Multi-branch accounting in Skyline Nexus ERP

What multi-branch accounting is

Multi-branch accounting is the practice of recording one legal entity's transactions so that each branch, shop or site can be measured on its own while the company still produces one set of accounts. It matters because branch managers are judged on branch results, and a branch profit figure that ignores shared costs or stock movements can close a profitable site or protect a failing one.

A branch is not a separate company. It has no share capital, files no separate statutory accounts and shares the company's tax registration in most countries. That is why branch accounting is mainly a management-accounting problem: the company-level figures are fixed by double entry, and the question is how to cut them by location in a way people can trust. This guide covers the concepts first, then shows how Skyline Nexus ERP handles locations, numbering, stock, access and branch reports.

Branch, company or cost centre: choosing the right unit

Three structures are often confused. A branch is a place of business inside one legal entity. A subsidiary is a separate legal entity, with its own ledger, which a parent consolidates under IFRS 10 when it has control. A cost centre is an internal responsibility unit, such as the finance team or a warehouse, that may exist inside one branch or span several. Getting the unit right avoids years of workarounds: branches that are really separate companies need their own ledgers and consolidation, while departments do not need branch treatment.

For listed groups, branch results may also be the raw material for IFRS 8 Operating Segments, which requires segment information based on what the chief operating decision maker reviews. Even for private companies the same logic is useful: design branch reporting around the decisions managers actually make with it.

• Branch: same legal entity, same ledger, reported by location
• Subsidiary: separate legal entity and ledger, combined through consolidation
• Cost centre: responsibility unit for costs and budgets, independent of location
• Project: a time-bound piece of work tracked across accounts and locations

Why branch accounting is harder than it looks

Sales and direct costs are easy to attribute because they happen at a counter or a warehouse. The difficulty lies in everything that crosses branches. Most arguments about branch profitability come from four places, and a good system design settles each one before the first report is produced rather than after a branch manager disputes the numbers.

• Shared costs: head-office finance, IT, marketing and rent for shared premises need an allocation key
• Stock movements: goods bought by one branch and sold by another move cost from one location to the other
• Cash: one bank account often serves several branches, so branch cash balances are rarely meaningful
• Opening positions: balances brought forward from an old system usually exist only at company level
• Numbering: each branch needs its own invoice sequence so gaps can be investigated locally
• Access: staff should see and transact only for the branches they work in

Setting up branches as business locations

In Skyline Nexus ERP a branch is a business location, created under Settings, Business Locations, Add a new business location. The form records the Location Type, an optional Parent Location, whether the site is a Free Zone or Bonded (customs) location, address and contact details. An Invoice and Pricing block chooses the Invoice scheme for POS, the Invoice scheme for sale, the invoice layouts for simplified and standard invoices and the Default Selling Price Group, so two branches can price differently. Each location also lists its Payment Methods with a Default Account per method, so card and cash takings at one branch can land in that branch's own clearing or bank account.

Invoice numbering is set under Settings, Invoice Settings, Add new invoice scheme, with Name, Numbering Type (sequential or random), Prefix, Start from and Number of digits. Giving each branch its own prefix, for example DUB and CRK, produces separate sequences that can be tested for gaps branch by branch, which is exactly what an auditor asks for.

How a branch appears in the ledger

Skyline Nexus ERP treats the branch as a dimension, not as extra accounts. Every journal header carries a business location, and every journal line can carry a cost centre and a project. Automatically posted documents take the location of the source document, so a sale at the Cork branch produces a journal stamped Cork. Where a cost centre is mapped to a location, the posting resolves the cost centre from the location too. The chart of accounts stays short, one revenue account rather than one per branch, and branch results come from filtering rather than from duplicated accounts.

Manual journals are entered from New Journal Entry, where each line carries an Account and a Cost Center. Company-wide entries such as head-office allocations, accruals or year-end adjustments therefore sit at company level or on cost centres, and appear in the consolidated view. If you want head-office costs visible per branch, give each branch a cost centre and read Cost Center Analysis alongside the branch statements.

Worked example: branch results and head-office costs

An Irish retailer has two branches. Dublin sells EUR 300,000 with cost of goods sold of 180,000 and branch running costs of 60,000, so its branch contribution is 60,000. Cork sells 200,000 with cost of goods sold of 124,000 and branch costs of 48,000, a contribution of 28,000. Head office costs EUR 40,000, so company profit is 60,000 plus 28,000 minus 40,000, which is EUR 48,000.

Allocating head office by revenue share (60% and 40%) charges Dublin 24,000 and Cork 16,000, leaving Dublin at 36,000 and Cork at 12,000. Allocating by floor space, 50% each, charges 20,000 each, leaving Dublin at 40,000 and Cork at 8,000. In both cases the branches add back to 48,000: allocation moves profit between branches, never creates it. The decision rule follows: judge whether to keep a branch on its contribution before allocated costs, because closing Cork removes its 28,000 contribution while most head-office cost stays.

• Dublin contribution: 300,000 - 180,000 - 60,000 = 60,000
• Cork contribution: 200,000 - 124,000 - 48,000 = 28,000
• Company profit: 60,000 + 28,000 - 40,000 = 48,000
• Revenue-share allocation: Dublin 36,000, Cork 12,000, total 48,000
• Floor-space allocation: Dublin 40,000, Cork 8,000, total 48,000

Stock across branches

Stock is held per location in Skyline Nexus ERP, and the Inventory Control Centre reports include the Location Wise Stock Report, Stock Valuation Report, Stock Movement Report and the Category/Brand/Location Inventory Summary. Goods move between branches through Inventory Control Centre, Operations, Stock Transfers, Add Stock Transfer, which records the Date, an auto-generated Reference No., a Status of Pending, In transit or Completed, the Transfer Reason, the Carrier / Responsible Person, Location (From) and Location (To), product lines and Shipping Charges. A completed transfer can no longer be edited, which protects the record once goods have arrived.

A stock transfer is an inventory operation: it moves quantities and their cost between locations in the stock records, and it does not create a journal. The company-level inventory balance is unaffected, which is correct, because the goods never left the company. Suppose Dublin buys 200 units at EUR 15, EUR 3,000, and transfers them to Cork, which sells them. The purchase journal is stamped Dublin and the sale's cost of goods sold journal is stamped Cork, so Cork's branch profit correctly bears the EUR 3,000 cost. On a branch-filtered balance sheet, however, the inventory account shows plus 3,000 at Dublin and minus 3,000 at Cork. For branch stock value, use the Location Wise Stock Report and Stock Valuation Report, and read branch profit from the Income Statement.

Branch reports: what the filter shows

The Trial Balance, Profit and Loss and Balance Sheet under Fiscal Authority, Reports each have a Filter by Location / Branch, with All Locations (Consolidated) as the default. The filter selects journals by the location stamped on them. The Profit and Loss can also compare with the previous period or the previous year, which gives each branch manager a month-on-month or year-on-year view without spreadsheets.

Two design points shape how branch figures read. Opening balances brought in at go-live are held on the accounts at company level, so a branch trial balance shows the movements posted since go-live rather than a full branch balance sheet. The Cash Flow statement is prepared for the business as a whole, which fits the fact that cash is usually pooled. Most businesses therefore use branch reporting for the income statement and working capital, and company-level reporting for cash and funding.

Access and segregation by branch

Branch staff should not see or change other branches' transactions. Under User Management, Users, each user has Access locations: either All Locations or a list of specific locations. A user without All Locations sees and transacts only for the locations granted in the sales, purchase and stock screens. Combined with a separate invoice scheme per branch and a Default Account per payment method, this means a branch cashier's takings, invoices and stock counts stay within that branch's scope.

Keep All Locations for the finance team and the owners, who need the consolidated view, and review the list each quarter; staff who move between branches often keep old access. Our guide on roles, permissions and segregation of duties explains how location access combines with role permissions.

From branches to a group of companies

When a branch becomes a separate company, for example to enter a new country, it needs its own ledger. Skyline Nexus ERP handles that as a separate business on the platform and brings the companies together under Fiscal Authority, Consolidation. A business group has a Group Code, Base Currency, Fiscal Year End, Default Method and an Auto Eliminate option; members are added as subsidiaries or the parent company with an ownership percentage and a method (full, proportional, equity or cost). Consolidation Periods take a snapshot of each member's trial balance translated to the group currency, eliminate intercompany balances mapped under Intercompany Accounts, and produce consolidated reports.

Branches and subsidiaries can coexist: each company in the group can have its own branches, reported by location inside its own ledger, while the group view is built by consolidation. Our guides on consolidation accounting and intercompany accounting explain the eliminations in detail.