WHITE PAPER

IMProviNG INtercoMPaNY RecoNciLiatioN For a FaSter CLoSe

CONTENTS 1 Executive Overview 2 Introduction 3 The Intercompany Problem 6 Fast Close Action Plan for Intercompany Reconciliation 8 Applying Technology to the Intercompany Problem 11  Unique Process Innovation BusinessObjects Intercompany 12 Setup Phase 12 Reconciliation Phase 13 Completion Phase 14  Building a Business Case for Improved Intercompany Reconciliation 17  Why Not Use a Consolidation System? 17 Setup Phase 18 Reconciliation Phase 19  Intercompany Reconciliation Case Studies 19  Socit GnraleOne of Europes Leading Financial Services Groups 19  OcA Global Provider of High-Speed Printing Systems 21 Conclusion

EXECUTIVE OVERVIEW

As we approach 2007, businesses are moving beyond the initial need to comply with legislation like the Sarbanes-Oxley Act (SOX) and instead are focusing on driving sustainability and control into their corporate processes. Of the various initiatives supporting this shift, the fast closea concept used to describe a corporations ability to complete its accounting cycles and close its books quicklyis perhaps one of the best documented. Predating the compliance revolution, the fast close forms a nance transformation project that has a clear structure and well-dened methodology, providing huge benets to those companies that take on the challenge. Yet throughout the 10-year history of the fast close, whats arguably the fast closes single largest barrier has remained constantthe completion of the intercompany reconciliation process. Surprisingly, this challenge continues to provide a bottleneck that many companies have yet to tackle effectively. However, as evidenced by a growing number of case studies, some companies endeavor to deal with the intercompany reconciliation challenge by employing technology to enable peer-to-peer processes and dramatically save time in their close process. Companies like Orange, Socit Gnrale, and United Business Media have all sought to implement solutions such as BusinessObjects Intercompany to improve the ow of communication during the intercompany process, removing it from the closes critical path and improving the quality of data. Unlike the wider fast-close projects that drive them, and in many cases the implementations of broader technologies that support the close process, such intercompany projects provide a quick win for companies who adopt themresulting in dramatic time savings with comparably little effort. This paper examines the issues behind intercompany reconciliation and outlines how companies such as those mentioned above have made impressive progress.

Authors: Paul Ferro, James Fisher

INTRODUCTION

In todays business environment, where compliance and competitiveness are paramount, corporations recognize the importance of the close and its role as one of the most essential ingredients of a successful global enterpriseand are under more pressure than ever to shorten their reporting cycles. Driven by new regulations that mandate greater nancial condence and transparency, companies are forced to deal with heightened investor expectations for accurate and timely nancial communications. The fast and high-quality close has now become synonymous with allowing more time for value-added activities, creating more timely access to nancial and nonnancial data for decision-making, and improving the work-life balance of key accounting staff during the close process. Signicant steps have already been made to shorten the reporting cycle via a combination of people, process, and technology, and many companies have achieved noteworthy improvements. However, by and large, close times are increasing particularly in the United States, due the rigor of the Sarbanes-Oxley Actresulting in time-consuming, labor-intensive efforts to ensure the quality of nancial data. Hence, companies once again are focused on speeding up the completion of their accounting cycles. According to survey data collected by Ventana Research in 2005 and sponsored by Business Objects, 93% of respondents either wanted to speed up or at the very least maintain close times. To achieve a faster close, you must scrutinize every step in the reporting process to gure out where your company can save time and how it can optimize the process. Based on our experience working with some of the worlds leading companies, weve determined that one of the most signicant bottlenecks in the close cycle is the process of intercompany reconciliation. As a result, virtually every fast-close project during the past ve years where signicant improvements have been made has included a project stream specically tasked with examining and addressing this issue. Survey results indicate that automation and process support for the intercompany matching and reconciliation process via systems is underutilized, and the employment of a suitable systems solution would make a signicant advance in alleviating this major cause of delay in the reporting process. In this paper we examine that evidence and, as part of our Fast Close Action Plan, we provide a framework to tackle this key issue.

Business Objects. Improving Intercompany Reconciliation for a Faster Close

THe INtercoMPaNY ProbLeM

Over the past ve years, numerous research projects have examined the interplay between the close and the intercompany process in great detail. Intercompany reconciliation and elimination is consistently identied as one of the most common nonvalue-added tasks slowing down the reporting cycle. In the most recent survey from BPM International1 , 41% of all companies surveyed identied intercompany as a signicant barrier to their close at a corporate level, and an additional 31% identied the process as an issue at the subsidiary level. These results are almost exactly the same as those from two studies conducted more than four years earlier by IBM Global Services in Europe and PricewaterhouseCoopers in the United States, indicating little or no improvement has been made in this area over that time. Furthermore, these recent surveys conrm that companies wrestle with a number of low-value-added supporting processes, including the correction of errors, re-keying of data, and follow-up of issues with reporting units by the central nance function. On top of these problems, system deciencies around intercompany processing and the lack of process automation are found to contribute to delays in the reporting process. The BPM International study suggests that the worst-performing companies are taking upwards of 10 days to resolve the intercompany process during a yearend close, while the best-in-class report an average of six days with ambitions to reduce it to four days. The reason this remains such a problem is perhaps bewildering at rst, but closer examination uncovers the existence of signicant process and technology issues. In the traditional intercompany matching and reconciliation process employed by most companies, the responsibility for resolving discrepancies in the intercompany balances declared by reporting units often falls on corporate headquarters. Generally this means that staff members in the central nance function are involved in checking balances, correcting errors, and contacting reporting units to resolve issues and intervene in disputes. This process results in an inefcient vertical ow of information between headquarters and reporting units and back again, rather than a more efcient lateral ow of information between the reporting units involved in the original counterparty transactions.

1 Study of European Group Reporting Processes and Systems, BPM International, 2006

Business Objects. Improving Intercompany Reconciliation for a Faster Close

Headquarters

Traditional

Traditional

Peer-to-Peer Reporting unit Reporting unit

Figure 1. Traditional intercompany processes often entail an inefcient vertical ow of information between headquarters and reporting units.

The process is also hindered by the means of communication employed: telephone calls, email, and fax. These technologies are time-consuming to employ and they rely on the response time of the reporting units involved. Such a process is very procedure-driven, often involving lling out forms and strict adherence to escalation procedures. Its clear that companies could save time if their reporting units adopted a peer-topeer reconciliation process to communicate and resolve differences directly with one another, thereby moving the responsibility for getting things right from the central nance function to the reporting units themselves. At the same time, the units could use any improvements in process automation as a catalyst to eliminate errors from the process, thus improving the accuracy of reported gures as well.
D-5 Reporting unit D+0 Headquarters D+5 Headquarters D+10

Close books

Intercompany reconciliation

Consolidation

Figure 2 . Headquarters winds up being the bottleneck during the reconciliation process.

Business Objects. Improving Intercompany Reconciliation for a Faster Close

As Figure 2 demonstrates, the bottleneck slowing down the reporting process is the time taken at headquarters to participate in the reconciliation process. If reporting units could deal directly with one another in a peer-to-peer fashion, this obstacle would be eliminated and the intercompany process would fall away from the closes critical path. Such an achievement would free central nance staff from time spent on nonvalue-added tasks, enabling far more time to analyze data rather than just gathering and reconciling it, as illustrated in Figure 3 below.
D-5 Reporting units D+0 Headquarters D+5 Headquarters D+10

Reporting units Close books Intercompany reconciliation Intercompany reconciliation Consolidation Consolidation

Close books

Time saved

Figure 3. Peer-to-peer processing between reporting units accelerates the close.

Business Objects. Improving Intercompany Reconciliation for a Faster Close

FaSt CLoSe ActioN PLaN For INtercoMPaNY RecoNciLiatioN

A fast-close project, like any other corporate initiative, requires a structured approach with a methodology thats supported by people, process, and technology. These projects must be manageable, have clear but realistic objectives, and as weve already seen, almost certainly include an intercompany project stream. Figure 4 depicts the Business Objects Fast Close Action Plan2 , in which BusinessObjects Intercompany plays a key role as one of the most highly valueadded quick wins for cycle-time reduction. Such quick wins serve to produce almost immediate timetable reductions with very little required resources, and demonstrate that time-savings are achievable, putting people into a positive and determined frame of mind for delivering the bigger wins as part of a broader fastclose project.

Stage 1 - Vision, benchmark, and review

Perform as is review Define vision and benefits
Implement quick wins: -Close-process monitoring -BusinessObjects intercompany server

Stage 2 - Design
Develop a blueprint for big wins: Review current systems where existing tools cannot deliver quick wins

Stage 3 - Implement
Rollout new performance management applications: BusinessObjects finance

Pilot, refine, and finalize

Continuous improvement

Change management
Milestone 1: Vision agreed and initial timetable reduction Milestone 2: To Be model proven and pilot Milestone 3: Rollout complete

Month 1

Next 3 months

3 to 9 months

Figure 4. A Fast Close Action Plan

As with the broader fast-close project, when assessing a corporations existing intercompany reconciliation process and how it can be improved, the rst step will always be to gather information on the current process and determine how long it actually takes in practice. You should review all nancial processes associated with intercompany matching and reconciliation, together with the existing software and technical architecture. In conducting this preliminary review, its also important to identify any gaps between current processes and best practices. Companies serious about resolving the issues associated with intercompany reconciliation should consider employing workshops to look at the process, and
2 Fast Close in 2006: Achieving Quick Wins and Big Wins. Business Objects Whitepaper.

Business Objects. Improving Intercompany Reconciliation for a Faster Close

search for opportunities to automate manual data entry or correction processes, as well as processes that involve duplicated effort or unnecessary steps in the resolution of disputes. As demonstrated earlier, companies need to identify and eliminate the causes of unnecessary complexity and cost (measured in staff-days) in the existing reconciliation process. In so doing, companies should aim to employ current best practices in the form of peer-to-peer reconciliation, which ultimately offers the greatest improvement in reconciliation times with the least amount of required effort and resource.

Business Objects. Improving Intercompany Reconciliation for a Faster Close

APPLYiNG TecHNoLoGY to tHe INtercoMPaNY ProbLeM

An examination of fast-close projects and additional quantitative research evidence indicates that technology has been underutilized with respect to supporting the intercompany reconciliation process. In most cases, existing consolidation and reporting tools report on the process only after its too late, thus triggering the manual process to resolve mismatched balances and transactions (often using traditional time-consuming tools such as the telephone, fax, and email). Companies can overcome these challenges by dening a technology blueprint, such as the one presented below. The rst key step in any systems solution is to create an electronic information ow, minimizing as much as possible the use of manual processes. You cant completely eliminate manual processesyoull always encounter situations requiring direct communication. Still, in implementing a solution, your company should aim to reduce reliance on manual methods as much as possible. As needed, an alert mechanism should prompt your users to undertake actions within the system, but at the same time, your system must support direct communication between users by storing and making contact details of other users readily available (telephone, email, and fax details). Its also important to consider the point at which these systems can be applied to the process. By allowing your reporting units to reconcile balances and transactions directly, away from the closes critical path, you avoid trying to x the problem after the event and thereby free more time for value-added activity, ultimately shortening the reporting cycle. To do this, its important that you be able to see instantaneously your intercompany position and the difference between what your company has declared and that of your counterparty. Visual indicators and lters to identify problem areas are equally desirable. To assist reconciliation, your company should employ a central intercompany reconciliation database. The advantage of such a database is that it creates one version of the nancial truthand once balances are declared and reconciled, they remain that way. Automating previously manual processes minimizes the incidence of unnecessary errors. It also reduces time delays by employing systems to process, compute, and report, thereby dramatically decreasing the reconciliation timeframe. However, its important to avoid automating processes that are inherently awed. In fact, the complete redesign of processes to meet best practices is preferable to eliminating inefciencies through automation. Any system solution should aim to eliminate time delays. One of the keys to doing this is to use a system that enables real-time reconciliation views. One of the best options is

Business Objects. Improving Intercompany Reconciliation for a Faster Close

using internet technology, where submitting data over the web to a central server offers an immediate overview of the intercompany reconciliation process, irrespective of location, time zone, or language. In todays global economy, your system should be available 24/7, and support multiple languages and multiple currencies. Central to making your process more efcient is getting the right people executing the right processes at the right time with the right tools. This means devolving a certain level of responsibilitycompleting the reconcilationfrom headquarters to the reporting units, but the central nance function should recognize that, ultimately, responsibility and control must still be maintained at headquarters. Therefore, for engagement and user acceptance, its vital that you maintain a common set of processes and tools that satisfy the needs of both the reporting units and headquarters. If you choose a web-based system, you can disseminate information via the web, regardless of whether its reconciliation-deadline and timeframe data or important process and instructional information that needs to be communicated to all involved in the reconciliation process. Centrally, your staff needs to relinquish the day-to-day operational aspects of completing the reconciliation, and move to more of an overseer rolemonitoring and controlling the process, and only intervening where necessary. To do this, headquarters must have the condence necessary to fully integrate its technology, processes, and people. Your technology should support this by providing a centralized view of the reconciliation progress, as well as the progress of individual reporting units. It also should provide a mechanism for the central nance function to intervene, arbitrate, adjust, and comment on the reconciliation. Effective change management is another integral factor in ensuring the success of a new solution. When choosing a technological solution an interesting question is whether to build or buy. Building is attractive as it results in a customized solution for your business processes, but the support maintenance and time to develop are factors that must be considered carefully. Buying, on the other hand, provides the security of a triedand-tested solution, which is constantly supported and improved upon. This benet must be weighed against the fact that buying may require the adoption of new concepts, processes, and workows, which arent necessarily bad as they follow industry standards, but they also require careful management and implementation. Any new solution you choose should be able to t seamlessly into your existing technology and infrastructure. Furthermore, it should complement desired business processes.

Business Objects. Improving Intercompany Reconciliation for a Faster Close

Key questions to be asked include: How easy is it to interface with source systems and with the eventual consolidation system (metadata and data)? Does the system meet your organizations technology and platform requirements (operating systems and hardware)? Does it support the desired level of matching (balances/transactions or both)? How easily does the system allow the identication of problem data (does it support materiality and have lters or rules)? How easy is it to add supporting information into the system (le attachments and comments, additional and congurable data elds) and is this capability at both the balance and transactional level? Finally, how easily will users adopt the system? Intercompany reconciliation is a simple but painful processany system solution must be simple to use and must not be perceived as overly complicated or difcult to see.

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UNiQue ProceSS INNovatioN BuSiNeSSObJectS INtercoMPaNY

Based on this technology blueprint, Business Objects was the rst performance management application vendor to develop and supply a unique peer-to-peer intercompany solution, which works independently of its consolidation system. BusinessObjects Intercompany, now the worlds leading peer-to-peer intercompany reconciliation application, enables business units to reconcile intercompany balances in real-time via the web, allowing corporations to close faster. Using BusinessObjects Intercompany, your company can eliminate time and effort from the reporting process by delegating intercompany reconciliation to its reporting units and managing the ow of intercompany information between them. BusinessObjects Intercompany provides the tools for your business units to debate and reconcile invoices and balances directly with one other, eliminating extra work and delays at the corporate and divisional levels. In the traditional process, divisions were required to act as intermediaries, resolving disputes that werent apparent until after submission of the reporting packs. Our solution removes intercompany reconciliation from the critical path, shifting the focus so that it becomes an integral part of the closing process of the business units and improves both the speed and accuracy of the closing process.
Headquarters BusinessObjects Finance, or another consolidation application

Reconciled I/C balances Reporting unit A Agree/disagree

Intercompany matching
BusinessObjects Intercompany

Reporting unit B

Agree/disagree

Figure 5. BusinessObjects Intercompany streamlines intercompany reconciliation for a faster closing process.

BusinessObjects Intercompany gives you the tools to enable peer-to-peer reconciliation of intercompany balances. Your users can choose whether to load their balances or go one step further and provide detail down to the invoice level. This allows a exible approach to data collection and reconciliation, ensuring that the right level of data is captured, reconciled, and reported.

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The process of reconciling invoices and balances using BusinessObjects Intercompany has three phases: setup, reconciliation, and completion. The following describes a typical intercompany reconciliation process. The actual process you use may be more complex and, as indicated above, is ultimately determined by your companys own working practices.

SetuP PHaSe

Before using the system, an administrator needs to prepare it for data processing. This involves updating any changes in metadata or reference data that may have occurred since the end of the last reconciliation period. The administrator maintains: Reconciliation periods. A new reconciliation period is opened and the timeframe for reconciliation is set. Metadata management. Companies, accounts, and currencies are updated to take into account any changes (e.g., you can add new companies, or deactivate accounts that are no longer used). Users. New users are added and given access to companies, and users whove left can no longer access the system. Central data maintenance. Information such as exchange rates and materiality levels that ensures data consistency for all system users is also updated.

RecoNciLiatioN PHaSe

During the reconciliation phase, users load the system with data they import or enter manually, and then execute the intercompany reconciliation process. The systems features provide: Matching engine. A key part of the systems functionality, the matching engine allows companies to automatically compare balances that have been entered or loaded into the system, and calculate differences in the headquarters reporting currency. State machine. The system contains a highly developed state machine, which manages the status of balances. Some simple states include open, reconciled, and unmatched, but many more complex states are also handled. Whenever a change in state occurs, the state machine sends out email alerts automatically.

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 Data entry and review. Icons provide users with a visual summary of their invoices and balances. Users can also generate reports to follow the intercompany reconciliation process, as well as determine how much work is outstanding and where they should focus their attention. Invoice-level matching. Where users have chosen to load balances and invoices, a further level of reconciliation is possible. During invoice-level matching, the system automatically compares counterparties invoices and allows easy identication of unmatched data. Since balance and invoice data loaded into the database can originate from different source systems, the system also compares the balance to invoice data to ensure synchronization.

CoMPLetioN PHaSe

At the end of the reconciliation phase when the majority (if not all) of the intercompany invoices and balances have been reconciled, the BusinessObjects Intercompany administrator closes the current period, ensuring that the system is ready for the next reconciliation period. The administrator can perform the following operations: Freezing. All users are prevented from making further updates to their intercompany data. Once the data within the database has been frozen, all users are able to export their intercompany balances. Archiving and backup. Any closed period data can be archived. This improves the performance of the database during the reconciliation period. Performing a backup of the database further safeguards the contents of the database.

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BuiLdiNG a BuSiNeSS CaSe For IMProved INtercoMPaNY RecoNciLiatioN

A unique characteristic of corporate initiatives that seek to improve the intercompany process is the ability to easily quantify rapid return on investment (ROI). ROI can be measured in terms of the quality of the information provided and the resulting reduction in errors, the amount of time saved in terms of staff-days by operating units, and the time saved at the head ofce during the close, thereby reducing the close cycle. A successful intercompany process, using a solution like BusinessObjects Intercompany, typically results in an average 60% improvement in the accuracy of intercompany transactionsand savings on average of 15 staffdays in reporting cycles. For example: Client A. A transport and logistics company with 70 reporting units experienced a 40% increase in the accuracy of balances submitted to headquarters, saving ve staff-days at its head ofce per reporting cycle. Client B. A retail and investment banking organization with 280 units experienced a reduction in the time taken to complete its intercompany reconciliation by a factor of three, gaining a 60% improvement in the accuracy of balances submitted to headquarters. Client C. A mobile telecommunications company with 70 units reported a savings of approximately 400 staff-days over a 12-month period in its monthly reporting cycles, and signicantly increased the accuracy of balances reported. Thanks to BusinessObjects Intercompany, we have considerably shortened our reconciliation process and changed our statutory consolidation from a quarterly to a monthly basis. In all, we have saved 10 days in publishing our nancial results. Head of Accounting, Socit Gnrale Based on the expected or actual number of days saved, an ROI timeframe can easily be calculated for users of the application. From our experience of process improvement and systems delivery, a conservative target is in the region of a halfdays worth of saved work per reporting unit, with this reduction being a measure of effort saved across the organization rather than elapsed time saved. In many cases, weve seen savings of up to one day per reporting unit. The ROI equation can be stated as: Payback is achieved when [Cost of 0.5 Staff-Day] x [Number of Reporting Units] x [Number of Reporting Cycles] is less than [License Fee or Build Cost] + [Setup Cost]. Some assumptions can be made to provide input to the equationclearly, these will vary by size of the company, infrastructure costs, and average nance staff costs. However, they are useful in providing an indication of likely or potential savings.

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AveraGe coSt oF FiNaNce StaFF AveraGe daiLY coSt NuMber oF rePortiNG uNitS LiceNSe Fee SetuP coSt

$65,000 (USD) 295 100 125,000 10,000

Figure 6. Calculating payback helps companies assess potential savings.

BusinessObjects Intercompany was the only tool on the market that we felt could meet all of our requirements. What we have bought is speed, precision and enhanced communication between our operations around the world. Group Consolidation Manager, Orange Plc A key assumption here is that the cost of building a custom application is much higher and riskier than using one purchased off the shelf. If you build a custom application, the equation is still applicable; however, the cost is likely to be greater and a lower ROI will be achieved. Some further considerations are that bestpractice intercompany reconciliation may not be supported by the current system and there is likely to be higher maintenance overhead. BusinessObjects Intercompany was the right solution at the right moment to solve our intercompany problems. We implemented it in two weeks, and immediately we were able to publish our results ve days earlier, saving over 20 staff-days in the process. Group Controller, Ascom Using these assumptions, its possible to do a simple cost/benet calculation. In the example below, we can see that a full ROI is achieved within just over nine months. This also shows that the benet depends heavily on the number of reporting cycles performed. In general, companies reporting monthly will derive a far greater benet than those reporting quarterly.
NuMber oF rePortING cYcLeS SaviNGS (IN uSd) breaK-eveN (YearS)
Figure 7. 9 month ROI model demonstrates value.

12 177,000 0.76

Any business case should also consider that any calculation being performed doesnt take into account the immeasurable benets to the business of getting faster, more accurate information to the people who need it the most quickly, i.e.,

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decision-makers and the market. The time freed can be applied to value-added activities to increase revenue or lower costs. In a paper published by Robert Frances Group, it was estimated that through improvements to the close process, its possible to achieve savings on annual tax payment in the range of 1% to 9% and reduced audit fees of between 10% to 12%.

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WHY Not USe a CoNSoLidatioN SYSteM?

Many of the consolidation and corporate reporting systems on the market have established intercompany reconciliation and elimination modules. Companies thinking of reengineering their intercompany processes often look to these modules as the cure for all ills. Are they correct to do this? To answer this question, its instructive to compare and contrast the processes required to perform an intercompany reconciliation in typical nancial consolidation and reporting systems with a purpose-built intercompany reconciliation system. Financial consolidation and reporting systems cover the breadth of functionality necessary for statutory consolidation and management reporting, providing a basis for nancial control and compliance. These systems also include functions to match intercompany accounts within the consolidation process, as is necessary for global consolidation and reporting processes. The intercompany balance-matching process is either included in the consolidation category of reporting or is a category in itself, but as mentioned earlier, consolidation systems provide value only when you start consolidating data and therefore form part of the closes critical path. On the other hand, BusinessObjects Intercompany is a product specically designed to match intercompany data interactively in a peer-to-peer fashion over the web. It deals not only with intercompany balances but offers a more detailed level of reconciliation down to the invoice level. The table below juxtaposes the process and the individual steps that need to be performed to complete the intercompany reconciliation. Weve broken the process down into two phasesthe setup phase and the reconciliation phase. Note the number of steps and the complexity of each.

SetuP PHaSe
FINaNcIaL coNSoLIdatIoN aNd rePortING SYSteMS 1 1 2 3 4 5 Set up metadata (companies, accounts, currencies, users) Build the category (sets of accounts, analysis hierarchies, translation rules) Design specic data entry schedules Design specic matching and analysis reports Set up the matching rules 3 Set up matching rules (dene matching accounts, match on local or transaction currency amounts, dene materiality rules) Set period and start the reconciliation process
17

BUSINESSOBJECTS INtercoMPaNY Set up interfacing (dene templates for metadata, balances and invoices) Import metadata (companies, accounts, currencies, users)

6
Figure 8. The Setup Phase

Roll out data entry and normal monthly data collection and reporting processes

Business Objects. Improving Intercompany Reconciliation for a Faster Close

In comparing the two setup phases, its clear that in the case of nancial consolidation and reporting systems more steps are required. Although some of these steps are complex, they serve the dual process of helping to prepare for the consolidation.

RecoNciLiatioN PHaSe
FiNaNciaL coNSoLidatioN aNd rePortiNG SYSteMS 1 Reporting unit - link to web site or client server application to begin monthly data collection processes Reporting unit - enter or import intercompany data Reporting unit run controls and publish data to central nance ofce Central - integrate the reporting unit data Central - dene and run consolidation processes Reporting unit - run analysis reports 3 Reporting unit - adjust balances manually and reconcile interactively with counterpart 1 BUSINESSOBJECTS iNtercoMPaNY Reporting unit - link to web site

2 3 4 5 6

Reporting unit - enter or import intercompany data

7 8 9

Reporting unit - go back to data entry and adjust balances Central - run analysis reports Reporting unit - nalize and submit to consolidation system
Figure 9. The Reconciliation Phase

4 5 6

Central - run progress/analysis reports Central - freeze all reporting units Reporting unit - export to consolidation system

Again, whats interesting to note are the signicant requirements imposed on the central nance function in a nancial consolidation and reporting system reconciliation processsomething thats almost absent in the BusinessObjects Intercompany process.

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INtercoMPaNY RecoNciLiatioN CaSe StudieS

Learning from your peers is one of the best ways to dene your approach to improving your intercompany processes and ultimately close faster. Not only does understanding how your peers challenged themselves help you to do the same, it also proves that timetable reduction is possible. The following studies are two examples of Business Objects customers who successfully implemented corporate initiatives to review and enhance their intercompany reconciliation, delivering a fast and high-quality close process.

Socit GNraLeONe oF EuroPeS LeadiNG FiNaNciaL ServiceS GrouPS

Socit Gnrale is the seventh largest French enterprise and one of the leading nancial services groups in Europe, based on market capitalization. Composed of a retail branch, specialized nancial services, asset management, private banking, stockbrokers, and investment banking, the group has over 768 entities generating a banking net product of 16.4 billion. In April 2002, Socit Gnrale decided to roll out an ambitious project to implement monthly accounting consolidation. For the consolidation department, the project involved a signicant reduction in exchanges and better distribution of the workload over time. To achieve this, the reconciliation process for intra-group amounts had to be rationalized and automated. The group chose BusinessObjects Intercompany to help meet its aims, and has since seen the number of intercompany discrepancies fall dramatically. As a result, the group considerably shortened its reconciliation process and met its objective to change statutory consolidation from a quarterly to a monthly basis. In all, by handing responsibility to the entities to process differences upstream, Socit Gnrale saved 10 days in publishing its nancial resultsreducing the groups consolidation work substantially. To learn more about our intercompany reference customers visit BusinessObjects.com/company/customers.

OcA GLobaL Provider oF HiGH-SPeed PriNtiNG SYSteMS

Behind the scenes, Oc helps the people who make our world. Companies everywhere use Oc technical documentation systems in manufacturing, architecture, engineering, and construction. High-speed Oc printing systems produce millions of transaction documents each week, such as bank statements and utility bills. In ofces around the world, people use Oc professional document systems to keep the wheels of business and government turning. Any business with this much history, scope, and scale faces real nancial management issuesspecically, how do you ensure that reporting is timely, consistent, and comprehensive without compromising speed, accuracy, and efciency?

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Oc realized it needed to resolve this challenge. While its intercompany consolidation processes were successful, Oc still felt improvements could be made and it decided to implement BusinessObjects Intercompany in late 2003. Once the selection was made, implementation was fastfrom initial consultation to going live within six weeks, starting with the closing of the annual accounts. During implementation, the Business Objects and Oc teams worked together closely to ensure that the nal result matched requirements. Once implementation was complete, the ROI quickly became obviousOc reduced its quarterly reporting cycle by at least one day, freeing up time for value-added analysis and disclosures and improving data quality and nancial information ow. To learn more about our intercompany reference customers visit BusinessObjects.com/company/customers.

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CONCLUSION

The fast high-quality close is as important today as ever and the ability to resolve your intercompany bottlenecks is a key factor in achieving your fast close ambitions. Because consolidation systems are inadequate at managing both the depth and interactivity necessary for the intercompany reconciliation process, central nance departments of businesses worldwide are forced to intervene and get heavily involved in order to complete the traditional hierarchical reconciliation process. Using applied technology for intercompany reconciliation, radical process change can be made with little effort, offering enormous gains in efciency. These gains arent all nancial in nature, though attractive ROIs are achievable. They also include alleviating the burden on the central nance function and transforming its role into that of overseer rather than executor of the process. Secondly, empowering reporting units to solve their own issues rather than being directed by headquarters is a key improvement resulting in a better quality close. Last but not least, taking the intercompany reconciliation process out of the critical path results in a faster closeand resolving this issue makes it the number-one fast close quick win.

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ABOUT BUSINESS OBJECTS

Business Objects is the world's leading business intelligence (BI) software company, with more than 39,000 customers worldwide, including over 80 percent of the Fortune 500. Business Objects helps organizations of all sizes create a trusted foundation for decision-making, gain better insight into their business, and optimize performance. The company's innovative business intelligence suite, BusinessObjects XI, offers the BI industry's most advanced and complete solution for performance management, planning, reporting, query and analysis, and enterprise information management. BusinessObjects XI includes the award-winning Crystal line of reporting and data visualization software. Business Objects has also built the industry's strongest and most diverse partner community, and offers consulting and education services to help customers effectively deploy their business intelligence projects. Business Objects has dual headquarters in San Jose, Calif., and Paris, France. The company's stock is traded on both the Nasdaq (BOBJ) and Euronext Paris (ISIN: FR0004026250 - BOB) stock exchanges. More information about Business Objects can be found at businessobjects.com

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Notes

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businessobjects.com insight.businessobjects.com

2007 Business Objects. All rights reserved. Business Objects owns the following U.S. patents, which may cover products that are offered and licensed by Business Objects: 5,555,403; 6,247,008; 6,289,352; 6,490,593; 6,578,027; 6,768,986; 6,772,409; 6,831,668; 6,882,998 and 7,139,766. Business Objects and the Business Objects logo, BusinessObjects, Crystal Reports, Crystal Xcelsius, Crystal Decisions, Intelligent Question, Desktop Intelligence, Crystal Enterprise, Crystal Analysis, Web Intelligence, Rapid Marts, and BusinessQuery are trademarks or registered trademarks of Business Objects in the United States and/or other countries. All other names mentioned herein may be trademarks of their respective owners. August 2007 WP3106-A