Why Sage Intacct Dynamic Allocations Is A Gamechanger

6 min read

March 19, 2024

The ability to allocate revenue and expenses is essential to determining the performance of various segments within your business, and this information is vital to running a profitable business. This means not just understanding how much your business spends and earns across the board but also understanding how much it spends and earns as a result of specific projects, products, services, employees, departments, or other critical units.

In the back office, the allocation of expenses, revenue, and investments can be achieved through a careful process of tracking and categorization that occurs behind the scenes. These processes allow you to generate management reports like profit and loss statements by class, category, or unit, and these reports enable you to assess your business's operations and performance on a granular level. 

With the information provided by profit and loss reports by class, you can determine which aspects of your business are truly profitable and which are being supplemented by revenue generated elsewhere. As a result, you can determine where to focus your attention, what to improve, and what to eliminate from your company. The data provided by allocation is essential to making data-driven decisions to improve the productivity, performance, and profitability of your business.

With most accounting systems, allocation and categorization are time-consuming, manual processes that require individual entries to be made and selected for every transaction. As a result, allocation data is often inaccurate, incomplete, and unreliable.

Dynamic Allocations, a software feature of Sage Intacct, however, eliminates many of the challenges associated with allocations in your bookkeeping and accounting process.

What Is Dynamic Allocations?

A fully automated cash flow allocation tool, Dynamic Allocations is a feature of Sage Intacct accounting software. It is designed to help users evaluate and understand the true performance of every significant segment of their businesses. Dynamic Allocations automates the process of allocating direct and indirect costs and revenue contributions in addition to assets and liabilities across multiple dimensions and multiple entities.

The Dynamic Allocations feature comes with built-in allocation best practices. It is designed to save days of bookkeeping work while increasing accuracy and providing valuable insights into the impact of a company's financials. Additionally, Dynamic Allocations creates a sound audit trail and an easy-to-access record of allocation justifications and reasoning.

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Dynamic Allocations boasts:

• A simple setup process that enables repeatable allocations that frees up time for oversight, analysis, and strategy
• Automatic corrections to avoid the need for post-period adjustments
• The ability to compare different methods of allocation to improve analysis and strategy
• Increased transparency and audit-readiness

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How Does Sage Intacct's Dynamic Allocations Work?

Dynamic Allocations provides a simple-to-use template for establishing an allocation in Sage Intacct's software. The setup involves a five-step process:

1. Rationale - The first step involves filling out a template where the allocation is given a name in addition to a description of its methodology and parameters. This helps ensure consistency in allocations and provides the information that an auditor will need to assess allocations.
2. 2. Dimension Treatment - In this section, you can determine whether the allocation should occur across entities or within a single entity and which dimensions (i.e. class or category such as department, service, product, etc.) should be included.
3. Source Pool - This step of the setup defines what the allocation is. It includes several fields that need to be filled out such as the location, vendor, department, customer grant, item, class, employee, and site.
4. Basis - This step is where you define how your allocation amount (from the source pool) will be split up and allocated. This is where you define the calculation portion of the automatic allocation.
5. Target Entry - The target entry step is where you instruct the software on how to record (or where to post) the allocation. It is recommended that users create an allocation journal that is specifically used for posting allocation entries.

Once your Dynamic Allocations have been defined in the software, you can use them to generate allocation reports.

What Can Sage Intacct's Dynamic Allocations Do?

Automatically Allocate Revenue and Expenses

With pre-defined allocation parameters, your back-office team can automate the process of allocating revenue, expenses, and investments.

Automate Manual Corrections

As a smart feature, Dynamic Allocations saves time by automating the manual corrections process.

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Allocate Across Entities

Within the setup process, you can use the dimension step to facilitate automatic allocations across multiple entities. With this feature, you can streamline the process of evaluating performance globally (across multiple entities or locations) and granularly (within single entities or locations).

Derive Allocation Distribution (Percentages) Based on Statistical Financial Data

Dynamic Allocations makes it possible to use your company's statistical financial data to obtain its allocation/distribution rates.

Dynamically Pull Source Balances

Sage Intacct's Dynamic Allocations allows you to automatically calculate source balances and then distribute them between dimensions using pre-defined allocation methods.

Provide Dynamic Basis Calculations

With Sage Intacct's Dynamic Allocations features, you can quickly pull basis calculations across segments to quickly evaluate costs, ROI, and performance.

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Can Sage Intacct Set Your Business Up for Success? Challenges and Sage Intacct Best Practices

Sage Intacct is an incredibly powerful accounting software suite that can transform your back office and revolutionize the way your business operates. However, in order to offer such a high level of potential to its clients, Sage Intacct software must also be highly complex. As a result, it can be difficult for a bookkeeping and accounting novice to successfully implement in a business.

In order to use Sage Intacct software and leverage its countless features, such as Dynamic Allocations, to your business's advantage, it is strongly recommended that businesses implement Sage Intacct along with the guidance of a professional bookkeeping and accounting team with direct experience and success in helping other commercial clients make the most of Sage Intacct.

Read More: Oracle NetSuite vs. Sage Intacct: Which Is the Better Accounting Software for Your Business?

Take Your Business to the Next Level With Sage Intacct's Dynamic Allocations

Sage Intacct’s Dynamic Allocations fully automates allocations. You eliminate the need for spreadsheets, save days of time, increase accuracy, gain an easy understanding of impacts on financials, and streamline audits.

If you have complex, or cross-entity, allocations, you may be spending days or even weeks each month calculating, verifying, and trouble-shooting allocation. That’s precious time that could be better spent on activities that deliver more value including oversight, analysis, and strategic advice. If you think your organization would benefit from Dynamic Allocations, let’s schedule some time to take a more customized look while helping you establish and follow a set of Sage Intacct best practices in your business.