Maestro*'s Multidimensional Mode

Many corporations possess more than one business location, division, or even more than one company1. These frequently share resources; employees, inventory items, equipment, etc. These same companies can also have common customers and suppliers.

It is to answer these kind of needs that maestro* has developped a set of functionnalities combining options such as the consolidation of financial statements and the production of intercompany entries: the multidimensional mode! 

 

It is important to state that, in maestro*, it is possible to consolidate financial statements without using the multidimensional mode.

summary

 

 

What is maestro*'s multidimensional mode?

Maestro* offers to corporations that own more than one company (various legal entities) and share ressources a software mode named the multidimensional mode. These entities can consist of companies belonging to the same shareholders, but that are better to manage separately.

Advantages and Characteristics

The use of the multidimensional mode offers certain advantages compared to the individual management of companies in maestro*. Among other things, it allows for significant time savings since the functionalities are adapted for the management of multiple companies. As will be explained a little later in the document, accounting entries are generated automatically between the different entities when comes the time to share resources, incomes, and expenses; those are called intercompany entries. Furthermore, the multidimensional mode has the effect of homogenising structures and processes since every entity is created from the same common base. Finally, this management mode facilitates the pooling, or not, of data for the production of miscellaneous reports and other consolidated financial statements, allowing for a global or sectorial view.

 

Please note that the multidimensional mode is not automatically used when a company is made up of multiple entities. Some conditions must first be met.

 

Using a Single Chart of Accounts

The multidimensional mode is first characterized by the use of a single chart of accounts for all compagnies entered in maestro*; these therefore use the same general ledger account numbers. It is the addition of prefixes, specific to each company, that allows to discriminate between transactions. Consequently, all transactions can be linked to an entity.

 

Sharing of Common Resources

Other than the chart of accounts, maestro*'s multidimensional mode allows to share common resources. In fact, it is an essential condition to the use of this mode. It is possible to apply basic configurations to all the companies and to create individual lists for each of them. These lists may include data concerning suppliers, customers, employees, items, equipment, projects, etc.

Some of the resources that can be pooled are: 

  • A general ledger chart (accounts, groups);
  • Employees, customers, and suppliers;
  • Inventory products;
  • Equipment;
  • Lists and catalogues;
  • Maestro* operation configurations;
  • Etc.

 

Using a Single Data Directory or Memory Partitioning Number for all Companies

Though each entity can be identified using a distinct prefix, and therefore each transaction, all data is grouped together in a single directory when the multidimensional mode is used in a Pervasive version of maestro*. Other directories can be used in parallel for companies that are not managed in multidimensional mode.

When a maestro* MS SQL version is used, all values of every company or entity are regrouped in the same database, whether maestro* is in multidimensional mode or not. The partition number happens to be what is unique when using the multidimensional mode. If every company is managed separately, each will possess their own partition.

 

Partition

With SQL server, all data contained in partitioned tables and indexes (also called partitions) are horizontally divided into units that can be spread across various filegroups in a database. Partitioning can make large tables and indexes more manageable and scalable.

Source: https://docs.microsoft.com/en-ca/sql/relational-databases/partitions/create-partitioned-tables-and-indexes?view=sql-server-ver15, January 21, 2021

 

Consolidating Reports

Authorized users are able to generate legal entity reports, in order to only view data that comes from transactions identified using a prefix. However, they can also generate reports that are said global or consolidated, regrouping all entities or only targetting specific ones.

In short, the multidimensional mode offers many features, such as:

  • The production of reports by taking into account an infinite number of company or entity grouping combinations;
  • The integration of companies in financial statements by taking into account a participation rate that can be different for each entity;
  • The automatic management of intercompany transactions, including:
    • Payroll production by a central company, when costs are distributed in multiple companies;
    • The management of an inventory for each company when the material is used by all companies in the group;
  • Etc.

Maestro*'s multidimensional mode has repercussions on many other available features. Though we see it being implemented more and more, it requires the presence of very specific conditions, since the data sets of all entities will be grouped to form a single data set.

 

The multidimensional mode can be difficult to install following the initial installation of maestro*. Therefore, it should be thoroughly thought out beforehand. The way in which the multidimensional mode is installed will greatly influence the methods and ways of thinking about work, support, programming, etc. If maestro*'s multidimensional mode need to be set up following the initial installation, it will be necessary to select a main entity, give it a prefix, and then reinstall all other entities (or companies) from scratch.

 

To Whom is maestro*'s Multidimensional Mode Intended? 

Maestro*'s multidimensional mode is generally required when a company is made up of more than one entity. However, this mode can also be used in the case of a single company with multiple business locations. It is still necessary to ensure that there is a real need; the maestro*'s multidimensional mode is useful if all the business units have at their disposal common ressources and if they share them.

 

If the need is limited to the production of departmental reports or the separation of the general ledger accounts, there are probably better solutions. For example, it is possible to create one or more company consolidated reports only used to perform daily entries or to produce financial statements. In short, when more than one entity needs to be managed with maestro*, the multidimensional mode is not necessarily required, nor is it defaultly installed since it introduces a certain complexity, especially when comes the time to copy data to create a test company.

 

There are two underlying conditions that must be met to install maestro*'s multidimensional mode.

  1. First, the company must possess or plan to own more than one legal entity. These entities, or companies, must have common data lists.
  2. Secondly, this data (also called resources) must, in addition to being common, be shared and used from one company to the other. Intercompany transactions will therefore have to result from it.

 

1st Scenario - J-P Gypse Enr.

Karen is the main shareholder, with her partner Jean-Philippe, of J-P Gypse Enr., a large-scale company specialized in plasterboard installation and interior finishing. They sometimes work as subcontractors but sometimes also hire subcontractors themselves. They work in both the commercial and residential fields. Furthermore, as they are located in Gatineau, they sign contracts for renovation or new construction work in both Quebec and Ontario. Their employees are therefore very mobile. Karen, Jean-Philippe, and their team will start working with maestro* and maestro*MOBILE next summer. They possess two entities - a management company and the plasterboard installation company in question. Management is carried out in the office located in a commercial building and equipment and material is stored in a warehouse they own and in plasterers' trucks.

Observations:

  • The company possess' two entities; a management company and a plasterboard installation company.
  • J-P Gypse Enr. employees work in company office (located in a commercial building), in a warehouse or at customers' premises.
  • J-P Gypse Enr. performs renovation and construction work in both the commercial and residential field, in Quebec and Ontario.
  • Shareholders wish, among other things, to evaluate project performance as a whole, but also by province, by type of work, and by industry sector.

Karen and Jean-Philippe's choice: Instead of using maestro*'s multidimensional mode, which isn't really relevant in this case, the company will instead use a project-based approach and will assign a type, category, and/or department to each project in order to generate the desired financial reports.

 

2nd Scenario - Rob & Brothers Inc.

Martin's and his brother's company has been offering excavation and formwork services for two generations now and will soon start using maestro*. Over the years, a subsidiary for bulk transportation and a seasonal snow removal company have been added. Situated in Red Deer, Alberta, the company has an administrations office and two garages and parks for its vehicles. The machinery is moved from one location to the other, depending on the needs. This is also the case of certain employees who, upon the arrival of colder weather, trade excavation work for snow removal work. In sum, at Rob & Brothers Enterprise, multitasking is rule!

Observations:

  • The company possesses three entities.
  • Both material and machinery are used by all three entities, according to needs.
  • Some employees are called upon to work from one entity to the other.
  • It is just as important to be able to analyse the financial profitability and to carry out follow-ups at subsidiary level as it is for the company as a whole.

Martin's choice: Maestro*'s multidimensional mode will be used at Robert & Brothers Enterprise. Various entities use shared resources.

 

Using the Multidimensional Mode

As previously mentionned, the use of maestro*'s multidimensional mode rests on using unique prefixes for each company which allows to associate a company to a transaction. These prefixes make it possible to make intercompany entries. Furthermore, since all data is regrouped in a single database, it is much easier to create consolidated reports by applying filters to select, or not, transactions based on their linked prefix. Let's take a closer look.

 

Company Prefixes

A prefix is assigned to each company entity. Thus, it becomes possible to generate transactions between the different entities by specifying the prefix to which each transaction is linked and, consequently, the accounting entries. These prefixes are generally made up of numbers and limited to a maximum of 10 characters.

Example 1

In the following structure, shown as an example, it has been decided to use four-character prefixes. The first number identifies the province where the entity is located, the second is used to specify the host city, the third represents the division, whereas the fourth allows to distinguish the place of business.

 

Example 2

Again as an example, a company operating in the energy and heavy construction sector in several provinces could decide to assign its prefixes according to the following logic:

Division

Identification

Province

Identification

Subdivision

Identification

Energy

1

Newfoundland

1

Service

1

Heavy Construction

2

Nova Scotia

2

Equipment

2

 

 

New Brunswick

3

Construction Work

3

 

 

Quebec

4

Maintenance

4

 

 

Ontario

5

 

 

 

The prefixes that would result from such a codification would offer a possibility of 40 different entities, as follows:

Entity

Prefix

Entity

Prefix

Energy - Newfoundland - Service

111

Heavy Construction - Newfoundland - Service

211

Energy - Newfoundland - Equipment

112

Heavy Construction - Newfoundland - Equipment

212

Energy - Newfoundland - Construction Work

113

Heavy Construction - Newfoundland - Construction Work

213

Energy - Newfoundland - Maintenance

114

Heavy Construction - Newfoundland - Maintenance

214

Energy - Nova Scotia - Service

121

Heavy Construction - Nova Scotia - Service

221

Energy - Nova Scotia - Equipment

122

Heavy Construction - Nova Scotia - Equipment

222

Energy - Nova Scotia - Construction Work

123

Heavy Construction - Nova Scotia - Construction Work

223

Energy - Nova Scotia - Maintenance

124

Heavy Construction - Nova Scotia - Maintenance

224

Energy - New Brunswick - Service

131

Heavy Construction - New Brunswick - Service

231

Energy - New Brunswick - Equipment

132

Heavy Construction - New Brunswick - Equipment

232

Energy - New Brunswick - Construction Work

133

Heavy Construction - New Brunswick - Construction Work

233

Energy - New Brunswick - Maintenance

134

Heavy Construction - New Brunswick - Maintenance

234

Energy - Quebec - Service

141

Heavy Construction - Quebec - Service

241

Energy - Quebec - Equipment

142

Heavy Construction - Quebec - Equipment

242

Energy - Quebec - Construction Work

143

Heavy Construction - Quebec - Construction Work

243

Energy - Quebec - Maintenance

144

Heavy Construction - Quebec - Maintenance

244

Energy - Ontario - Service

151

Heavy Construction - Ontario - Service

251

Energy - Ontario - Equipment

152

Heavy Construction - Ontario - Equipment

252

Energy - Ontario - Construction Work

153

Heavy Construction - Ontario - Construction Work

253

Energy - Ontario - Maintenance

154

Heavy Construction - Ontario - Maintenance

254

 

Of course, only entities that really exist should be created in maestro*.

 

 

While most software developers have adopted the relatively simple solution of adding a company identifier to the data, not all have designed it in the same way. As such, the two most frequent errors encountered in systems that claim to be multicompany are: 

  • An identifier is added in all of the software's files, no exception;
  • A sequential identifier is used (a number instead of a code).

In maestro*, a careful selection of the files in which the company identifier needs to be present has been made. For example, while it is logical to add it to transactions, it is not always desireable to do the same for all master files; for while it is possible for two companies or divisions to do business with completely different suppliers and customers, the reality is that we most often meet companies where this kind of data needs to be shared.

 

Intercompany Entries

When a transaction is generated in maestro*, an entity is linked to the accounting equation through the use of a prefix. By default, the amounts are charged to this same entity. However, maestro* multidimensional mode allows to specify entities linked to transactions and to generate these transations between various different entities2. Intercompany entries are accounting entries automatically generated by maestro* when an amount must be charged from one entity to the other. Indeed, the software systematically creates the adjustment through intercompany accounts receivable and intercompany accounts payable when a transaction is carried out between two entities.

Intercompany entries are not specific to purchases only. They are also carried out, for example, when the employee of a company managed in multidimensional mode works for different entities of the said company in the same pay period. If the latter is linked to a master entity, it is this entity that will carry out and process the pay cheque. However, each hour worked for another entity will be subject to an adjustment and, consequently, maestro* will generate intercompany entries.

Simplified to the extreme, the intercompany entries that would result from an expense incurred by one company but charged to another could resemble those illustrated below.

Example

In multidimensional mode, each entity has its own intercompany accounts receivable and accounts payable. For example, a company made up of four entities will have four intercompany accounts receivable and four intercompany acounts payable, therefore allowing each entity to carry out transactions between each other.

 

Using Masks

Attributing prefixes to entities in maestro* allows for all sort of ressources to be shared and displayed for all entities. However, it may be necessary to filter, select and/or limit the access, display or analysis of data to only some of them. Masks ensure that ressources can be hidden and unused in certain circumstances or for certain entities. For example, a mask could be applied to a certain supplier in order to limit its display and use to two entities only. This supplier would therefore become invisible for the other entities and could not be used in transactions generated by the latter. As the name suggests, a mask is used to mask and exclude data linked to part or all of a prefix. The use of said prefixes also allows to use masks (illustrated by an X) to combine entity data and as filters. In fact, filters can be used for several purposes in maestro*. That is the case for the generation of reports, such as project costs, accounts payable or receivable, financial statements, etc.

It is possible to add a mask to various resource types: employees, customers, suppliers, items, equipment, projects, etc. When it is possible to apply a mask in maestro*, a button appears, allowing the selection of said mask.

For example, when printing the accounting report, applying filter 1XX to the entities of the second example would result in the consolidation of all the financial activities of the Energy division. Inversely, applying filter XX2 would result in being able to view all financial activities linked to the Equipment sub-division only.

 

It is not uncommon to see various entities of a same company working on a project. Maestro*'s multidimensional approach allows to only create one project while making it possible for several or all entities to enter costs and revenues for this project. These can therefore also perform the follow up of their respective profits and losses, while allowing the management team to generate consolidated financial reports for the project as a whole. Of course, each entity may have its own budget, but allocated with a view to carrying out a joint project.

 

Taxe Remittances

Single Corporation

One of the legal obligations of incorporated businesses is to remit taxes to the government. This task proves to be quite simple, in multidimensional mode, for businesses made up of several companies, but that make up a single and unique corporation. Indeed, in intercompany exchanges, the taxes paid by one company are collected by another, but they make up the same corporation.

 

Distinct Corporations

The process is more complex for producing the reports needed to remit taxes for several separate companies with different shareholders (as is often the case for companies where maestro*'s multidimensional mode is installed). For maestro*, the value of the account receivable corresponds to the value of a sale made to a different business unit. At the end of the fiscal year, the maestro* user will have to create an accounting entry equal to a fake sale, in order to generate the taxes and eliminate the value entered in the account receivable. In return, they will have to create a purchase in the second business unit to enter the taxes. The following is an example of the accounting entries that will need to be made:

 

 

Though maestro* automatically generates intercompany transactions, it does not generate end of period entries.

 

Numbering and Counters

In multidimensional mode, the counter management requires special attention. Some customers ensure that a single company makes the payments for all companies. For others, it is necessary to make the payments and other transactions through each company (they are all responsible for their accounts payable). Usually, customers do not appreciate having a single numerical sequence for all companies. However, it is necessary to obtain unique numbers for each transaction that requires them (order counters, invoice numbers, cheque numbers, etc.). One way of doing this is to use masks and thus force the use of prefixes.

 

Though the use of multiple currencies is not specific to the multidimensional mode, the presence of multiple divisions often means that more than one currency may be used at any given time. It goes without saying that the main monnetary units used my Maestro Technologies' customers are Canadian and American currencies.

The use of more than one currency adds its own grain of complexity since maestro* must perform conversions from one currency to the other, based on the previously selected preferences. Intercompany transactions must also take into account the currencies associated with the transaction amounts since an additional one is generated to convert the amount to the appropriate currency and at the rate indicated in the Currency Management option, thereby affecting the account receivable and the account payable.

 

Consolidated Reports

In multidimensional mode and when preparing consolidated reports, it is essential to respect and follow the International Financial Reporting Standards (IFRS) norms, as well as those from the Accounting Standards Board (AcSB), used to standardize the display and presentation of financial data. Also, income cannot be accumulated.

It is the customer's responsibility to identify the incomes of a sister company (or sister division) and to substract them from the consolidated report so as to cancel out incomes and expenses that come from intercompany transactions.

 

Accounting Consolidation

Accounting consolidation consists of preparing the financial statements of a group of companies. It aggregates the accounting records of each of the companies in the group and makes restatements as if they were a single entity.

Source: https://fr.wikipedia.org/wiki/Consolidation_comptable, June 20th

 

Inventory Management in Multidimensional Mode

Another interesting feature of the multidimensional mode is the sharing of an inventory, if the latter is managed through the catalogue. Indeed, a single catalogue is used and shared between entities. The inventory's quantities and values are managed through locations and localisations, specific to each entity. When items in an entity's location are transferred to a location attached to another entity, a financial transaction is automatically generated to reflect the physical and financial change of the items. A similar transaction is also automatically generated when an item is transferred from an entity's location to another entity's project. This approach simplifies purchases between the different entities of a same company.

 

Security Management in Multidimensional Mode

In maestro*, security configurations can be applied either locally or globally. This means that security and access settings can be the same for all entities (global security) or different from one entity to the other (local security). When a security is said to be global, any changes made to its settings will be replicated in all other entities. On the contrary, if the security is locally managed, all entities will have different settings and the selected parameters may differ from one entity to the other.

To apply a specific security to certain entities of a multidimensional company, it is also possible to use a security domain. Indeed, the company can decide to limit access to specific data for certain entities, the same way it can limit access to certain options for employee groups. To do so, a security domain will have to be linked to an employee and a prefix.

 

This (applying security domains) requires the installation of an option that is not there from the outset and needs to be configured. This option ensures that each entity will have its own security parameters. A financial vice-president will be able, for example, to have access to all information, whereas the access will be restricted for the financial directors of each entity.

 

Employee Management in Multidimensional Mode

Maestro* makes it possible to limit, if necessary, the companies in which an employee works so that the employee can only be selected from the desired companies. What's more, it is also possible to select a payroll company in the employee file. This configuration prevents an employee who is called upon to work for different companies to receive a pay cheque (as well as T4 and RL-1 slips) from each of these companies.

 

Mobility in Multidimensional Mode

The various maestro*MOBILE interfaces take into account the configurations set in maestro*. As these are essentially operational functionnalities, the prefixes and divisions are taken into account, just as they are in maestro*. Whether a company is installed in multidimensional mode or not, the maestro*MOBILE user uses the app the same way. It is the operations that can be performed in maestro*MOBILE that, once transferred or completed in maestro*, generate intercompany transactions if needed. It is therefore important for employees to be linked to the appropriate company so the financial transactions linked and generated by a daily entry may be accurate.

 

Alternatives to the Single Use of the Multidimensional Mode

The Project Approach

An alternative approach to the multidimensional mode, characterized by assigning prefixes to entities, is to use the fields dedicated to the management of projects by type, category, and/or department to distinguish divisions, provinces, sub-divisions, etc. (please refer to the document concerning the Management of projects in maestro* for more information). This information is sent to the Accounting module and can eventually be used as filters to generate financial reports (view the document concerning Financial statements in maestro* for more information).

 

The disadvantage of this approach is that it is not possible to automatically generate intercompany entries when revenues or costs have to be allocated from one entity to another.

 

The Project and Divisions Approach

In order to limit the number of prefixes used (see example 2), consideration may be given to combining the use of prefixes in multidimensional mode with the use of project types, categories, and/or departments. For example, company divisions could be assigned a prefix and sub-divisions a department each.

 

This method also offers a number of possibilities for the generation of financial reports. However, it makes it impossible to consolidate project cost reports and accounts receivable or payable. Unless each entity has its own set of activities, the approach combining prefixes and projects does not allow more than one entity to work on a same project. It also goes without saying that intercompany entries cannot be generated for project types, categories, and departments.

 

REMINDER

  • Maestro* offers to corporations that own more than one company (various legal entities) and share ressources a software mode named the multidimensional mode
  • The multidimensional mode offers various advantages and features, such as the use of a single chart of accounts, a single data directory or partition number, the sharing of common resources, the possibility to generate consolidated financial reports, and functionalities adapted to the managing of multiple companies.
  • To use the multidimensional mode, a company must own more than one legal entity and have common resources which are shared between said entities.
  • The use of the multidimensional mode in maestro* relies on the use of prefixes, which are specific to each company and allow to associate transactions to the latter.
  • We call intercompany entries the account entries automatically generated by maestro* when an amount must be charged between entities.
  • Masks make sure these resources can be hidden and unnused in certain circumstances or for certain entities. The use of prefixes also allows to use masks to combine the data of different entities and act as filters.
  • Counters, the maestro* catalogue, employee management, and mestro*MOBILE have been developped to easily adapt to the multidimensional mode.
  • Security, when maestro* is used in multidimensional mode, can be managed globally, locally, or by domain.
  • The multidimensional mode is not systematically used when a company manages more than one entity; some alternatives are available and may be better suited to the customer's needs.

 

MAESTRO*'S MULTIDIMENSIONAL MODE - FOOD FOR THOUGHT

o

How many companies will use maestro*?

o

How are these companies linked?

o

Which intercompany operations need to be performed?

o

Are the performed intercompany operations taxable?

o

Are all companies, if applicable, consolidated?

o

Does each company manage its own payroll? 

o

Does each company manage its own accounts payable?

o

Does each company manage its own accounts receivable?

o

Do your companies share:

  • the same start and end of year dates
  • the same inventory
  • the same resources
  • the same general ledger account structure
  • the same employees
  • the same equipment
  • the same bank accounts
  • etc.

o

Do you have a head office, satellite offices, a warehouse, etc? 

o

Please describe your global financial structure.

o

How are your customers and suppliers coded?

o

Is your codification and classification system consistent?

o

Does access to certain information need to be restricted, for either employees and/or entities?

o
  • Are you planning on expanding the company in the near future?

    • o

    Do you plan on acquiring other companies?

     

    Last modification: June 25, 2024