Our second post in November on differences between GP and BC from a finance perspective is great for GP users to read, but also great for every current or wannabe accounting, finance or administrative user of Business Central.
Very simply put – Posting Groups provide a map from the transaction to the accounts that will be used when posting to the general ledger, so the user doesn’t have to.
Posting Groups and Master Data
Posting Groups are assigned to transactions when master data is selected to be used in a transaction such as a customer or an item. When the master data is assigned, it defaults a posting group to the transaction. The accounts to be used in the transaction because of the posting group selected, cannot be modified at the transaction level.
Examples of Master Data with some of their posting groups
- Customer – General Business Posting Group, Customer Posting Group
- Vendor – General Business Posting Group, Vendor Posting Group
- Item – General Product Posting Group, Inventory Posting Group
- Bank – Bank Account Posting Group
- Fixed Assets – Fixed Asset Posting Group
- Resources – General Product Posting Group
Defaulting the default Posting Group
To further automate the process of determining what GL accounts will be used to post a transaction, Customer, Vendor, and Item templates can be used. These templates become incorporated into the process of creating new records in BC. For example, when a user selects to create a new customer in BC, they can be presented with a list of customer “types.” These “types” are a list of templates that include default information to populate the record upon creation. This template can include Posting Groups. This not only allows for more consistent master data setup, but one more layer of control and one more layer removed from the everyday user making decisions related to how the use of the record will impact what posts to the general ledger.
Posting a sales transaction
Without getting into too much detail, let me explain where the GL accounts used in a sales transaction come from without ever directly selecting a GL account on the sales transaction. In our example, we are selling a product – a widget. That widget is represented as an inventory item in BC through an item Card. We are selling our widget to a customer. That customer is represented in BC through a Customer Card.
When we ship and invoice the sale of our product to our customer, we need to relieve inventory, post the cost of goods sold, record a sale and the receivable amount. To get the general ledger accounts to use for this transaction, all the user needs to do is select the customer and the item, then post the shipment and invoice. How is this all that needs to be done?
General Ledger Accounts used in transactions
Once the user selects the customer and item on the transaction, the accounts to use in posting are determined by the Inventory Posting Group, Customer Posting Group, and General Posting Setup. General Posting Setup is a combination of the General Business Posting Group (who) and General Product Posting Group (what) and determines the correct accounts to use.
The Inventory Posting Group and General Product Posting Group assigned to each item are used to determine the Inventory Account and the Cost of Goods sold account. The Customer Posting Group and General Business Posting Group assigned to the customer are used to determine the Accounts Receivable account and the Revenue account.
When it is a purchase transaction, the only difference is instead of revenue and receivable, the vendor determines expense and payable accounts.
Why change a defaulted posting group on a transaction?
Accounts Receivable Account
You may need to post the receivable for a specific invoice to an AR account that is different from what you normally use for a customer. This is something you can change on the order or invoice.
For example, this one sale will be given extended payment terms, and you would like to see this receivable balance in a different receivables account like “long term receivables”. To make this change, on the sales transaction, the user must select a different Customer Posting Group that has the required receivables account assigned.
Allowing users to select different Customer Posting Group must be “turned on” and set up to work properly. Allow Multiple Posting Groups must first be enabled in Sales & Receivable Setup and then on the Customer Card. This same functionality is available for Vendor Posting Group and enabled in Purchase & Payables Setup and the Vendor Card.
Expense or COGS sold account
You are purchasing an item for use by your own organization that is normally sold. When this happens, it is unknown to purchasing if this item is to be expensed or will become a fixed asset. You would like to post the purchase expense to a clearing account instead of the purchase account normally used for this item.
To make this possible, set up a General Product Posting Group (GPPG) for internal purchases, making it easy to identify. Maybe INTERNAL? Define the GL Account to use in General Posting Setup. You may need to personalize purchase order or invoice by adding GPPG to the lines. This field is not included on the lines out-of-the-box. Instruct the user to select GPPG INTERNAL for any internal purchase that is unknown if to expense or depreciate.
What do all these scenarios have in common?
- When it comes to deciding what accounts will be used to post a transaction in BC, Posting Groups provide the map from transaction to posting.
- Users do not select GL Accounts in transactions where customers, vendors, items, resources, or fixed assets are used.
- Posting Groups and the accounts they use are set up and maintained by someone in accounting or finance. Purchasing, sales, production, job and service transactions can be entered by users without regard to how the transaction will be posted to the general ledger.
From a finance perspective
By replacing the use of GL Accounts in purchase and sales transactions with items or resources, and by using templates when creating new master data records, the decision over what GL accounts to use when posting sales and purchase related transactions is removed from the users control.
I hope that this post helps you to understand how Posting Groups support the control activities your organization may need to have in place to ensure financial transactions are recorded and reported correctly. Your auditors may just love you for it!
For a link about this topic and more related to GP vs. BC go to
