By implementing new accounting system the distributor of hair care products enjoys the benefits of flexible reporting and streamlined operations.

The Situation

The US office of foreign entity of the established hair care distribution business had difficulties reporting financial results of operations. The office was located in Midtown Manhattan. The inventory was handled by 3PL warehouse in New Jersey. The reporting had to be done in two different formats: one set of statements for US operations and second set for foreign parent.

The difficulties of reporting were driven by the fact that the company relied on the accounting module of the software that was developed for warehousing operations and could not satisfy business requirements. Limitations of the software also prevented decision makers from seeing and analyzing operations by business segments: by division and type of customer vs. by product line.

The company also had difficulties reporting sales tax to 13 different states. The problem was that the same inventory item could be taxable to one customer and non taxable to another. Because current software could not fulfill that requirement that was taking days of employees’ time to sort and massage the information to prepare sales tax reporting.

Due to the limitations of the software the financial data was not readily available at the end of every month and controller frequently had to wait 2 to 3 weeks until warehouse finalized their numbers. The visibility of information was limited due to difficulties using the software and inability to extend the information to end users.

An additional spin on the complexity of requirements was the fact that the company heavily relied on EDI to receive orders from trading partners.

The Solution

The situation was challenging. Not only we had to find the solution to satisfy architectural, transactional and reporting requirement but also provide the functionality for EDI component to be able to integrate with independent warehousing system for submitting orders, updating inventory and reporting daily shipping activity so the customer can generate the billing.

Upon analysis of the current situation and business requirements our team recommended to replace current software with MAS 500 accounting system and FRx for financial reporting. Along with MAS 500 system the appropriate EDI components were selected. We have chosen MAS 500 because of the flexibility of configurations and ability to support transactional requirements of the client that in turn supported the financial reporting.

The Execution

Once the sufficient budget was established and hardware procured and installed we proceeded with the implementation of the software. Additional analyses required for software configuration were performed. These analyses revealed not gaps between standard system functionality and business requirements. The system was installed and configured.

A challenge came when it was time to test the data conversion. It appeared that current software did not provide an easy facility to extract the data in desired format. Together with the company controller we extracted the data in whatever format was possible and created a checklist of steps for the preparation of the data. That was the beginning of testing of the data conversion.

Upon loading and validating the “master records” we performed the load of opening balances for the General Ledger, Accounts Payable, Accounts Receivable, Open Purchase Orders, Open Sales Orders and Inventory. All opening balances tied out to the penny with the existing system. A significant milestone was accomplished.

At the same time our EDI partner was customizing their software to map it to the current warehousing system. Once that was done we proceeded with user training. The training revealed that we were missing some important reports that customer relied on for their operations. We had to postpone the Go Live event and develop these reports on the emergency basis. After additional “walk through the system” the client “took the software for a spin” by doing hands-on testing and parallel processing of transactions. That proved that actual results of these transactions matched the expected results. That was a green light for setting the Go Live date and preparing for the final data conversion.

After so much preparation the Data Conversion and Go Live were uneventful. The users went home on Friday night and Monday morning when they came back to the office they were on the new system.

The Benefits

At the end of the first month of being on the new accounting system the company was able to produce various financial statements required by US government and by foreign parent. The management was able to gain the insight into the operations and view performance of the company by different business segments. With that knowledge the management was able to make better, proactive and more informed decisions that resulted in continuing company growth.

The closing cycle was reduced from two weeks to three days. The accounting department had no longer waited for the warehouse to finalize their numbers. Once the shipping results for the last few days of the prior month were delivered via EDI transmission the company was ready to close their books.

The sales tax reporting has become a breeze. The software captured all necessary details of transactions by state and taxing authority. The sales tax reporting has become a matter of printing the report and filling the form. No longer there was a need for manual data massaging or manipulation.

New accounting software allowed easy extracts of the information by non financial users. That resulted the entire company to operate on the same set of data. Salespeople didn’t have to disturb the customer service of accounting department when they needed the information but could simply run inquiries and reports on as needed basis. That reduced the number of interruptions and increase users productivity and improved morale in the office.

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