Profit Center Setup (Creating Branches)

Profit Centers Setup

Pacific Solutions’ management systems have the ability to run multiple profit centers. Profit center typically refers to more than one physical location for a single financial entity. For example ABC Flooring has a location in Memphis and a location in Nashville. ABC Flooring owns both locations. However, ABC Flooring would like to run an income statement (profit and loss) on each location to evaluate profitability performance.

This kind of income statement separation is also possible within the same location for separate divisions if desired. The important thing to remember is that you are running two income statements and one (1) balance sheet. The income statement is the statement of sales invoiced, purchases (cogs) and general and administrative expenses (payroll, rent, utilities etc). The management systems do not have the ability to run separate financial balance sheets. You would need a second installment of JobRunner or FloorManager to accomplish multiple balance sheets for separate financial entities.

JobRunner and FloorManager both have the capacity to run multiple profit centers with separate income statements (P&Ls). A distinct process of action items are performed to setup, prepare and run this type of environment.

Set up Steps

This is the series of steps that you will work through in the next few pages for setting up multiple profit centers:

1. Run Sales & Financials Reports
   
2. Setup New Warehouse(s)
   
3. Create New Branch Store Name
   
4. Modify Existing Chart of Accounts to Original Branch
   
5. Create New GL Accounts for New Branch(s)
   
6. Remap Existing GL & New GLs to Store Names
   
7. Run Sales & Financial Reports
   
8. Rebuild Enterprise Financials Chart of Accounts
   
9. Run Financial Reports in Enterprise Financials
   

These steps are outlined in this document in detail. Please read this information carefully as this process affects your financials.

Prepare to Setup

Before creating anything in the management system, run financial reports and sales reports as a starting point. Since setup will require modifying current ledger accounts, it is important to make sure financial reporting looks appropriate along the way.

The following is a list of suggested (but not limited to only) reports to run:

Consider your current warehouse designations. Typically each warehouse represents each profit center location. Physical and financial inventory can be run by warehouse. A warehouse is not necessarily the same as the profit center name. For example, ABC Flooring may have a couple of warehouse “names” for their home office in Memphis. Warehouse called “Memphis” is for the attached warehouse and the warehouse called “All Storage” is an auxiliary storage unit also for the home location in Memphis. Before ABC Flooring starts a second profit center they can already run an On Hand Inventory physical report to list what is currently in warehouse “Memphis” and what is currently in warehouse “All Storage”. Once ABC Flooring adds a second store entry in the system and another attached warehouse name for “Nashville”, they will be able to run 3 physical inventory reports (and financial) for all three warehouse names.

Please keep in mind that warehouse names are not the same thing as the official store location for each office. Inventory is an asset to the company and is reported on the balance sheet. The ability to separate inventory reports by warehouse is a courtesy and has nothing to do with each company’s income statement.

It is possible for the combination of inventory reports run per single warehouse to not balance to the inventory report for all combined warehouses. This is typically due to warehouse names being removed or not assigned from inventory records. It is suggested that you turn on the mandatory requirement of warehouse, dye lot and record# in order to minimize this.

Enterprise Financial Modules

Enterprise Financials (EFS) depend on information from the core system. When EFS was first setup, the chart of accounts was established by a replication building process that will need to performed again once the core system ledger account chart is modified. Please contact support@pacific-solutions.com to inquire about rebuilding the enterprise chart of accounts once the core system ledger list is completed. If you have done extensive groupings and subgroupings in enterprise, you will need to review these and perform this step again to complete the additional store location setup.

Core System Chart of Accounts

The core system (JobRunner and FloorManager) chart of accounts will need to be modified in order to create a second series of ledger accounts to produce a second income statement. Print the chart of accounts ahead of time to make sure you have all the information you need to create the new branch location’s chart of accounts. Although you only need accounts for the income statement, you may need new asset and liability accounts added (but not assigned to a branch) for buildings, loans etc that would be attached to opening another profit center.

System Users Considerations

Your current system users do not need to have any modifications. These users are already assigned to the current store branch. New users working in the new location/branch will need to be setup and assigned to the new store location as their default. If you will have users working across multiple profit centers (store branches) please educate them thoroughly on how to select the correct store location on all of their created records (quotes, orders, PO, WOs etc). You may consider have a second login name for users working across multiple store branches if commissions will be paid based on performance is each store branch. You can find more information on this topic by discussing this with a trainer. Please contact support@pacific-solutions.com to discuss commission considerations in an environment where the same users will be working across all stores/branches.

Warehouse Name Setup

Enter the new warehouse names in the warehouse location list. Navigate to Admin>Value lists>Warehouses. Enter the warehouse name and address for each new warehouse.

1. Click the new arrow to create a new line
   
2. Enter the warehouse name in the name field
   
3. Click the info icon to enter the address and phone information
   

1. Enter the warehouse address and phone information
   
2. Click return to return to the warehouse locations list
   

Repeat for additional warehouse names.

Store Information Setup Part 1

Create a new store in the Store Information area in admin. This area will be visited a second time once ledger accounts are setup. Navigate to Admin>Store Information to enter the new store branch information. Click on the new arrow to create a new Store. Store numbers are automatically create sequentially.

1. Enter all pertinent store information into section 1
   
2. Select the warehouse names associated for the new store in section 2
   
3. Enter the address this store/branch sill use as the starting address when using the directions tab at system records in section 3
   
4.  Do nothing with section 4, this cannot be entered until the chart of accounts are established
   

At the very bottom of the store information screen is the “Header / Logo Information” area. Choose the header option to be printed and if you are using a new logo, paste the logo into the logo field use the stated criteria for the logo.

Chart of Accounts Setup

Existing Accounts Preparation

Establish the existing income statement accounts to the original store branch first before creating any accounts for the new branch (profit center). Navigate to Admin>Ledger Accounts.

Locate the first income statement account existing in the original list of accounts. This would typically be Sales. Click on the sales account to display it in the modification window. Once the account is in the modification window, assign branch #1 (your original store name) in the  Branch field. Your original account will have a 4 digit root number to start with and then when the branch #1 is assigned, the number will acquire a suffix of 01 making it a 6 digit number.

1. The original root number of the account is 4 digits
   
2. Assign the original first branch to these existing income statement accounts. Select the branch number 1
   
3. Click accept button to finalize the change
   

Once the original account is assigned the original branch numbers, the account will now look like this with a 4 digit root number and a 2 digit branch number:

Repeat this process for all original income statement accounts. Do not begin creating new accounts for the new store branch until all of the original accounts are assigned the original branch number. You will not be able to use the same root 4 digit numbering schema if you don’t assign branch number 1 to all existing income statement accounts.

When this is completed, all of your existing income statement accounts will have a 01 at the end of the account number.

**Note: as you associate the store to the existing accounts, the system will “think” for some time while it associates the new full account number with the 01 suffix to all system postings. This process could take a good while depending on the number of transactions for each account.**

New Profit Center Account Creation

Once the existing accounts have been established with a branch location, you can then create the new set of income statement accounts for the new profit center (store location).

Navigate to Admin>Ledger Accounts. You may use the same root 4 digit number for the new accounts as you have for your existing accounts (the ones that now have 01 at the end of the number). For example, your original existing Sales account was 4500 and after assigning it to store 1, the account is now 450001. This makes it possible to enter 4500 as the root 4 digit account number for Store 2’s Sales account. This account will become 450002 once the new store branch is assigned to the new Sales account.

1. Enter the 4 digit root account number
   
2. Name the new account with a name that identifies it and the location
   
3. Choose an income statement account type
   
4. Select the branch store number from the drop down list in the Branch field
   
5. Click accept button to create the new account
   

Repeat this process for all of the new income statement accounts for the new store branch.

Optional Balance Sheet Account Setup

Although this process for multiple profit centers only produces one balance sheet, there are some scenarios where additional balance sheet accounts may need to be created for the new store branch. These GL accounts would be:

1. Checking Account: in some multiple profit center setups, companies will use separate checking accounts for each branch. In this case, setup a second checking account in the same way you setup the income statement accounts. Be sure to modify the existing checking account with the branch association first before creating the new store’s checking account.
   
2. Retainage Account (JobRunner only): Create a second retainage account for the new store location if you wish to separate the retention withholding by branch.
   
3. Vendor Pre-Paid Deposit Account: Create a second pre-paid deposit account if you wish to separate the purchase order deposit payments between branches.
   

You may also wish to create branch specific tax liability accounts if you wish to separate sales tax postings into separated accounts on the balance sheet.

The balance sheet accounts by branch are optional and fully depend on your profit centers and your business practices for assets and liabilities for your multiple branches. If you choose to create new ledger accounts for the above mentioned balance sheet accounts, these are then mapped in the store information area for system generated postings.

Milestone Checkpoint

Once all of the existing and new accounts have been established, run the set of financials reports again and check the balances. Run the income statement by Branch 1 and the Sales Chronological Invoiced report by Branch 1 to balance. Run the income statement and the Sales Chronological for all branches and check for variances against the branch reports. If any balances appear to be incorrect, please contact support@pacific-solutions.com. There will not be any postings for the new accounts only the pre-existing ones.

Store Information Setup Part 2

Existing Store Information Preparation

It is imperative that you edit the original store branch “store information” account maps with the new account numbers now that a branch location has been added to each existing account.

Navigate to Admin>Store Information. Open the information icon for the original store branch. Typically this would be store number 1. Remap the default GL accounts by re-selecting the appropriate GL account for each option.

1. Locate the default GL section in store information
   
2. Re-select each account to make sure the account number and its suffix is showing
   

There are multiple sections in this area. The following GL accounts need to be re-selected as they are accounts on the income statement:

GL Sales Accounts: