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Enhanced Chart of Accounts and GL Segments

Zuora

Enhanced Chart of Accounts and GL Segments

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Overview - Chart of Accounts 

The Manage Chart of Accounts feature in Zuora is a critical tool for configuring and managing your organization's accounting structure. It helps you define and maintain the general ledger accounts that are essential for financial reporting and revenue recognition. 

The Chart of Accounts (COA) represents the structure of your general ledger. It allows you to:

  • Organize financial data into accounts for reporting and compliance.

  • In accordance with your accounting system, map GL accounts and segments for Zuora transactions, for example, Invoices, payments, and refunds.

The enhanced Manage Chart of Accounts feature is currently available for new Zuora tenants only.

Accessing Manage Chart of Accounts 

  1. Log in to Zuora and navigate to the Finance Settings page.

    • From the main menu on the top right of the screen, click on Finance.

    • Select Finance Settings from the submenu.

  2. Locate the Manage Chart of Accounts tile in the Finance Settings section.

  3. Click Manage Chart of Accounts to open the interface.

Managing the Chart of Accounts

To manage the Chart of Accounts effectively:

  • Ensure your Zuora GL accounts align with your ERP or financial systems for seamless reconciliation.

  • Use clear and standardized names for accounts to avoid confusion.

  • Regularly review the Chart of Accounts for relevance and accuracy.

  • For easy navigation and reporting, use logical grouping, for example, prefix codes like "REV-" for revenue accounts.

Zuora supports only a single Chart of Accounts for each tenant. 

Changes to accounting codes or corresponding GL account numbers can impact financial reports. Ensure all mappings and integrations are updated accordingly.

Ensure all transaction types are mapped correctly. Incorrect mappings may lead to reporting discrepancies.

Introduction to GL Strings in Journal Entries

With the introduction of Enhanced GL Segmentation, Zuora will support generating and reporting GL strings at the line-item level within journal entries. This is an enhancement from the existing process where GL segment values were stamped only at the journal entry level. This new capability provides greater granularity and precision in financial reporting, aligning with the needs of more sophisticated General Ledger (GL) structures.

What is a GL String?

A GL string is a combination of multiple GL segment values that represent the accounting context of a specific transaction. Each segment corresponds to a dimension such as department, region, account, or product. The GL string helps companies track and report financial data with greater specificity.

Example 1 GL String:

  • Account-Segment1-Segment2-Segment3

  • Example: 4000-00-7654-0036

In this structure:

  • 4000: Represents the account (e.g., Sales Revenue).

  • 00: Segment 1 represents  the department.

  • 7564: Segment 2 represents  the region.

  • 0036: Segment 3 represents the geographical area.

Example 2 GL Account and Accounting Attributes String:

●  Account-Segment1-Segment2-Segment3

●  Example: 4000-20-01-3000

In this structure:

●  4000:   GL account Number (e.g., Sales Revenue).

●  20:   Segm 1 Sold to Customer Industry : 10=SAAS; 20=High-Tech; 30=Services.

●  01:   Segm 2 Sold to Customer Tier : 01=Tier 1; 02=Tier 2; 03=Tier 3 

●  3000:   Segm 3 Product Group 1000=Timesheet, 2000=Planning, 3000=T&E.

Key changes with enhanced GL Segmentation

  1. Reporting at the Line-Item Level:

    • GL strings will now be associated with each debit and credit line item within a journal entry, rather than being applied at the journal entry level.

    • This ensures that every line item can have its own unique GL string, reflecting its specific financial context.

  2. Granular Stamping of GL Segment Values:

    • Instead of applying GL segment values at the journal entry level, Zuora will now stamp GL segment values for every line item in the journal entry.

    • Example:

      • Journal Entry Debit Line 1: 4000-IT-USA-WEST

      • Journal Entry Credit Line 2: 4000-HR-USA-EAST

  3. GL String Display on the Journal Entry UI:

  • The Journal Entry UI will now display the GL string for each debit and credit line item.

  • Users can view the specific GL string associated with a line item directly within the interface.

  1. Impact on Financial Reporting:

  • This enhancement ensures that journal entries align closely with GL requirements, simplifying reconciliation and improving traceability in financial systems.

Steps to finalize the Chart of Accounts in Zuora

There are four steps for you to finalize the chart of accounts configuration in Zuora:

  1. Setting up the GL segment

  2. Creating your accounting code

  3. Associating those accounting codes with different transaction types that are available in Zuora

  4. Publishing the Chart of Accounts. Ensure you test and validate before you publish the Chart of Accounts.

Next, go to Step 1: GL Segmentation.