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Overview

A clean, nature-based chart of accounts (CoA) paired with dimensions like Department is the most sustainable way to structure financial data. It avoids duplication and supports flexible reporting as your business scales. Functional views belong in dimensions, not in your CoA.

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Basics

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The Chart of Accounts

The CoA is typically designed around natural classifications of income and expenses. These describe the type of transaction, regardless of who incurred it or for what purpose. Examples include:

  • Revenue
  • Salaries and wages
  • Rent
  • Office supplies
  • Travel expenses

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Dimensions

To analyze financials by other perspectives - such as teams, projects, or regions - most accounting systems offer dimensions. These allow you to tag transactions with additional metadata, enabling more flexible reporting. Common examples:

  • Department
  • Cost center
  • Project
  • Region

This lets you answer questions like:

  • What is the cost of Project A?
  • How much are we spending on travel in the Sales team?

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Common Pitfall: Functional logic in the CoA

When companies start thinking in functions (like Sales or Engineering), it’s tempting to reflect this in the CoA. For example:

  • Sales Travel
  • Marketing Software
  • Engineering Salaries

This gives a quick sense of departmental spend, but it’s not scalable. Over time, this approach leads to duplicated categories and a bloated CoA.

The real problem arises when you want to transition to proper dimensions. At that point, you’re forced to either:

  1. Revise historical entries, which is costly and error-prone, or
  2. Set a cut-off date, which limits the usefulness of your historical data.

Dimensions are the intended way to enable function-based views, not by duplicating functional logic in the CoA.

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How to structure your GL and dimensions in your accounting system

Use dimensions early – even in small or early-stage setups. Most ERPs support dimensions out of the box, and modern FP&A tools like Francis let you model across multiple dimensions without friction.

By keeping your CoA clean and nature-based, and tagging function via dimensions (e.g. Department), you get a system that scales with your business, without needing to change practice along the way.