Why not look forward instead of back? Intercompany Accounting in Dynamics AX

Adrian Blake, Head of Finance Consultants, explains how you can simplify your accountants’ job and allow them to help your business move forward with Dynamics AX.

Are you a UK based group with multiple subsidiaries based beyond the shores of the United Kingdom? How do you collate, reconcile, and validate those numbers? Typically not easily, but would you like to click a button and see the numbers consolidated and validated before your very eyes, with discrepancies easily highlighted? Well read on…

Times are not easy for any Group, just look at how you recharge a single purchase invoice between subsidiaries. It will start off with a chain of emails between accountants, a few phone calls, a debate on the expense and analysis codes, and end with 2 sets of manual journals in 2 different systems at 2 different values.

Why end there? Look at the entertainment of the month end intercompany reconciliation and consolidation. Your Group accountants will be ringing all the subsidiaries asking for their accounts, then when you get them asking for continuous explanations, and then when you get the explanations you have to reconcile the intercompany accounts. Not to mention the local GAAP differences, different Chart of Accounts, different exchange rates, different languages, and different cultures. All of this is on the critical path of producing the board pack at the end of each month.

Of course, nothing goes wrong… I would wager you have accountants who are pulling their hair out reconciling and looking backwards when they want to be adding benefit to the business by looking forward.

Well life can be made more fun with a modern Enterprise Resource Planning, ERP, system like Dynamics AX. Here at HSO we have been busy for the last 15 years migrating disparate multi-national companies on to a single platform.

First we create a core (at HSO we call it a "Kernel") AX system that supports the common data and processes throughout the group (e.g. product codes, common report groupings, group exchange rates, group chart of accounts, group and subsidiary management accounts packs). Then we rollout the Kernel to each country, creating a new company in AX with all the fully supported Microsoft local statutory requirements. Microsoft supports the statutory requirements, in 24 countries and counting, so you don't have to worry about tax rule changes giving your Finance and IT teams a migraine.

Once 2 countries are on AX you can start utilising all the intercompany trading functionality. This allows you to automatically create matching intercompany PO's and SO's in 2 countries all using the same transfer prices, quantities, charges, currency codes, and exchange rates. In the ledgers both countries' intercompany debtors/creditors are all kept up to date and in sync. So no more duplication of keying and problems with reconciling at the end of each month.

Group can also start using intercompany functionality to post recharges in each subsidiary's accounts, again all using the same exchange rates and currency amounts in both sets of books. But we haven't lost control - by using the AX workflow engine we can wait for approval from the source and destination countries before posting any recharge simultaneously in to both books.

Why spend the money on a consolidation tool like Hyperion when AX can do it for you? A single click automatically translates the subsidiaries' accounts and performs eliminations - pulling all your Group numbers in to 1 easy place to report from.

Finishing everything off is the accountant friendly Management Reporter tool that produces your accounts packs for Group and subsidiaries. From each report you can drill down from consolidated numbers to each individual invoice in the source country. You can even add control totals in to the reports to highlight where the numbers don't reconcile. Any GAAP adjustments are easily posted in to their own distinct AX Posting Layers and all reports can point at any of the Layers. In my experience this has been a blessing for Group Finance Officers who now have full visibility of verified numbers.

So why not get moving and allow your accountants to be helping the business move forward rather than constantly reconciling last month's figures - let AX do it for you! 



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