Multiple ERP Systems: 5 common pitfalls to avoid
The challenge of using multiple ERP systems in your group
Whether it is due to mergers, acquisitions, or local regulatory demands - many organizations are using multiple ERP systems or accounting systems today. But whatever the reason, it is essential to ensure that it doesn't challenge the parent company to create timely, consolidated statutory financial statements. January 26th at 10.00 GMT, we are live at a webinar, where we discuss how you can manage your consolidation in the easiest way possible when your group uses multiple ERP systems. From our experience, there are five different pitfalls for your group accounting when you use numerous ERP systems.
#1 DATA ACCURACY
To know your data is one of the most significant advantages you have in this digital age. However, one challenge that can minimize this advantage in consolidation and group accounting is time lost collecting data from multiple ERP systems. If your team loses valuable time translating data to fit the parent company, you will not have time to analyze the data.
It is common for many companies to complete the consolidation process with the use of a complex series of spreadsheets presenting additional challenges such as:
- Data safety due to sharing across the organization
- Personalized excel templates for managers at varying levels and across country borders.
- Constant delay in collecting and validating data.
- Human errors: you know it, and I know it - with manual handling of data, there is always the risk of errors.
#2 TIMELY RESULTS
Delivering data in time is a constant challenge. But it becomes an even more significant challenge with multiple ERP systems. Since collecting and validating data can take so long, results rarely are current enough for agile business control. Also, many companies who share ERP systems have the opportunity to analyze every subsidiary for trends, both on profit and loss, early in the process. This delay often arises when sharing data manually back and forth. For example, if a number doesn't add up - it has to be sent back to the subsidiary, which then tracks the error and validates their new information before sending it back through a new Spreadsheet. And so, the long journey begins towards an untimely result, where the management team feels more reactive than proactive.
Are you confident that your resources are fully optimized? We can probably agree that the finance department's key people can use their time better than chasing numbers through multiple systems. For example, on performing higher-value activities like analyzing business insights. Instead, the case of time lost on compiling data across multiple ERP systems is a common occurrence that affects your best resources and delays the organization. So if there is one area where you should not lose your competitive edge, it is on an askew use of your most valuable employees.
#4 LACK OF INTEGRATIONS
We experience time and again that significant errors arise when systems do not integrate well. Lack of system integration is one of the most problematic pitfalls and will influence almost all the other challenges mentioned here.
As you separate financial statements from subsidiaries, mergers, and acquisitions, which all contain foreign currency translations, and intercompany transactions - the challenge of using multiple ERP systems truly comes to light. The consolidation process is complex, no matter country or region, prone to constant error-checking. And when it involves insecurities about the number of validations across the group and its subsidiaries, it only escalates the complexity. The reality is that there is no way around data integration if you want to stay relevant as a finance professional.
However, multiple ERP solutions don't always have to be viewed as a hindrance to effectiveness, optimization, and business agility when they all integrate into the same system. E.g., cloud-based software enables you to integrate your systems quickly. In groups with subsidiaries in several countries and various ERP systems, using one software to standardize and automate the consolidation ensures everyone in your team, across borders, uses the same methodology in the review or preparation.
#5 MAPPING OF LOCAL ACCOUNTS
The last pitfall to avoid is the trouble with local charts of accounts and the lack of proper mapping. Commonly, the local charts of accounts do not match the requirements of the consolidated financial numbers in the parent company. Very simple - because we have different statutory requirements across borders. But the difference in requirements can also influence the wording of dimensions. Therefore, it is essential always to ensure that your mapping is complete and standardized before starting the consolidation process. Precisely this key point we will go over in our webinar, where we narrow in on:
- The trouble with the local Chart of Accounts
- The accounting principles and structure of the parent company
- Handling Group Data
Join us Wednesday, January 26th, at 10 am (9 CET) and learn more about how you can ease the challenge of handling multiple ERP systems across the group.
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