Having a well-organized JD Edwards Chart of Accounts (COA) is critical to the health of any business, and yet far too often, companies make things more difficult for themselves with their choice of Object naming conventions, adherence to old structures, and more. Luckily, following a few best practices can make understanding the JD Edwards Chart of Accounts much easier.

Account Name Formatting Best Practices

The standard JD Edwards way of formatting an account name is Business Unit.Object.Subsidiary. “Business Unit” describes the “Where,” the lowest organizational level within your business where this transaction will have an impact. “Object.Subsidiary” describes the What, naming what type of transaction is being created, whether that’s sales revenue, rent, supplies expense, etc. (The “Object” portion describes the transaction and the “Subsidiary” portion is simply an expanded description of the Object account.)

Depending on your organization’s setup, an Object can be up to six alphanumeric characters, while the optional Subsidiary can be up to eight alphanumeric characters (no spaces). While you can use alphanumeric characters, it’s highly recommended that you use numerical values instead. (According to our consultants, using alphanumeric values can cause the reporting to become difficult and leads to costly custom development.)

Other Chart of Accounts Tips and Tricks

Often times, companies rely on old structures when developing their chart of accounts, which makes sense—why make something from scratch when your old system works just fine? Thing is, when it comes to Objects in your COA, certain structural choices can necessitate rewrites. Here’s an example.

Let’s say you created a series of accounts in a numerical sequence, with each Object account receiving the next number in the sequence. Travel Expense is named 6400, Lodging Expense is named 6401, Transportation Expense is named 6402, and so on. But what if you needed to classify different types of Travel Expenses, such as International and Domestic? 6401 and 6402 would make sense, but they’re already in use. That’s why one COA best practice is to ensure there’s room for growth or expansion when creating Object account numbers. That way, whether your company adds another division or acquires a whole new business, you won’t have painted your system into a corner.

These were just a few of the tips, tricks, and best practices that will help you better understand your JD Edwards Chart of Accounts. You can find more of them in our ebook: JD Edwards Financials 101. It’s bursting at the seams with JD Edwards Financials information, ranging from the benefits of automating your AP department to hot tips for mastering the Job Cost application, not to mention even more Chart of Accounts info.

In need of more specific information? We also have an extensive network of JD Edwards Financials consultants that can help.