Make Mergers & Acquisitions Seamless with the Right ERP System
Managing the complexities of a multinational organization is a tough job. It doesn’t matter if you are an established manufacturing company with 20 facilities worldwide undergoing geographical expansion, or a small company planning to open its first subsidiary abroad, having complete visibility over your global operations can be tricky if you don’t have the right systems in place.
Establishing a presence in a new location requires substantial investment, not to mention the ever present economic, cultural, compliance and technological barriers. Let’s look at a common scenario:
You are a distribution company based in the United States and have just acquired a company in Canada to expand your services and attract talent from a new market. The US and Canada have different currency and sales tax, as well as different federal and municipal accounting laws and business regulations to follow. Through the acquisition you adopted a new system with separate data – so where do you start when it comes to consolidating all of this data at month end? From currency conversion to inventory valuation, it would require multiple employees spending a large amount of time and resources trying to manually reconcile this data from the different sources. Even with just two locations, you’re at high risk for compliance issues related to transfer pricing, tax and other human error related mishaps. Further exacerbating this could be the strain on working capital caused to 2 inventory locations not talking to each other.
During the process of acquiring a new company and adding a new location, it’s critical to remember that:
- Regulations change from state to state, and country to country, and it’s your responsibility to ensure you meet each regulation in order to avoid costly non-compliance fines
- Sales tax is hard to manage with one location, let alone several. Trying to manually track and apply varying tax rates can and will lead to errors, errors that can cost you significantly
- Real-time reporting is essential to accurate data when factoring in multiple changing currency rates and the value of inventory so it would be wise to not rely on manual data entry for this
When companies move into international markets, their current system may not always be up to the task of handling the intricacies of accounting processes and corporate standardization. Clearly you have made this move because you want to succeed in the global arena – but in order to do that, you need to be able to make fast, accurate decisions on the fly. If you need to quickly take a look at your company’s monthly performance before running to a corporate meeting, you should be able to access a report that automatically consolidates this data and shows you how you are tracking for this month compared to the rest of the year – regardless of how many countries and languages you operate in. Thankfully, there are a lot of solutions out there that area made for automating consolidation and mitigating these errors.
Reduce Manual Processes, Decrease Strain on IT
Some organizations will have inherited another system from a previous acquisition or they have chosen to use a smaller accounting solution to connect with a larger business management system for rolling out new locations. Either way, if those systems aren’t integrated, you are spending an excessive amount of time, money and resources just to see a snapshot of your entire enterprise and report on business performance.
Here is a basic overview of what most global companies should look for in a solution to reduce manual processes and decrease the strain on IT:
- Ability to consolidate financial statements accurately without manual intervention
- One single, modern system with minimal customization to view their entire operations
- Localization capabilities (including languages) for compliance and risk management
- Easy for both IT staff and end users to learn and use
- Proven accuracy, efficiency, and visibility across financial, supply chain, and warehouse operations
- Easily deployable to grow as you acquire new companies
At the end of the day, the goal of this software is to more effectively operate as one company and more efficiently deploy working capital from a global perspective. This means that you should be able to pull a regular report, like an AR aging report, and see who owes you money and who you owe money to from all over the world – but in your own functional currency.
Make Acquisitions Seamless with Microsoft Dynamics AX
Microsoft Dynamics AX makes it easy to standardize operations, provide visibility and simplify compliance. As a robust, cloud-based business solution, Dynamics AX is designed for enterprise companies. It provides a solid technical platform that supports small and large global deployment scenarios, complex integrations, and advanced security requirements.
How does AX meet all of these areas?
Get 360 degree visibility with one end-to-end solution
Eliminating a number of systems and integrating your data across one, complete solution is essentially the only way to have all of your employees across the world using the same system. This simplifies reporting, through and through.
Standardize and automate business processes
By creating a common chart of accounts and codifying business steps, your system becomes trainable and repeatable which leads to more efficient processes and adoption. This ensures data gets entered accurately and your customers and employees receive a consistent experience, no matter where they are located.
Close the books quicker with company consolidation
Company consolidation in Dynamics AX allows you view and run reports based in the currency translations they were done in or in your functional currency. Once you’re set up in multicurrency, you can set up as many currencies as you need. You also have the option of billing your clients or vendors in their currency and running reports by region and country.
- Tax Consolidation
- Eliminations and allocations
- Accounting Compliance
- Inventory valuation
Lifecycle Services (LS) for ease of deployment in global rollouts
LCS enhances the efficiency and shortens the time it takes to implement and deploy Dynamics AX with their system guided procedures and controls. This is an improved service in AX 2016 that enables scalability to manage the entire lifecycle of the solution
Cloud-based, mobile ready
Dynamics AX is a cloud-optimized platform for both public and private deployments. Running natively on Microsoft Azure, Dynamics AX can be deployed on nearly any device with an internet connection and there is no change in user experience. This simplifies the production environments for global deployments, and reduces backup servers for disaster recovery. Windows Azure and Windows Server support scaling based on need, meaning you don’t pay for what you’re not using and adding or removing users is simple and immediate.
Stay ahead of regulatory compliance
With 36 country localizations and languages accessible in all versions later than AX 2009, local laws, accounting regulations, and languages are available out-of-the-box in Dynamics AX. This reduces your risk and liability with keeping compliant in multiple locations, and also makes it easier to implement and update your system regularly.
Microsoft Dynamics AX is also a streamlined solution that offers supply chain capabilities to support complex global financial and sourcing operations – all out of the box, with minimal customization. If you’re a manufacturing company, remember to keep this in mind when evaluating other solutions.
Expand Your Global Presence with Microsoft Dynamics AX
Whether you are undergoing geographic expansion, product line expansion, new subsidiaries or new channels, a global ERP solution needs to be flexible and scalable enough to support your expansion model and fit your business needs. Managing the complexities of an international organization with one centralized ERP solution, like Microsoft Dynamics AX, helps you streamline and standardize processes, gain visibility across your entire operations, and keep on top of changes in local regulations.
Rand Group has a team of experts with backgrounds in both ERP and accounting, that can help you best manage your international acquisition. We not only understand the tax and compliance implications from a technical standpoint, we also lived through them ourselves when we acquired our Canadian subsidiary. Let us turn our knowledge and experience into your success. We will start with a software assessment and end with a properly executed plan
– Software Delivered as Promised. No Surprises.