Divisional Structures

This article describes how to use branches to represent divisions, business lines, regions and stores inside a Model Reef model.

You will learn:

• How to choose the right level of divisional detail.

• How to structure branches under an entity.

• How to reuse structures for multiple divisions or locations.

• How to keep divisional reporting and consolidation clean.

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What counts as a division

A division in Model Reef can be any logical unit you want to see separately, for example:

• Product lines (Software, Services, Hardware).

• Channels (Online, Retail, Wholesale).

• Regions (ANZ, UK, Europe, North America).

• Stores, clinics, venues or branches.

• Business segments (SME, Enterprise, Consumer).

Divisions are distinct from legal entities. You can have multiple divisions inside one entity branch.

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Structuring divisions under an entity

A common pattern within an entity branch is:

• Entity A

  • Division 1

  • Division 2

  • Division 3

or, for locations:

• Entity A

  • Region North

    • Store 1

    • Store 2

  • Region South

    • Store 3

    • Store 4

Each division or store branch holds its own revenue, cost and other variables.

The entity branch then shows:

• Its own head office or shared costs.

• Plus the sum of all divisions and locations beneath it.

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Reusing divisional templates

1

Build a template branch

Create one template branch containing common variables such as revenue, COGS, rent, staff, marketing, etc., along with default drivers, timing settings, notes and tags.

2

Duplicate the template

Duplicate this branch for each new division or location.

3

Adjust per-division inputs

Change only the inputs that differ (volumes, prices, local costs).

This pattern gives you consistent structure across all divisions and reduces modelling time and errors.

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Allocating shared costs to divisions

There are several ways to handle shared costs such as head office expenses.

1

Keep shared costs at the parent entity branch

• Simplest approach.

• Divisional branches show direct costs only.

• Entity and group level reports show total profitability including shared costs.

2

Allocate shared costs to divisions with drivers

• Use drivers such as revenue share, headcount or floorspace to allocate costs.

• Create allocation variables per division that reference parent level cost drivers.

• Optionally keep both allocated and unallocated views using categories and custom reports.

3

Hybrid approach

• Allocate only certain shared costs (for example sales and marketing).

• Keep others (for example corporate overheads) at the parent level.

Choose the method that best matches how management thinks about divisional performance.

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Divisional reporting

With divisional branches in place you can:

• Run P&L, Balance Sheet and Cashflow statements per division or region.

• Build dashboards showing revenue, margin and cash contribution by division.

• Compare divisions side by side using charts or custom reports.

• Aggregate divisions into higher level segments using intermediate parent branches.

Because each branch has full statements, you can analyse both top line and capital intensity at each divisional level.

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Avoiding over segmentation

It can be tempting to model every minor unit as a branch. This often leads to:

• Unnecessary complexity.

• Harder maintenance.

• Slower decision making.

Guidelines:

• Use branches for units where separate P&L or strategy decisions are made.

• For smaller slices, use categories, tags, or variables rather than new branches.

• Start with a small number of divisions and add more only if there is a clear decision making need.

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Related articles

• Multi-Channel Revenue Forecasting

• Build a Top Down Forecast

• Attachments

• Entering Delays