We recently implemented Microsoft Dynamics 365 Finance and Microsoft Dynamics 365 Supply Chain Management for the largest land-based salmon aquaculture farm in the world across three countries, USA, Denmark, and Norway. The implementation included full Financials as well as Operations (Warehouse Management, Asset Management, Production Control, etc.) and required our team to be onsite working with the client to ensure success. Today, I would like to focus on the core financial requirements as the basic premise of an Enterprise Resource Planning (ERP) to provide stakeholders with accurate, consolidated financials across their companies.
Although there are many aspects to a successful multi-entity multi-national implementation, there are a few key requirements that must be met at the start of any implementation of an ERP:
- Do we have the localizations for each country we are working on within the solution?
- Are we consolidating financials across entities? If so, are we sharing our chart of accounts?
- Do we have a strong multi-currency engine that can manage account (Cash/Bank, AP, AR) revaluations for accurate financials?
1. Do we have the localizations for each country we are working on within the solution?
A localization is a set of country-specific requirements that a client must meet to operate legally and efficiently within a said country. Examples of this are tax reporting requirements, such as integrating with the SKAT in Denmark and Norway. Reporting includes producing the proper VAT reports as well as electronically incorporating with tax authorities. Additionally, a localization may have country-specific reporting requirements with regards to vendors and customers, among others. Finally, there are language requirements, such as being able to switch the language of the ERP to meet your end-users local needs.
Although country-specific localizations are not required, they are recommended as they will simplify reporting requirements, reduce potential errors, and allow your team to work on more value-added activities.
2. Are we consolidating financials across entities? If so, are we sharing our chart of accounts?
One of the strengths of Microsoft Dynamics 365 Finance is the ability to share chart of accounts across entities, that facilities both reporting and minimizes errors due to unavailable accounts for other companies. Using Account Chart Structure, we can further define which legal entities will use which accounts in the Global Chart of Accounts, further simplifying finance and day-to-day accounting tasks.
I cannot underscore how important this is for our client. By sharing one (1) chart of accounts, they can utilize a Shared Services model where accounting and finance tasks might be performed by one team at one location, in this case, the US team. Shared Services allows the other legal entities to focus on generating revenue without having to manage a cost center and having the additional added benefit of reducing overhead, thus minimizing costs allocated to each entity.
Some countries require the use of a statutory chart of accounts. For example, Mexico and Brazil, in which the state dictates which accounts must be used in their internal ERP (for auditing purposes) as well as the tax reporting.
Microsoft Dynamics 365 Finance manages this seamlessly using consolidation accounts, so even if you’re required to use statutory accounts, you are still able to roll-up and generate consolidated financials easily.
3. Do we have a strong multi-currency engine that can manage account (Cash/Bank, AP, AR) revaluations for accurate financials?
Many organizations both sell and buy in a currency other than their local currency. Additionally, they might have bank accounts in different currencies that both fund and receive cash from vendors and customers.
Due to the global nature of our client’s operations, they needed to be able to integrate with an exchange rate provider to populate exchange rates daily. Proper exchange rates allow our client to revalue transactions at month-end for accurate reporting purposes. Thanks to a simple but robust revaluation system in Microsoft Dynamics 365 Finance, our client was able to speed up their month-end closing procedures. Utilizing the Business Process functionality, we were able to set up a month-end procedure and routines that our client could follow and execute, minimizing month-end close times and speeding up reporting to stakeholders. These are, by far, not a complete list of requirements needed for a successful implementation. Still, they are important to take into account when choosing a solution as well as a Consulting Partner to ensure they understand your companies needs and have the expertise and experience to deliver an end-to-end solution for your organization.
If you want to learn more about the benefits the aquaculture industry can obtain with Microsoft Dynamics 365, please download our case study on Atlantic Sapphire’s implementation
And if you want to learn how the solution applies to your business’ specific needs, please contact us