Why we chose a set or pre-defined Chart of Account

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Doug Levin
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One of the many questions we get is why we didn't allow 100% changes to the chart of accounts, and it's a good one.

There were three primary benefits:

  • The yellow categorization engine requires a set chart of accounts (it can never categorize to an account you create)
  • It allows for faster setup for new users
  • It also allows for consistency between companies for users like bookkeepers or entrepreneurs who work in many.

To help make this work Cheqbook allows the creation of up to 100 personalized accounts, and you can also group any of them (set or user created) into subgroups for subtotals in your reporting.

Yes, there are disadvantages to this approach:

  • You cannot rename the existing accounts (or the yellow engine won't know what it's supposed to be).
  • You cannot turn off the existing accounts (or the yellow engine may categorize to a closed account).
  • The number of personalized accounts you can create is limited to 100 (originally this was 10, then 20, but now it's set at 100.  This discourages the abandonment of the set accounts as well as keep financial reports manageable since every 40 or so accounts adds another page to a balance sheet or P&L).

Despite these limitations we ultimately decided that it was good to be different, since most other software has abandoned the set chart of accounts approach and we believe it does have great value for many users.

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3 Comments

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  • 0
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    Douglas Martz

    Yellow is only good for the first time a transaction is recieved, if a user is using the system correctly.  most all businesses use the same vendors over and over, with similar transactions, so after one or two weeks most all transactions should be coming in blue if a user cares about his proper books,. so as a trade off to do this (not allow manipulation of current assets) or and not allow the inability to have more than 100 custom accounts because it minimizes the effectiveness of "yellow" is, in my opinion, a weak reasoning to not allow 250 or more custom accounts that would not respond to yellow.

    Edited by Douglas Martz
  • 0
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    Doug Levin

    Yes, you are correct.  As you categorize transactions the blue engine learns and takes over. 

    However for new users and new vendors the yellow engine gives them a solid preliminary answer.

    Also, this gets into the issue of how varied our users "keep" their books.  We have users that are religious about going all green (eventually "reviewing" everything) and others at the other extreme that only categorize their reds.  

    Plus 250 custom accounts with data would turn a financial statement into an 8 page monster.  

    At the time we settled on 100 it was still early before launch during testing, when it possible to change.  Now it would be very very challenging.  

  • 0
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    Emily Willix

    I have added some custom accounts to my chart of accounts (for instance, under Income, I have added "Grants and Awards.") However, they don't seem to function! I can't seem to categorize any transaction this way. I start typing the name of this account, and it simply doesn't appear in the drop-down. What am I doing wrong?

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