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Financial Reporting Software

Once in a while, (every 18-24 months or so), I get criticized – if not quite in trouble – for saying what I think. Usually it’s because I’ve criticized a piece of software and someone who’s using or implementing that software gets annoyed. They say I’m being negative and hurting the progress of their project. But saying what I think is one reason why clients stay with us year after year. They know that if they ask me a question, they’ll get a straight answer. Of course, that sometimes leads to my comments being taken out of context, and they end up annoying those who’d prefer that certain opinions not be aired. Generally, I believe that openness to a wide variety of opinions is important to progress. If people can’t express negative sentiments openly, they wind up muttering them to friends; then real issues remain unacknowledged and unresolved. That said, I...

Financial reporting can be a challenge even with an up-to-date ERP system. If you have multiple systems, the challenge is even greater. And if much of your reporting is stuck in Excel, you may wonder if you need to buy new consolidation software. Is new consolidation software the need to solve your financial reporting issues? In most cases, the answer is a very big maybe. Yes, new software is cool. New software is pretty. But it’s also expensive and often unnecessary. At Red Three, we specialize in helping our clients get the reports they need from the software they already have. While consolidation software like Hyperion certainly has its place, you may not need it. Indeed, before you invest in any business intelligence or financial reporting tool, make absolutely sure you’re maximizing the power of your current software. To help, here are seven steps to improve your financial reporting – without new software: 1) Teach...

Over the years, I’ve rewritten many financial statements. Unlike other reports, financial statements represent special challenges in that, most often, they specify particular ranges of data. Let me explain. When we build a sales report, we generally start with all the data we want and then sort and select from there. We may select all invoices and matching customer data. We may sort those invoices by region, salesperson, store, or line of business. We may allow the user to select one or several regions, salespeople or lines of business. But no matter how we sort or select, we can always run the report for everything and confirm we’re getting the full picture. Financial statements are different. With the exception of a very basic trial balance where you can select all the natural balance accounts, a financial statement is built line by line. For example, the first line may be sales – 40000-42000....

I’m living a cliché. In the 20 years I’ve lived in New York City, I’ve always had a superintendent. Which means I’ve done no more home maintenance than change a light bulb or plunge the toilet. There are only two exceptions: when we first moved in, I installed new knobs on all the kitchen cabinets. And once, to the amazement of my wife and child, I assembled a desk from Target. (But I worked on the desk during Hurricane Irene and had lots and lots of time.) Why do I mention this? Because while I acknowledge that tools such as hammers, saws and drills are perfectly useful, they aren’t worth much in my hands. Which brings me to reporting tools. Recently, I’ve been learning WebFOCUS, a reporting tool by Information Builders. One of my clients uses the tool for financial reporting. They love its report distribution abilities but dislike the complexity of...

Technology gets a bum rap when projects go bad. While it’s true that software is complex, it can be made to work. More often, it’s people – and their communication styles – that sink projects. I’ve written previously about how technology (and IT people) can fail because of lack of communication. I’ve been thinking more about this lately. We’re currently working with a client who’s moving from Lawson to Oracle EBS. We’re providing just a small portion of the services. (They have some Very Large Consulting Firms engaged.) While Oracle presents any number of technical challenges, the real problem on this project stems from communication. I won’t dive into the details (to protect the innocent and guilty). Instead, I’ll illustrate my point with a Goldilocks trio of communication styles: direct, denial and diplomacy. First, some communication styles are too hot. These are people who’re really good at what they do, but they’re...

Quick Definition: In general terms, “refactoring” means to restructure and streamline internal processes – even though you technically don’t have to because the external output still works. It’s a term borrowed from software development. In software, when you build something, you can’t always predict how your product is going to be used. So, either because you predicted wrong or things changed substantially, you wind up making adjustments to “just make it work.” And it does work. And nobody really complains. But it’s hard to understand and a mess to maintain. When you try to explain to someone how it all works, you realize it could be made much simpler. While refactoring is a technical term, you can also apply it to financial reporting. Over time, reports multiply. Organizations change. Initial setups become less optimal so adjustments are made to keep things working. But when you take a closer look at how...

So far in this series, we’ve covered the basics of exchange and revaluation and revaluation and translation as it relates to accounts and controls. In this final post on currency accounting, we’ll provide a few additional pointers to help your currency accounting run smoothly. Watch Your Rates Everything depends on having good rates in your system. To be good, a rate needs to be updated frequently and accurately. 1. Update rates frequently When you first start with multiple currencies, it’s often not a crucial part of your business. So, some businesses decide to update rates only monthly. If rates are stable, this isn’t much of an issue. If rates swing, it becomes a problem. Let’s take an example. Say ACME only sets rates once a month. They send out weekly invoices to their U.K. Customer. At the end of the month, they revalue these invoices. For the entire month, they used a rate of 1...

When we started our series on complex accounting challenges, we explained that our data consultants need to educate our clients in what we do before we can explain how we can do it for them. This is particularly true with foreign currency accounting. In Europe, it’s rare that to find a company of any significant size that doesn’t face currency issues. As a result, most European accountants have at least a basic understanding of what’s involved. In the U.S., that just isn’t the case. Given the size of our market, many companies expand extensively without ever trading internationally. And if they do trade internationally, often their trading partners use U.S. dollars. So, they operate internationally and still have no currency exposure. But that’s not always the case. And indeed, with opportunities in developing worlds often outpacing those in the U.S. domestic market, it’s happening more and more. So, in this series of blog...

Continuing our previous post on currency accounting, we’ll now move onto translation and revaluation as it relates to accounts and controls. Revaluation doesn’t just impact accounts payable and receivable. It also impacts foreign currency bank accounts and/or intercompany payables and receivables. The challenges with these accounts are often more system-based than conceptual. Most accounting systems that can handle foreign currency can track the currency and initial rate of payables and receivables. Because most systems require complete information for transactions these transactions are generally entered with complete information (you can’t print an invoice/cut a check if you don’t specify the currency correctly), revaluation is usually fairly smooth. Bank accounts can be more of a challenge. Accountants unaccustomed to working with different currencies often take short cuts when doing account reconciliations. They reconcile their financial statements, but they don’t always reconcile the foreign currency balance. Some systems have the ability to insist that currency...

As discussed in an earlier post, we’re creating a series of posts to cover some of the complex system accounting challenges we commonly run into. In this first blog post of the series, we’ll review the basics of VAT, especially as it compares to sales and use tax. When U.S. companies expand internationally, they find themselves having to meet a new set of reporting and regulatory requirements. They wonder how (and if) their enterprise software solution can meet them. But before addressing these questions, it helps to understand the requirement itself. VAT vs. Sales and Use Tax VAT (or value added tax) is different from sales and use tax. Sales/Use tax in the United States is only charged to the final consumer of the material or service involved. Wholesalers who buy in bulk do not pay sales tax nor do the retail stores that buy from them. Retail stores at the end of...