Tag Archives: GL

The Power of Software Integration


ERP Software Integration
Maximize the impact of your CPM software with automatic integration to your ERP

Users of popular consumer software applications, especially mobile ones, are used to performing daily tasks such as scheduling activities on their calendars in their e-mail applications, either from their home or office computers, or most often, from their mobile devices.  In fact, many take the results of these activities for granted, not giving much thought to how data moves from one application to the other.

With a push of a button, or, more accurately, a touch of the device’s screen, your e-mail meeting invite creates an entry into your calendar with all needed details. These activities would not be possible without integrating two or more applications, either locally or in the cloud, to create a seamless workflow, with minimal user data entry, promoting accuracy and completeness of data possible only with automation.

Business software applications are no different. Their users perform daily tasks such as processing receipts of inventory into warehouses, guided by existing and approved purchase orders and suppliers’ packing lists with bar-coded bags or boxes of items that upon scanning automatically update inventory records, PO records, inventory sub-ledgers and GL control accounts. Posting a customer payment on an open invoice causes this invoice balance to be eliminated or reduced, while automatically updating the AR sub-ledger and the GL control account balance.

These automated activities are possible because of integration between the inventory and accounts receivable programs in an ERP solution and the system’s general ledger. There is minimal data entry users must perform, and with that, accuracy and completeness of data and other information improve dramatically.

CPM (corporate performance management) software is a good example where integration is important in achieving the desired results, with minimal user interaction and no data input errors.

Here, the data from the ERP or accounting software is integrated with the CPM solution and periodic account balances, or even transaction activity, in each period are automatically provided. The planning and budgeting software is integrated with the reporting or analytics solution, and both the actual and budgeted data is displayed and analyzed as soon as a financial period is closed. Gone are the days of exporting GL data to a text file that must be uploaded to the CPM solution, mapped to the solution’s databases’ various data fields, and then independently mapped to the analytics software to obtain the desired reports and formatting.

A good example of integration between popular SMB (small and medium-sized business) GLs and a CPM solution is Centage Corporation’s Link Maestro. With Link Maestro, a user can obtain all GL account balances, and even transaction activities, for many popular GLs.  The process is entirely automatic and accuracy and completeness of data is guaranteed every time the process is run.

Once the GL data is in the Budget Maestro CPM application, analysis can take place immediately using Analytics Maestro. Actual accounting data and budgeted data automatically flow to the analytics application and are displayed in the predetermined format for every accounting period. This, again, is possible with integration–two software applications, the ERP and Budget Maestro, tightly integrated by Link Maestro.

Now even SMBs can achieve that level of automation afforded by integration, previously available only to very large organizations and through lengthy and expensive customization of the company’s software. Let your computer and software do all the tedious work in an error-free environment while you spend more time analyzing the data which ultimately allows management to make timely and informed decisions.

Why CFOs Need to Adopt Financial Analytics

And why they can’t continue to do their daily work without it

RK Paleru, Executive Director of the Systems, Analytics and & Insights Group at George Washington University recently authored the article “How can CFOs adopt Financial Analytics?”.  He touched on the reality facing the finance departments of so many organizations that are not adopting new technologies and therefore still relying on spreadsheets to deliver the results that support decision making.  While these departments know that these tools are flawed, they still continue to rely upon them.

In response to Paleru’s article, a great discussion ensued on Proformative’s website.  One member commented that accounting and finance departments are so wrapped up in the close process, financial statement consolidations, financial reporting generation and compliance activities, that there is hardly enough time to devote to analytics, especially with the inadequate tools many of these organizations possess.  I tried to reinforce the notion that upper management (the CEO, CFO and certain other management team members) must have timely, accurate and complete data in order to be able to make reasonably informed business decisions.  In addition, major changes have to be made in order for management teams to be able to see and understand their company data immediately, as actual data becomes available and in conjunction with existing and updated planning, budgeting and forecasting data.

My general observation is that many existing planning and analytics software solutions do not provide CFOs the data they need.  This is due to the fact that the majority of the software solutions today cannot produce accurate and complete future period financial statements, and especially the Balance Sheet and Statement of Cash Flows.

This is why I am excited by a new generation of Planning, Budgeting and Analytics software which I call:  “SmartBudget Driven Future Period Financial Statements and Analytics”.  I’m sure this definition will be refined as this software category matures but for right now the essence of it is:

Generating future period financial statements and other reports, driven by a smart budget, prepared using built-in drivers and system pre-defined business rules, automatically consolidated across the enterprise that provides the CFO (and the CEO) with the insight into the future financial health of their organization.

Using this type of software, all the traditional potential errors and omissions are completely eliminated or greatly reduced due to the fact that no spreadsheets are employed in this process and users are never asked to provide formulas, functions, links, macros or any other programming.

The software should also perform analytics in particular areas of interest such as sales and expenditures and respond to any other custom requirements the organization might have.

Another desirable feature is the ability to “drill back” into the source GL containing the actual accounting period results.  By pulling in any required detail data from the GL (as detailed as actual transactions, if the ERP software GL is set up to post into in detail), the analyst can examine specific variances and anomalies, not visible on the summary level.  The root cause of these variances or anomalies can be investigated and any found issues can be quickly remediated.  The CFO, equipped with this information will have the opportunity to make process changes, or make timely and informed decisions.

Analytics Maestro, used in conjunction with Budget Maestro can provide:

  • Sales analytics, using both actual and budgeted data
  • Expenditure analytics
  • Future period Balance Sheet for each budget period
  • Future period Income Statement for each budget period
  • Future period Statement of Cash Flows for each budget period
  • Many other specific reports, tailored to the company’s needs

The future period financial statements can be consolidated or filtered by any entity or level in the enterprise entity hierarchy.

With this data, CFOs can have a pretty good idea of what the financial health of the company is going to look like.  They can see the predicted cash balance, receivables, inventory, payables and other liabilities.  They can easily obtain forecasted future financial ratios determine whether the company will comply with loan covenants whether or not it will be able to utilize its credit lines, whether or not it will be able to retire debt and other obligations in future periods and more.

By using a software like Budget Maestro, CFOs can have a pretty good idea of what the financial health of the company is going to look like.  A CFO can perform his or her job with peak performance when relying on intelligent data in real time.  Not relying on analytics can be a costly mistake. Luckily, there is a new technology available that can change all that.

Those Debits and Credits

A budgeting system that actually does the thinking for you

I just finished working with a client on the year-end close, right in time for their external auditor to come in and do their work.  Either my memory was failing me or this year’s close was different than past years, I couldn’t help but notice the large number of journal entries that were required in order to bring the various accounts to their proper balances at year-end.  There were adjusting entries, reversing entries, allocation entries and other miscellaneous entries.

As I was reviewing the various entries for accuracy and completeness I reminded myself that fine art of accounting is nothing more than posting the correct amounts in the correct accounting periods and of course, using the right GL accounts.  As usual in situations like this, you have to carefully prepare the entries, making sure you use your debits and credits correctly, applying them to the right GL accounts and so on.  An edit list, additional reviews, approvals and finally the actual posting usually follow this.

Those who are closely involved in this process realize how several manual controls must be set up in order to make them as effective (in reality, they can never be as effective) as automated controls (e.g., posting subsidiary ledgers to the GL, usually under full automated controls).

This reminded me how in Budget Maestro (a budgeting, planning, forecasting and business intelligence software application from Centage Corporation, www.centage.com) the results of the projected financial statements and all other reports are accurately determined by an array of system generated journal entries.

Users of Budget Maestro don’t ever need to make any entries (with the exception of optional, user made adjusting manual entries).  They don’t need to remember account numbers, they don’t need to know whether to use a debit or a credit for a particular transaction; what they experience is complete automation as the system performs all these entries in the correct budget periods, in the right amounts and using the appropriate GL accounts, period after period.

I still remember the day I first fully understood the profound impact that this software architecture and design had on the final results and why it was possible to obtain these results, especially without any user programming or formula work.

This approach to designing and implementing a budgeting, forecasting and business intelligence solution completely eliminates many of the manual internal controls that must be in place in other similar applications.

In Budget Maestro there are no formulas to deal with, no user defined functions and links; every piece of data that participates in the budget model, either entered by users or automatically calculated by the many business rules and drivers available in the system, causes the right set of journal entries to be performed in the background.

It is these automated journal entries that make all the forecasted financial statements and all other user defined reports accurate and complete, and without worrying about transactions orientation (credits vs. debits).  This is in addition to not worrying about the budget period to post to and the account numbers.

With that in mind, I think I’ll take the activities involved in running Budget Maestro over traditional journal entries any time.