[3537]

Perfect financial accounting. No beans counters

Date:
December, 2010
Prototype:
proto$ gen VI mod 3FFECA (Londinium)
Customer:
Ulmart.ru`
Total automation of the enterprise’s financial block: from automatic import, recognition and application of payments from the client bank to auto-generation of the profit and loss statement and balance sheet. The budgeting process, treasuries, etc – all are inside the single business management meta-system. The payment processing girls, budget controllers and other financial managers are not needed any longer.
 

Data validity

The zipchain technology is implemented within the dia$par.Mirror at the level of the kernel. No one, even the programmer, is in a position to violate or bypass the balance rules (and a double-entry accounting rule is a part of them).

In solutions offered by others on the market, the double entry rule control gets deliberately turned off when the volume of transactions goes over a certain limit — otherwise, the speed at which work is done may just fall to a standstill. As a consequence, you may get somewhat predictable results in terms of the quality of reporting (and volumes of theft indissolubly linked with it).

dia$par do not suffer from this problem, which has been verified with 4,000 real-life and 18,000 pilot-test users.

Modularity

Here is how "modularity" is normally implemented in ERP systems. There are modules like "Inventory", "Finance", "CRM", "WMS", etc (in post-Soviet-era systems this is something like Warehouseman’s AWP
(Automated Work Place), Manager’s AWP, etc).

So what are all these modules about? The first thing that comes to mind is marketing.

During the peacock-feathers courting stage, one may, for instance, try to console you with the thought that
you will get the finance module when you "grow up", but first you need to purchase the warehouse module, which is just 70 "kilo euros". As a consequence, you keep paying for it module by module, but it’s too late — they gotcha already. Your initial budget for the unit did not seem so frightening.

Eventually, you may end up with something like this: the finance guys can easily change the total warehouse balances without the ACTUAL MOVEMENT OF GOODS. In other words, there have been no receipts, no expenditures, not a single goods-related transaction, yet the warehouse totals have changed in some magical way.

What do we get in terms of quality? The same thing.

With dia$par such miracles are impossible by definition. The entire reporting system is built around the concept of integrated and coordinated data, which is controlled by the core, and changes to bookkeeping records (called "accounts" in accounting terminology) can be effected solely by documents related to the movement of real values — goods or money.

Management statements put together using a single button

You can obtain your company balance sheet, profit and loss statement, and cash flow statement at any time by pressing a tiny button on your computer (or, better, poking it on your stylish iPad screen). If need be, you can have these statements put together with a drill-down to a specific document (cash-, banking-, or sales-related — anything). And you can view the entire history of changes to the document. You get an instant reply to your question as to why your consolidated shareholder reports contain the figures they contain. In putting
together your reports, the system processes hundreds of thousands of documents within seconds.

You can make changes to your accounting records only through making amendments to documentation related to real business transactions. And only in an open period. This change is instantly reflected in the figures from your adjacent departments, which leads to multiple checks of data from different angles. As a
result, your books get to reflect the real present state of affairs in the company with 100% accuracy.

For companies that work with large and extra-large databases, dia$par.Mirror has an option of conducting report calculations (by a unit concerned with the post-processing of data samples from DMBS) on separate servers, which is done for the purposes of distributing the workload around and scalability. In this case, data is read from a reserve standby server, which will take some pressure off the main database server and allow it to focus on real-time transactions.

By the way, how long does it take you to get, say, your monthly reports — after the month is closed? Around a week? That’s in a best-case scenario. But let’s be honest and admit it normally takes at least two weeks. It may take even longer than that: some shareholders may learn of the work done in the previous month only by the end of the following one.

dia$parSales Report Parameters

dia$par analytical tools allow the user to get relevant data (purchases, warehouse inventory, shipping logistics, sales, finances, warranties) without going through the trouble of intermediate aggregation (XLS files, thousands of them) and menial manual MS Excel processing (oh all those pivots!). Now you simply don’t need a team of "analysts", Excel fairies, any more. You get your data instantly and can view it in any way you like.

 
Sales Report oniPadSearch in the Sales Report

Since the management balance sheet is calculated directly within dia$par.Matrix (which basically is a type of reports), it goes without saying that the system will keep track of ALL business transactions and assets of the company, including its intangible and core assets.

 

Treasury

dia$par will provide you with a well-adjusted and time-saving process in terms of making payments. All payment requests automatically find their signers, determined by the document coordination matrix. Got a new finance guy or head of branch? A couple of clicks in the HR section, and now it’s your new employee who’s getting those payment approval requests. There’s no disruption in operational activity. Furthermore, the HR department sees to that the new staff member is automatically empowered to use the system to the degree that fits the position, while the rights of the previous staff member are revoked (or modified in case of position change).

Obviously, we’re talking here not only about requests for payment but any document within dia$par (agreements, staff payroll records, requests for staff recruitment, the budget, etc).

In most companies, the payment schedule is normally put together in Excel by girls from the Accounting department. After transiting to dia$par, you can only feel sorry for those poor creatures, since the system is designed in such a way as to cut down on manpower, all these microserfs, in every way possible. With dia$par, the payment schedule is built automatically based on current cash balances and account balances, the purchase and operating payment plan (the plan also incorporates regular payments like salary payouts), as well as forecasts for cash receipts. The treasurer either approves the payment plan suggested by the system (which is the case most of the time) or make some amendments to it. Classic work on variances.

?Cash flow statements

These statements are especially crucial to the operation of the company. To enable competent management of the company’s finances, the system can handle both forecast and actual cash flow statements, as well as plan/actual.

Forecast cash flow statements are put together based on sales and purchases plans, inclusive of the average length of the payment grace period for counterparties, the operating payment budget, and investment and loan budgets. For instance, when you introduce a new lease agreement into the system, payments on it automatically begin to be reflected in your forecast cash flow statements.

Your actual cash flow statements can be drilled down to each office within the company. To this end:

  • All receipts to accounts are, on collection, incorporated into cash documents. dia$par knows which sales-point particular account receipts belong to.
  • All non-acceptance write-offs by the machine of credit fees or interest are recorded across sales-points and cash flow statements.
  • In the event of cash receipts on consumer credits, in importing the bank statement, dia$par automatically searches for the corresponding sales document and ties the cash receipt to the sales-point. Additionally, there is functionality that allows you to obtain itemized reports from consumer lending banks.

If you have an agreement with a bank in the way of financial covenants, your financial manager can within seconds check the degree to which these covenants are fulfilled.

Sales analysis

In addition to the classic sales report, which contains your proceeds, profit, and prime cost with a breakdown into sales-points (cities, regions) and products (product categories, brands), the system provides:

 

  • Sales reports with distributed indirect expenditures. The budget item amount can be distributed proportionate to sales or proportionate to the spot occupied at the warehouse. This gives you an idea of which groups of products are really making you money.
  • Sales reports with distributed product warranty costs. If the client returns the product under a warranty and that product is put back on the shelves for sale at a reduced price, the difference between the new price and the old one is reflected in the costs of the sales office which made the initial sale.
  • Sales reports with a breakdown into payment methods. You get an analysis of the structure of your proceeds: the number of payments made with cash, debit cards, other forms of cashless payment, and payments made from a bonus balance or via consumer credits. It’s worth mentioning separately the record-keeping of gifts and discounts received via vendors" special marketing offers. If, as part of a special offer, you have, say, a 50% discount on a product at the expense of the vendor, the proceeds from the sale are registered without the discount and the debt for 50% of the product is registered with the vendor.

Budgeting

Budgeting usually is a sore subject of most Russian companies. Leastwise, it’s a process that is overly bureaucratized and, as it is stretched in time, insufficiently conceptualized in terms of operational
applicability. In most cases, the budget is drawn up retroactively, the same way it was done with the five-year plans during the Soviet era. So it’s like having a budget just because there must be one. Not having one is kind of uncool.

Meanwhile, here’s how the budgeting process is implemented with us.

In drawing up the company’s general budget, the payroll budget is automatically calculated using formula-based data from the HR department and inclusive of plans to change staff.

The rest of expenditure associated with a particular unit within the company is planned out by the head of that specific unit — based on the unit’s own budget items. The budgeting process is built using the "bottom-to-top" principle. The planning of expenditure budgets begins with the smallest business units. The budget of the next unit, which is bigger, is made up of the budgets of subordinate departments plus the unit’s own budget items. And so on all the way to the very top.

The formation of the first draft of the budget is followed by the approval process, which is linked directly with the subordination matrix used to determine the sequence of managers approving the budget.

When a matrix organizational structure is used, budget approval is done in two stages: first the heads of branches approve those branches budgets, which is followed by functional coordination. For instance, the head of logistics approves the aggregate budget for all warehouses and logistics departments within all the branches, while the head of sales approves the aggregate budget for all sales departments within all the branches, etc.

In the end, the company’s executive board approves the company’s expenditure budget.

In this case, the job of the information system is:

  1. Minimizing the amount of time it takes to draw up the budget. The system offers its own first draft based on statistics and expected staff changes. The manager just needs to make a few manual corrections.

  2. Making the budget coordinating process as transparent and SPEEDY as possible. One can always see clearly which manager is holding the coordination process up.

Managers at any level involved in the budgeting process can choose not to approve the budget offered by the system and can make some changes to it in respect of the relevant budget items. An aggregate budget at this hierarchy level goes on a decomposition trip along the corporate tree in the reverse direction, "top-to-bottom".

Consequently, after the company’s aggregate budget has been approved, your control mechanism kicks into gear. There will be no single request for payment put together if there is an excess. In that case, you’ll have to coordinate the budget correction document. Sounds like a pain in the neck to you? Well, it is. But this is the only way you can train your managers to plan your company’s resources responsibly.

Yet, if the client wishes, such control can be less stringent. Once the limit has been exceeded, the system does let you post documents but generates a number of text message/email alerts in line with business logic.

In addition, the system allows you to keep records for individual projects undertaken by the company. For instance, if you’re opening a new store, you can set up a budget for the project that you will use to control all
your project agreements and payment requests. Reports on all payments and expenditures associated with the project are at your fingertips at any time.

A few words on bookkeeping

In the world of judiciously organized businesses, the Accounting
Department is a strictly service unit which generates reports for fiscal agencies.

It is in this paradigm and in close partnership with local bookkeeping software that the official bookkeeping unit is implemented in dia$par.

This was a general insight on how financial accounting is implemented dia$par.

Being inside dia$par. Some stories
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