Tally Prime for Service Industry

Service sector is the most diverse Industry of all. Mainly because the business process of every business from the service sector is different. For example, there are a few businesses that do not involve the transfer of ownership of any product but have purely only services like educational services while some businesses may involve products like the automobile service industry that also involve the transfer of ownership of spare parts.

Tally Prime is equally diverse and can accommodate all types of unique accounting and business management requirements. Some of the unique functional requirements of a service industry and its corresponding fulfillment in Tally is explained below -

How to track location wise/product wise fixed assets including quantitative details

Some businesses in the service sector do not sell their products but rent it out to their clients. In such scenarios, tracking the fixed assets purchased as per these rented out finished products becomes a complicated task. As these fixed assets cannot be shown in the P&L account sometimes. One way of working through this is to use the inventory part of Tally Prime to create stocks, fixed asset ledgers, finished product location ledgers and also the godown ledgers. Create normal purchase entries with details about the (fixed assets) stock involved, expense, godown location and the finished product wise ledger. While creating the finished product ledger go to ‘More details’ and set ‘inventory values are affected’ to ‘Yes’. This allows you to check the complete detailed report in the stock summary report of Tally prime. In order to not show the amount in Profit and Loss report you can press F11 to open configuration and set ‘Integrate accounts with Inventory’ to ‘No’. This will prevent your entries to show in the P&L report and Balance sheet.

Alternatively, in case you want to integrate your inventory and accounts, you can go to the fixed asset stock and alter it by going to the ‘More Details’ and select ‘Costing method’ make it ‘Zero Cost’.

Tracking Profitability for different Business Verticals

In service industry, a business may have different business verticals for which they may want to check the profitability as per each business verticals. Tally Prime helps you in the entry making as well as detailed report generation here’s how -

To track business vertical wise profitability, you can use the cost centre feature of Tally Prime. You must create income and expense ledgers under the sales account group. While creating these two ledgers, go to more details and set ‘Cost Centre Applicability’ to ‘Yes’. This will open the cost centre allocation window while you create any sales or purchase voucher entries. When the cost centre allocation window opens up, select the cost centre (business vertical) for which the transaction was made and save the entry.

To check the business vertical performance, Tally shows you detailed reports in the Cost centre summary report and the Cost Centre Breakup report.

To check these reports, go to Gateway of Tally screen - Display More Reports - Statement of Accounts - Cost Centre - Cost Centre Summary or Cost Centre Breakup.

Tracking profitability Business Vertical-wise, Location-wise and Business Partner-wise

Some customers may want to check profitability from multiple dimensions. Such customers can use the cost centre category and cost centre to track these multiple factors. Here’s how -

In ‘Gateway to Tally Screen’ go to ‘Create’ and click on ‘Cost Centre Category’. Now you will see a pop-up asking if you want to create new category or alter the existing category. Click on ‘Create new’. Now type the cost centre category name e.g. Location, Business verticals, and Business partners.. And set ‘Allocate Revenue Items’ to ‘Yes’.

Next go to Cost Centre and create new cost centres. Set the primary category to any of the above said three and then add the different cost centres under the appropriate cost centre category.. Now create entries and allocate the applicable cost centre category and cost centre. You can also add multiple cost centre categories and cost centres.

To check the profitability, you can got to ‘Gateway of Tally - Statement of Accounts - Cost Centre - Category Summary.

Track Project-wise Profitability and Inventory together

Some businesses have contract based business and may have to evaluate their performance as per different projects and may also have to track inventory. Such customers can keep a track of these factors by creating multiple cost centres as the multiple projects handled and while creating cost centres, go to ‘More details’ and set ‘Job Costing Details’ to ‘Yes’

Create location/godown with the same name as project name or different name as required. Go to ‘more details’ and go to ‘Job Costing Details’ and ‘Set Job / project for job costing’ to the same project name and save it.

While creating an accounting entry select the cost centre associated and while creating inventory entry select the Location/godown.

To check the reports you can go to ‘Gateway of Tally’ and select ‘ Display more reports’ - ‘Statement of Inventory’ - ‘Job work Analysis’ Select any one the projects and you will see all the details associated and the entries made.

In this way you can use Cost Centre and Location'/Godown for tracking profitability in Tally for various different dimensions in a business. If you want something more exclusively made for business verticals you can get a business vertical module in Tally.