimension has its own values (for example a DEPARTMENT dimension with ADMIN, PROD and SALES) and a single entry can carry several dimensions at once.

The difference from general ledger accounts is fundamental. The account answers “what is it?”: an energy cost, revenue from product sales. The dimension answers “where, for whom, for which initiative?”. Microsoft’s documentation is clear on this: instead of setting up separate G/L accounts for every department and project, you use dimensions as the basis for analysis and avoid a complicated chart of accounts.

In practice, if today you have accounts such as “Electricity – factory” and “Electricity – offices”, in Business Central it’s better to have one energy account and a dimension that says which department or site the cost relates to.

Global dimensions and shortcut dimensions

You can create as many dimensions as you need, but they don’t all behave the same way. On the General Ledger Setup page you choose which ones get a privileged role:

• Global dimensions: there are at most two. They’re stored directly on entries and can be used as filters almost everywhere, in reports, batch jobs and entry pages. Pick the ones you use most often.
• Shortcut dimensions: up to eight, including the two global ones. They’re available as fields directly on journal and document lines, so users don’t have to open the dimensions page every time.

Other dimensions remain usable, but they’re entered from the Dimensions page of the line or header.

Default dimensions and value posting rules

Asking users to type dimensions on every line is the surest way to end up with incomplete data. It’s far better to assign default dimensions to master data: customers, vendors, items, G/L accounts, resources, locations. When that record is used on a document, the dimension is proposed automatically.

For each default dimension, the Value Posting field sets how strict it is:

• blank: no restriction, the dimension can be posted with any value or none;
• Code Mandatory: a value is required, but any value is accepted;
• Same Code: the value must always be the one specified on the record;
• No Code: the dimension must not be used with that account.

One practical warning, also noted by Microsoft: on accounts used by the Post Inventory Cost to G/L batch job, don’t set Code Mandatory or Same Code, because that batch job can’t use dimension codes. It’s also worth checking how dimensions are handled when you adjust exchange rates.

When several records propose different values for the same dimension (customer, item, location), default dimension priorities come into play. Define them, and above all test them with real documents.

Dimension combinations

Some combinations make no sense: an administration department cost charged to a construction job, for example. On the Dimension Combinations page you can set each pair of dimensions to No limitation, Limited or Blocked. With Blocked, the two dimensions can never appear on the same entry; with Limited, you define which combinations of values are not allowed.

Use them sparingly: a few targeted rules prevent the most common mistakes, while too many rules block posting and generate a constant stream of requests to the administrator.

Analysis views and reporting

Dimensions pay off when you use them to read the numbers. There are three main tools:

• Set Dimension Filter: a quick action to filter chart of accounts totals and entry pages by dimension.
• Analysis views: each view combines up to four dimensions and summarises G/L entries. From the view you open the Analysis by Dimensions page, a matrix where you choose what to show as lines and columns. The view needs updating, manually, through a batch job or by turning on update on posting.
• Financial reports (formerly account schedules): they can use analysis views and dimension filters, for example to build an income statement by department or a margin by channel.

Designing the chart of accounts and dimensions together

The principle is simple: keep the chart of accounts lean and push analysis into dimensions. The chart of accounts should meet statutory and tax requirements and describe the nature of the cost or revenue. Everything about “who” and “where” belongs in dimensions.

A few useful questions at the design stage:

• Which reports does management need every month? Start there, not from a list of everything that could be measured.
• Is the data already captured elsewhere? Customer, vendor and item are already on the entries: there’s no need to duplicate them in a dimension, unless you need a specific grouping.
• Who will enter the value, and at what point in the process? If the answer is “nobody in particular”, the dimension will stay empty.

Common mistakes to avoid

• Too many dimensions. Every extra dimension is another field to fill in and check. Four dimensions that are always complete beat ten that are half complete.
• Values treated as free text. Codes created on the fly, duplicates such as “JOB01” and “JOB-01”, values never closed. You need someone responsible for the value lists and a coding convention.
• Global dimensions chosen lightly. You can change them with the Change Global Dimensions action, but every posted entry has to be updated: the process can take time, affect performance and lock tables. There’s a sequential mode and a parallel mode intended for large databases, but it’s always an operation to plan. Better to decide carefully before go-live.
• No testing with real documents. Priorities and value posting rules should be tried out on test orders, invoices and journals before go-live.

A starting design for an Italian SMB

Treat this as an example, not a rule: it needs adapting to the way you work.

• DEPARTMENT or COST CENTRE: administration, production, sales, logistics. Often the first global dimension.
• JOB or PROJECT: useful for businesses working on orders, sites or projects. If job management is complex, consider Business Central’s project management features as well.
• AREA or CHANNEL: Italy, export, resellers, e-commerce. Often the second global dimension, if sales analysis is central.

A fourth dimension, such as a product line, should be added only if it genuinely supports a decision.

For the technical details, see Microsoft’s guide to dimensions.

Let’s talk

If you’re setting up Business Central, or want to review dimensions and a chart of accounts that don’t give you the numbers you need today, get in touch: we’ll start from the reports you need and build the structure around them.