In the 1400’s, certain papers of Vietnamese merchants had shown their acceptance to and application of branch accounting for their business places at different geographical locations. But, certain organizations, even in the 2020’s, are in a non-acceptance zone for the incorporation of branch accounting concept and are ignorant to the advantages of it.
Expansion is the truth of a growing organization. Branches facilitate and grow businesses and are advantageous but brings along very few threats as well. When the advantages over threats are a dollar over a penny then the concept can be easily certified as fruitful.
What is Branch Accounting?
Branch Accounting (BA) is concept of maintaining separate books of accounts for every branch of an organization. This concept has flourished in this unity in diversity concept where accounts are maintained severally but at the HO it is available all together, and at RealBooks, it’s a step ahead that not only inter-branch entries are auto-posted, the reports are also available in consolidated form, which helps the management to get the reports on a single click without any effort on manual consolidation.
In this fast running world, running across the nation or globe for understanding and resolving financial issues and the delayed reporting system gets troublesome for the management and hinders or slows down the organizational growth whereas after getting into the BA concept, the management can clearly get the statistics of each and every branch over which they can work on the required specific areas and improve. Whereas, in the collective accounting at a single books of accounts it’s next to impossible to ascertain the performance of individual branches.
How Branch Accounting benefits the business organizations, accountants and auditors?
Inventory Planning: Having the books of accounts maintained severally, it helps the management to reduce the issue of mismanagement of inventory. After a year of proper application, the organization can easily plan the requirement at the branch, can send adequate inventory and can even reduce the logistics cost incurred due to urgent/emergency inventory transfers.
P&L Assessment: The management can go through the profit and loss statements of their branches and can individually ascertain the profits or losses of the branches and the fixed and variable expenses can be checked upon as well. If the accounts are collectively maintained then it is way too difficult, in some cases it is never possible, to ascertain the individual P&L and the management are left at a confused or blind spots.
Cash and Fund flow: In the proper maintenance of cash flow, branch accounting concept is a must because with an unplanned flow of cash, organizations end up with increasing number of creditors remaining unpaid, post their due date of payment and the debtors are mismanaged as well. The goodwill of an organization is quite dependent on their cash and fund flow management so that all the other factors perform better.
Performance Analysis: An organization in profits doesn’t imply that the branches of that organization are all in profits as well. Many a times, it is seen that a branch making extensive profits has to compromise all at its loss making or breakeven branches (just generating the revenue to incur complete set of expenses)and ultimately the firm is at loss even after being in profits.
BA is a concept of benefit, if the benefit is properly extracted from the ways and tools of accounting.
Looking for a software to implement Branch Accounting?
Here, we introduce RealBooks a cloud-based GST compliant, multi branch accounting software in India that continues to be the best and the smartest software for maintaining the accounts of your branches alongside Head Office.
“0” Duplicacy of Masters: Usually when a business operates at multi-location they often create duplicate items. This is a very common error that the inventory & accounting masters of branches differ due to some manual and managerial issues. RealBooks has reduced this error to zero since at RealBooks users can maintain common masters across the company. Create a company and then create the branches as segments under the company instead of creating a new company for each and every branch.
Decentralized accounting with centralized reports: The books of accounts may be maintained treating the branches as separate entities but the reports can be generated in a consolidated form at any point of time without a single second of synchronization delay. Not only this, you also can generate reports for a specific set of branches by creating segment groups. Get all the reports you need with the same ease.
Confidentiality held strong: As you get the ease at the reporting end since the reports can be generated anytime and any moment required, it might be a threat because not all the data available are for public access. The role-based access feature of RealBooks serves the purpose. With this feature, you can assign the individuals who can access the data and who cannot. Alongside the given ease, confidentiality is still held strong.
Auto-Posting of inter branch transaction ( payment, receipt, contra, expense & party adjustment):
Let’s call the user at the branch to remind them that they have missed an entry and also let’s call them at the HO for a reconciliation ceremony year after year.
The telecom expenses have been reduced by Jio and the traveling expenses will be reduced by us.
With our bang-on feature of auto-posting entries between the branches and on behalf of the branches are all done only at one end/branch and the required entry gets auto-posted in the related branches. Entries like payments or receipts on behalf of a branch, expenses incurred for a branch, inter-branch transactions (generally known as contra entries), and even party adjustments, all can be done through this feature. In this RealBooks era, users at multiple branches need not to struggle for the same entry.
Multi Branch Accounting made simpler and smarter than ever!! Branch Accounting itself is a package of benefits and RealBooks will complete the package of benefits by adding value to your organization through its business intelligent developments.
Switch to RealBooks and take your visionary organization towards a smarter and greener tomorrow.