Accounting management presents numerous challenges, and managing the closing process is not always easy or quick, especially because it deals with various documents, data, and information, often generated from other departments, in addition to hours spent tracking down missing information and spreadsheet calculations that need to be manually entered into the accounting system, increasing the potential for errors due to human failure.
However, for organizations with multiple subsidiaries, closing the accounting books is even more complex, especially if they operate in several countries.
As companies grow, it is common for them to acquire other businesses as a way to enter new markets or diversify revenue streams.
Throughout this expansion, an organization ends up using several different ERP and accounting systems simultaneously. Although each has its own individual functionality, these systems rarely integrate with each other. This makes data collection and standardization across the organization more difficult.
The accounting area plays a crucial role in the financial management of companies, providing important information for strategic decision-making and the planning of actions in the short, medium, and long term.
Therefore, the lack of a common chart of accounts is another obstacle that must be overcome to produce consolidated financial reports. This means that each transaction of each subsidiary must be reviewed by accounting before being posted to ensure that the correct account codes are used. However, this rarely happens due to a lack of resources in an enterprise management system, as well as the pressure to close the books quickly.
In the case of a multinational company, there will also be different accounting standards and tax regulations to be addressed, as well as exchange rates to be consulted so that transactions are converted into the corporate base currency for reporting purposes. And since revenue recognition, depreciation, and amortization rules vary from country to country, the revenue schedule and expense schedules also need to be adjusted for corporate reporting.
While it is essential that subsidiaries operating in different countries comply with local and federal regulations, ideally they should also follow corporate accounting standards and use the same chart of accounts for consistency and easier consolidation. Replacing the miscellany of different sIntegrating ERP and accounting systems into a single solution is a first step toward achieving that goal.
The accounting department should not be isolated from other departments within the company. Therefore, the Oracle NetSuite ERP system is fundamental for integration with other departments, allowing for the exchange of complete and accurate data to facilitate decision-making.
The Oracle NetSuite ERP management system was designed to meet the unique accounting demands of various companies. Among its main features are:
– Shared general accounting with a standardized chart of accounts and the ability to create a customized chart of accounts at the regional, country, or subsidiary level.
Automatic currency conversion using updated exchange rates with simultaneous transaction posting in the local base currency.
– Support for various accounting standards and tax rules with the ability to apply multiple accounting treatments to a single transaction.
Consolidation without the need to manually reclassify or adjust individual transactions.
– Real-time access for authorized users to subsidiary financial data down to the transaction level.
Oracle NetSuite's multi-book accounting system allows finance and accounting professionals to create multiple sets of books with different rules to meet a variety of financial, tax, and administrative needs.
Using Oracle NetSuite's multi-book accounting, the company can create a specific IFRS (International Financial Reporting Standards) ledger with rules that automatically post transactions occurring through the European subsidiary to both it and the primary ledger that follows US GAAP (American accounting principles).
Revenue management rules vary in different patterns; separate ledgers can also be created with different revenue recognition schedules. Where rules differ, revenue may be recorded in different amounts or at different times, depending on the requirements. Ledger-specific accounting accounts and depreciation and amortization expense schedules for fixed assets are also possible.
Oracle NetSuite multi-ledger accounting also automatically performs currency conversion based on predefined rules that determine which units are used for reporting purposes in each country or region and for each subsidiary. Individual transactions are posted in multiple currencies simultaneously using current exchange rates, eliminating the need to perform manual conversions as part of the closing process. And because this happens in real time, the impact of GL (General Ledger Accounting) can be seen in multiple currencies immediately.
Take advantage of all the benefits of this innovative management system! The Oracle NetSuite ERP brings numerous advantages to both companies and accounting firms, ensuring greater agility in processes and security regarding data and decision-making with strategic planning.
