A nonprofit finance lead we've been working with came into a chart of accounts review last week a little frustrated with her own first draft. She'd built out a detailed account list, then started second-guessing it once she saw how dimensions worked in Business Central. Her instinct was right, and it's the same instinct that trips up a lot of teams moving off older accounting systems.
The question underneath all of it: when you want to see spending broken out by program, by location, or by grant, do you create more accounts, or do you use dimensions? Getting this right early saves you from a chart of accounts that balloons into hundreds of near-duplicate lines.
The trap: one account per breakdown
In a lot of older systems, the only way to slice reporting is to add accounts. Want to see office supplies for one program versus another? You end up with "Supplies - Program A," "Supplies - Program B," and so on. Multiply that across every expense category and every program, and the account list gets unmanageable fast.
Business Central handles this differently. You keep one account (say, Supplies), and you attach dimensions to the transaction that tell you which program, location, or grant it belongs to. The account answers "what kind of expense," and the dimension answers "for what."
You keep the account general. The dimension carries the detail.
A simple rule for deciding
Here's the working rule we used on the call. If the only reason you're tempted to split an account is to report on it by program, location, service line, or funding source, that's a dimension, not a new account. If it's a genuinely different type of transaction with a different accounting treatment, that's an account.
So food and refreshments stays one expense account, and a dimension tells you whether it was for a community engagement event or something else. Supplies stays one account, and a dimension flags which department consumed it. The finance lead had originally buried these details in the account names, and pulling them out into dimensions cleaned up the whole structure.
Finalize the chart of accounts before you design dimensions. Dimensions layer on top, so if the account structure keeps shifting, the dimension setup shifts with it.
How dimensions get organized
Dimensions in Business Central aren't just flat lists. Each dimension (like Division or Location) holds dimension values, and those values can be organized with headings and totals so your reports roll up cleanly.
For this nonprofit, Coordinated Services became a dimension. Under it, values like Chore, Transportation, and Accessibility. Some of those need to break down further (Chore splits into one-time, ongoing, and transitional), and some don't (CS Support stays as one value). You mark a value as a heading or a begin-total when it's just a grouping, and as standard (postable) when transactions actually land there. Set up that way, a report on Chore sums its sub-values automatically, and Coordinated Services sums everything beneath it.
- Division, with values like Coordinated Services and Community Engagement
- Location, with values like central office, north, and south
- Development, for grants a donation or expense gets applied to
- Project and grant funding source, for tracking restricted money
Mandatory, default, or optional per account
Once the dimensions exist, you decide how each one behaves on each account. Business Central gives you value-posting options on the account's dimension setup:
| Setting | What it does |
|---|---|
| Code Mandatory | The user must pick a dimension value every time they post to that account |
| Same Code | One specific value flows automatically, and the user can't change it |
| No Code | No dimension required for that account |
This is where judgment matters. Making everything Code Mandatory feels thorough, but it means the system stops and asks for a value on every single transaction, including things like customer receipts where the detail may not add much. The usual approach is to concentrate dimensions on the income statement (income and expense accounts) and keep them off control accounts, so day-to-day posting stays smooth.
Where this tends to land
For a nonprofit especially, this pays off at reporting time. When you need to show a funder how a grant was spent, or show the board results by program and location, the data is already tagged. You're not rebuilding it from account names or exporting to a spreadsheet to re-sort.
The sequence is worth repeating: settle the chart of accounts first, then decide which dimensions each account needs and whether they're mandatory or defaulted. Rushing dimensions before the accounts are stable just means redoing the work.
If you're staring at a chart of accounts that keeps growing because it's the only way you can see the numbers you care about, that's usually a sign dimensions can carry that load instead. We're happy to walk through your structure and figure out what should be an account and what should be a dimension. Reach out through our contact form or give us a call.