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THE
BUYER’S GUIDE
TO FINANCIAL
MANAGEMENT SOFTWARE
The 10 Essentials of an Effective
Financials Solution
www.netsuite.comGrab a seat and enjoy.
Read Time: 30 minutes
THE BUYER’S GUIDE
TO FINANCIAL
MANAGEMENT SOFTWARE
The 10 Essentials of an Effective Financials Solution
Introduction weeks to complete and sales that occur on
Managing your company’s financials is the the last day of the quarter often do not get
backbone of your business and is vital to the entered into the system, thereby not getting
long-term health and viability of your company. recognized as revenue on time. Critical
Yet attention to your bottom line often takes financial processes such as handling financial
a back seat during times of increasing consolidation, multi-state and country taxation,
revenues and growth. To continue applying and reporting based on multiple currencies
the necessary financial rigor to support rapid become a huge productivity drag on your
growth, the accounting department needs entire department and are plagued with errors.
the right tools to most efficiently do their job.
Add on regulatory requirements such as
Without tools to handle the business and
revenue recognition and constantly changing
regulatory requirements of a high-growth
accounting standards across countries
company, accounting staff wastes time on
you’re operating in, and the pressures get
manual and duplicative work while closing
compounded. If any of these scenarios
the books every month and you may end up
sound familiar, it’s time to take a hard look at
hiring extra temporary staff to perform
how your existing business systems may be
this work.
hurting your bottom line.
When spreadsheets and workarounds
This white paper outlines the 10 essentials of
become the norm for your finance department,
a complete financial management system and
you know it’s time to upgrade your financial
how the right solution can help you keep up
management solution. Your financial close
with the rapidly changing business world.
times and audit preparations take too many
Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 2TABLE OF CONTENTS
1 2 3
Core Financial Support for Multi-Company
Management Governance, Risk and Global
Capabilities and Compliance Business
(GRC) Management
Page 4 Page 11 Page 13
4 5 6
Streamlined Integrated Complete
Order-to-Cash Inventory Procure-to-Pay
Process Management, Process
Fulfillment and
Shipping
Page 16 Page 18 Page 20
7 8 9
Project Accounting Actionable Adaptability
and Contracts Business to Specific
Management Intelligence Business Models
Page 21 Page 23 Page 24
10
Low Total Cost Conclusion
of Ownership
and Superior
Ease of Use
Page 27 Page 30Chapter 1
CORE FINANCIAL
MANAGEMENT CAPABILITIES
Accounting Functionality ready General Ledger’ that gives finance
Every financial management system needs professionals new flexibility and visibility,
to have basic accounting functions such richer reporting functionality, enhanced
as General Ledger, accounts receivable, audit trails and new support for multinational
accounts payable, tax, cash and payment financial management.
management with an audit trail built in.
The General Ledger must also be capable of
Beyond basic accounting functionality, your
handling an unlimited number of accounts
financial management system must be
and sub-ledgers to power your company’s
extensible to accommodate future growth
innovation and growth.
while simultaneously allowing you to keep an
eye on the operating expenses impacting the It must allow you to define your own
bottom line. accounting periods and let you close
individual components separately to match
Modern General Ledger the needs of any new subsidiaries and
The General Ledger is the core of every international divisions that you may introduce.
accounting system and must be dynamic,
The globalization of business continues to be
flexible, scalable and unconstrained by rigid
driven by several factors, including the growing
code-block structures. It must empower
presence of multinational corporations, global
real-time financial intelligence and embed
capital markets, foreign direct investment
operational efficiencies, such as faster
and economic interdependence. At the
reconciliations and closing of the books.
same time, investors, bankers, shareholders,
The GL should be transformative—not a static, customers and other financial statements
one-size-fits-all but a dynamic asset that users exist all over the world, specifically
enables companies to tailor GL processes in countries that have their own unique
to meet their unique business needs and sets of accounting standards. Whenever
changing conditions, a dynamic, ‘disruption- the same business event requires different
Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 4"NetSuite gave us the agility to adapt to change and the scalability
that we needed. It’s been critical to entering new markets quickly,
efficiently and effectively." – Avant
accounting treatment because of industry- be burdened with tasks that are manual,
specific rules, country-specific rules or both, error-prone and information that is out of
different reporting outcomes will occur. To date and difficult to get. A modern financial
report financial results within compliance management system can address these
based on multiple accounting standards challenges by streamlining and automating
concurrently, accounting departments should mission-critical processes, reducing
have Multi-Book capability to comply with any operational costs and delivering unlimited
standard. Multi-Book functionality eliminates capacity for growth.
data entry replication and reduces the need
for error-prone manual adjustments from Cash Flow Management
processes due to managing multiple books One of the keys to managing your financial
per accounting standard. health is your ability to monitor your cash
The ability to build automated processes flow carefully on a regular basis. When your
with workflows such as approvals, thresholds, company is growing rapidly, you may face
and more checks into the process in order unexpected costs for permits, licenses, raw
to balance your growing organization would materials, equipment, extended contract work,
be ideal in a financial management system. and vendor agreements.
As an example, automating the journal entry These investments often require large upfront
approval workflow to verify criteria like payments and smart financial planning to
threshold amount and approval limits before keep cash flow positive. If there isn’t enough
the journal is posted and approvals workflow cash on hand to meet any one of these
functionality streamlining approval and review obligations, it could result in repercussions for
process of transactions such as purchase your company, threaten its growth and even
orders, vendor bills, sales orders, expense expose it to legal liabilities.
reports, journal entry transactions will reduce
errors, provide better control and insight into To avoid these potential pitfalls, it is vital that
the process. Finally, a modern GL system your cash inflows keep pace with your cash
must have predefined charts of accounts outflows. Your financial management system
for a wide range of industries to help with should allow you to perform cash flow analysis
quicker deployment. to examine the components of your business
that affect cash flow, such as accounts
Without these essential accounting receivable, inventory, accounts payable and
capabilities, finance teams could easily credit terms, to name a few. By performing
Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 5"NetSuite gives us meaningful data rather than what we had before
which was really guesswork. Now we work less hard but make
more money." – P3 Medical
cash flow analysis on these individual your company’s balance sheets. Your financial
components, you’ll be able to more easily management system needs to be able to
identify cash flow problems and opportunities handle and report on these varieties of
for improvement. recurring revenue scenarios.
Real-time visibility is important in making timely When identifying potential recurring revenue
informed decisions. When information can streams, it is imperative to know your
be accessed instantly from almost anywhere, company’s “cost to serve”. Your financial
without wasting resources on data extraction management system should be able to
and tying data from different sources together, accurately model different chargeability
employees can make more accurate, faster scenarios and get a handle on direct and
decisions. By having greater real-time indirect customer costs—acquisition costs,
visibility into your cash flows through detailed service costs and product delivery costs,
dashboards and key performance indicators as well as which customer segments drive
(KPIs), you’ll be alerted to discrepancies and margin and which do not. The old adage
“red flag” situations a lot more rapidly. that 20% of your customers generate 80%
of your profits is particularly important with
Recurring Revenue and recurring revenue, because the remaining
Revenue Recognition Management 80% of break-even or marginally lossmaking
Running a business with a predictable customers may be costing you year after year
revenue stream is difficult when you’re in unless you smooth out profitability across your
nascent stages of growth because there customer base.
are so many uncertainties related to new
It is also important to have good revenue
customer acquisition. But once you establish
recognition processes in place—a revenue
a stable customer base, you need to focus
recognition solution that helps you comply
efforts on extracting ongoing revenues
with accounting standards and report financial
from these customers and increasing your results in a timely manner. Whether your
customers’ value to power your next stage of business conducts sales transactions that
growth. Close coordination between finance, consist of products or services, or both, and,
sales, and service is necessary to identify whether these transactions occur at a single
recurring revenue streams, and define the point in time or across different milestones,
periods of chargeability for services rendered your revenue recognition solution should help
and when revenue can be recognized on
Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 6you schedule, calculate and present revenue incorporates support for flexible revenue
on your financial statements accurately. recognition will ensure that your staff reduces
their dependence on multiple spreadsheets
DocuSign’s newfound flexibility has opened
and error-prone manual processes. Such
the floodgates to efficiency. In addition to
a system also helps ensure that you gain
slashing its revenue recognition process from
clear visibility and continual monitoring for all
nine days to several hours using NetSuite
aspects of the revenue recognition process,
Financials, the digital transaction management
and that you are positioned to manage and
company’s finance team has reduced its
recognize different types of revenue such as
monthly financial close by over 30%.
time-based, percentage of completion and
Your financial management system should also event-based, among others.
help you comply with FASB, SEC and AICPA
Support for ASC 606 revenue recognition
regulations regarding revenue recognition.
rules is especially important because ASC
Your financial system should feature built-in
606 regulations can allow companies to
support for key revenue recognition rules
recognize revenue much sooner. Before the
such as ASC 606, SOP 81-1, SAB 101, EITF
advent of ASC 606 regulations, if you were
00-21, EITF 08-01 and EITF 09-03 to enable
unable to determine the fair value of any of
you to recognize revenue for multi-element
the items that were part of a sale, you had
sales, and to recognize them at different rates.
to defer the revenue for those items until
The new revenue recognition standard, they were delivered sometime in the future.
ASC 606 represents the most sweeping However, ASC 606 allows you to apply an
change to revenue accounting rules in Estimated Selling Price (ESP) for items not
years. Your financial management system yet delivered and recognize their revenue
should be able to handle billing and revenue a lot earlier. ASC 606 regulations thus have
recognition that supports compliance with a material impact on your revenues and
revenue recognition rules such as revenue consequently are very important to your
arrangements with multiple elements bottom line.
(ASC 605-25) and percentage-of-completion
Billing Management
accounting (ASC 605-35), while providing a
Your billing infrastructure needs to be able to
foundation to comply with ASC 606.
handle multiple pricing schemes for different
These new revenue recognition rules bring customers. You may be managing different
with them a whole set of complicated payment terms, whether monthly, quarterly
calculations that your finance staff must or annually, and may be billing customers
perform. A financial management system that in advance, in arrears, or prorating them
Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 7on partial months. Using spreadsheets can your operations, and then modeling several
quickly get out of hand, and different or one- “what-if” scenarios to assess the impact of
off billing arrangements can throw things off different cost structures. Without a financial
and result in billing errors. management system that allows you to easily
perform these functions, your finance team
You need a financial management system
will end up wasting time consolidating data
with a billing solution that equips businesses
as well as projecting results from all of those
to offer transaction, subscription, usage-based
different scenarios on a regular interval
billing, and any hybrid model while managing
from various systems instead of performing
that revenue accurately and in accordance
strategic analysis.
with the latest revenue recognition standards.
An agile and sophisticated solution that offers When it comes to financial planning, your
unparalleled control and flexibility over billing budgeting and forecasting functionalities
and revenue management processes can rank at the top of the list, especially because
be a competitive differentiator by allowing of their focal role in controlling costs. Your
your customers to change their billing financial management system needs to
plans and payment options, thus improving enable multi-dimensional data collection
customer satisfaction. You need an agile and and automate the consolidation of plans so
sophisticated solution that offers unparalleled that you can clearly look into the costs for
control and flexibility over billing and revenue personnel, sales, capital equipment and more.
management processes—a centralized and Automation also improves accuracy and
future-proof framework that supports the reduces errors by eliminating broken links
universe of monetization models and allows and formulas.
you to be nimble, innovate rapidly and profit in
A key best practice within financial planning
today’s marketplace.
is to compare actual data with plan data. With
spreadsheet-based planning, integrating
Financial Planning and Reporting
actual data into budgets, forecasts or what-if
To accurately plan and forecast future costs for
scenarios is cumbersome, and subsequent
various initiatives, your financial management
variance analysis is nearly impossible.
system should give you deep visibility into the
Financial management systems with best-in-
current state of your company’s operations so
class budgeting and forecasting capabilities
that you can identify problem areas.
seamlessly integrate year-to-date actuals with
Financial planning involves pulling together future expectations and allow you to perform
data from several departments within your variance analyses to compare actual results
company to gain a comprehensive view of against budgets.
Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 8Financial reporting for compliance purposes Fixed Asset Management
is extremely important in today’s highly As your company grows, you may acquire
regulated environment. Regulations such as a variety of fixed assets such as equipment,
Sarbanes-Oxley, Dodd-Frank and numerous land and buildings. You need to be able to
GAAP standards must be adhered to strictly. maintain and control the complete asset
In this kind of environment, it is very important lifecycle of all your fixed assets, from creation
that your monthly reports, performance to depreciation, revaluation and retirement,
reporting and financial close be built with the so that you can get a better view of how
appropriate internal controls into the process this affects your bottom line. Accordingly, a
in an automated fashion leading to reliable financial management system must have
and accurate results. This is a major reason detailed asset management functionality and
why it takes so long for many companies support multiple depreciation calculation
to close out every quarter. A financial types. It needs to handle both depreciating
management system that can withstand and non-depreciating assets, maintenance
regulatory scrutiny, accelerate financial close schedules and insurance. It must also tightly
and produce key financial reports on demand weave your asset acquisition process into
offers a tremendous competitive advantage. your accounting processes to help ensure
that no equipment slips through the cracks.
A robust system should also allow your
finance staff to dynamically drill through from There are several methods of depreciation
data entry sheets or budget reports directly and each method has a different set of
into underlying transactions and the evidence advantages and disadvantages. Your financial
supporting those transactions, providing deep management system should allow you to use
and unparalleled insight into your business. any of the standard depreciation methods
It would also allow your team to monitor including straight line, fixed declining, sum of
any financial measures according to their years’ digits, asset usage and even your own
role—whether controller, finance manager or user-defined depreciation methods.
analyst—through customizable dashboards
Strong management of your fixed assets can
and KPIs.
help you take advantage of tax deductions
related to the depreciation of your assets.
These deductions serve to help shore up
your cash flows so that you can reinvest the
proceeds into your business and grow further.
Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 9“Our move to NetSuite is really
about scaling the business. We
have much more visibility and
accuracy compared to what we
were doing before with the
real-time accounting capabilities
in NetSuite.”
TubeMogul
Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 10Chapter 2
SUPPORT FOR GOVERNANCE,
RISK AND COMPLIANCE
Today’s business climate is more complex Today’s environment demands a more
and more challenging than ever before. Even comprehensive, agile, and innovative approach
small businesses, nonprofits, and government to Governance, Risk and Compliance (GRC).
agencies face issues that historically affected Industry-specific compliance, regulations like
only the large multinational corporations. the Sarbanes-Oxley Act, and globalization and
Contemporary risks and requirements are outsourcing, have led organizations to expect
numerous, ever changing and fast to impact more from the GRC capabilities of their ERP/
any organization. New regulations, business financial management system.
decisions, changing workforces and evolving
The key is to understand what your GRC
technologies are just a few of the many
program is trying to achieve and how a solution
examples of increasing changes.
can support you in meeting the program
Organizations have traditionally struggled objectives. A cloud-based GRC solution brings
with effectively managing risk across the a number of advantages. One of the many
enterprise. Increasing growth and margin advantages of utilizing a cloud-based solution
expectations as well as changing regulations is the reduction of many IT risk mitigation
and technology innovations have further activities typically required for on-premise
complicated and significantly changed the software, such as running regular backups
risk landscape. The traditional approach and establishing data recovery methods, as
of managing risk in silos across different an example. A cloud-based solution should
functions—internal audit, internal controls, provide its customers with annual reports on
and compliance—and reacting to risks as their Statement on Controls, commonly known
they occur puts many companies at a as SOC reports (SOC1 under SSAE No. 16 and
competitive disadvantage. ISAE 34021 and SOC2), for the IT General
Controls (ITGC) associated with their customer-
facing systems environments.
Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 11In addition to compliance with all key accounting standards, the financial management system should have built internal controls and auditability into the system. The system should provide tools for security and controls management with permissions and management approvals all built into the core. In addition, the system must provide flexible workflows that ensures approval, workflow, and routing processes are defined and orchestrated centrally while preserving a complete audit trail of approvals and changes. When examining technical criteria for a GRC solution, upgrade paths and scalability should be a key consideration. GRC experts point out that typically no single solution will meet 100% of an organization’s GRC needs. Many GRC platforms support a wide range of use cases, and some vendors are stronger in certain areas than in others. NetSuite provides a host of options for customers to develop, maintain, and monitor their portion of the control framework from within the NetSuite system. Third party applications are also available that provide additional tools for control environment management. A cloud-based environment doesn’t remove the responsibility for good controls, instead it shares the burden to allow firms to focus on their portion of the control framework. Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 12
Chapter 3
MULTI-COMPANY AND
GLOBAL BUSINESS
MANAGEMENT
At some point in time, your company may With global currency exchange rates
grow across multiple geographies, with changing on a daily basis, your financial
multiple subsidiaries and international management system needs to be able to
locations. At that stage, you will have to deal automatically update exchange rates. It needs
with reporting currency, calculating taxation to enable your finance department to maintain
and meeting different legal and compliance the current local currency conversion rate as
requirements for each division. You’ll also well as the historical rates used at the time an
need to consolidate financial and business order was placed or a commission was paid.
information and gain visibility at the regional
While multi-faceted currency conversion
and global level.
capabilities are an important part of running
Handling local taxes poses a challenge for a global business, consolidation of financials
many companies. Your financial management and real-time roll-up is critical to achieving
system should readily handle local taxes a more rapid financial close, as well as to
across subsidiaries through an integrated gaining timely visibility into operations. Your
tax engine that allows for multiple tax financial management system needs to
schedules for everything from GST to VAT, to deliver multi-currency consolidation across
consumption tax or general sales tax. The accounts receivable, accounts payable,
system should also handle country-specific payroll, inventory, billing, invoicing and order
accounting standards and deliver multi- fulfillment—from local in-country operations to
currency management in all financial areas the regional office to global headquarters.
including accounts receivable, accounts
The need for intercompany eliminations is
payable, payroll, billing, invoicing, order
important if you have multiple subsidiaries.
management, forecasting, quota management
Many companies do not have a clear
and commissions.
Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 13intercompany elimination policy and find themselves struggling with currency, accounting and tax implications. You need to properly revalue foreign currency intercompany assets and liabilities and set currency conversion rates before performing the intercompany eliminations. To do this, your financial management system needs to have local entity and inter-entity reporting, automated management of revenue recognition, tight internal controls, easy- to-follow audit trails and multinational compliance capabilities. Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 14
“As we grow into new countries,
all the local requirements in
terms of currency, GST and
accounting reports have to be
met. With NetSuite OneWorld,
we actually have instantaneous
access to all of the information at
our subsidiaries in real-time.”
Treknology Bikes 3
Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 15Chapter 4
STREAMLINED
ORDER-TO-CASH
PROCESS
One key to maintaining control over your data from one system to another, and costs
bottom line is ensuring that your core only rise as more staff and contractors must
business processes can scale efficiently be hired and paid overtime to handle order
as you continue growing. Without doing so, processing demands.
you can compromise your ability to increase
Once an order has been placed into the order
profits as your revenues grow. As businesses
management system, you need to ensure that
grow rapidly, the order-to-cash process is one
customers provide payment in time and that
of the first areas to expose these growing
your Days Sales Outstanding (DSO) number
pains and an inefficient, manual order-to-cash
doesn’t get to a point where it results in order
process can be expensive and cause major
cancellations or customer dissatisfaction.
revenue recognition and customer
A system that integrates front- and back-
service issues.
office processes and includes built-in order
When sales reps convert a lead into a management allows your business to reduce
customer and place an order, that information unnecessary paperwork and costs by enabling
typically needs to be transferred to other personnel to turn closed opportunities into
databases to process the order management orders with just a few clicks of the mouse. It
fulfillment, update the accounting information, also provides your finance and executive
populate customer records and calculate and team with far more accurate and timely insight
pay commissions. Without efficient order-to- in to business performance.
cash systems, you may not be able to capture
By streamlining and accelerating the order-
this information in your accounting systems
to-cash process your business can benefit
in time for the close of the quarter, resulting
by eliminating manual bottlenecks and
in inaccurate reporting, decreased revenue
errors and establishing a smooth flow from
results and unhappy sales reps because of
sales quote to approved order, successful
delayed commission pay-outs. Furthermore,
order to fulfillment, and timely invoicing to
hours of employee time are wasted retyping
Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 16payment, the way TubeMogul did. TubeMogul, an enterprise software company for digital branding, used NetSuite to streamline its billing and order-to-cash cycle, with sales orders automatically triggering ad campaign creation and complex revenue accounting and billing processes have been simplified. TubeMogul’s multi-currency transactions, 12 in total, move six times faster, and global financial consolidation time has been cut in half. Another company, Outback Toys, sped up its order-to-cash process significantly while saving $100,000 annually and growing the business by 33% with NetSuite. Nucleus Research found that customers using NetSuite’s automated quote-to-cash functionality were typically able to reduce quote-to-cash time by 50%. It is vital to ensure that your order-to-cash process is streamlined, efficient and secure and incorporates the controls necessary to increase revenue and margins, reduce risk, and improve working capital. Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 17
Chapter 5 INTEGRATED INVENTORY MANAGEMENT, FULFILLMENT AND SHIPPING To manage each product’s margins with a order and inventory management, fulfillment clear view into inventory costs, turn rates and accounting; freed up staff resources and and inventory profitability, a good financial avoided hiring additional people; gained real- management system will incorporate strong time visibility into the business; and improved inventory management controls and provide customer support quality. Big Agnes is rolling you with complete real-time visibility into out NetSuite ERP globally as it expands into demand, supply, costs and fulfillment trends. 20 countries. Key capabilities of inventory management Strong inventory management capabilities include bin and lot management, landed cost, also enable you to track the specific cost for demand based replenishment, customer and each lot as products are bought and sold. As volume pricing, and multi-location inventory. a result, your company gains pricing flexibility Keeping track of performance around these by being able to assign different prices areas will enable your company to gain to different types of customers and sales control over inventory replenishment and channels, such as wholesale, retail or online ensure that you have enough product on sales. This strategy helps you increase your hand to fill anticipated orders, while keeping customer footprint and extract maximum excess stock and related costs to a minimum. value, while at the same time controlling your In this manner, you can slash inventory costs costs. Furthermore, integration with your back- by tightening control of stock levels while office accounting system allows your finance increasing operational efficiencies. Big Agnes, staff to calculate demand plans leveraging a manufacturer of tents, sleeping bags and historical data and model how expected sales sleeping pads for backpacking, camping and and purchase orders affect future outdoor adventure has doubled productivity in inventory levels. Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 18
While having detailed inventory management functionality certainly helps you maintain stringent controls over your margins, it can add even more value when integrated with fulfillment and shipping. With integrated inventory, order fulfillment management and shipping, you can eliminate manual re-entry, order processing errors, and the costs of reconciling shipping information. In fact, according to independent analyst firm Nucleus Research, companies typically save as much as 35% on annual shipping costs with a single, integrated back-office system for inventory and fulfillment. You can also reduce fulfillment errors by electronically routing orders to suppliers for drop shipping and improve your returns process with integration between order management and return merchandise authorization. Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 19
Chapter 6
COMPLETE
PROCURE-TO-PAY
PROCESS
All businesses need to purchase services A further benefit of automation is that new
and equipment. Without strict purchasing purchase orders are automatically generated
and approval processes, you run the risk of once re-order points have been reached for
employees engaging in maverick spending goods or raw material. Instead of having to
that can hurt your bottom line and potentially pull staff off projects to look up previously-
open your wallets to the opportunity for fraud. completed purchase orders and order
A financial management system that handles quantities, and generate another purchase
the complete procure-to-pay process gives order, purchase orders can be automatically
you visibility into all areas of spending to triggered by your financial management system.
quickly identify and rectify any out-of-control
Once purchase orders have been generated,
costs and find opportunities for savings. You
vendors that provide goods or services to
need a system that has complete purchasing
your company need to get paid. Your finance
workflows, policies, approvals, and audit
staff will need to confirm with the receivables
trails to provide complete control and
department whether the services or goods
ensure accountability.
were delivered as promised and only then
Another benefit of a streamlined procure- authorize accounts payable to release
to-pay process is time savings and the payment to the vendor. All these activities
elimination of errors through automation consume valuable cycles that your finance
of the entire process through purchasing, staff could spend on other critical financial
receiving and account payables. When your processes and operations. Integrating
finance employees can track the status of receivables with accounts payable ensures
purchase requisitions and orders through that payment can be promptly delivered
self-service functionality that eliminates paper- to vendors.
based forms and associated errors, it frees
your staff to focus on activities that help grow
the business while trimming the bottom line.
Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 20Chapter 7
PROJECT ACCOUNTING
AND CONTRACTS
MANAGEMENT
For companies with professional services automatically calculate the appropriate
organizations and services businesses, proportions of payments to be made at each
project-based accounting and billing is stage of the project to all parties involved.
one of the most important and complex This reduces the amount of time your finance
areas for finance staff to tackle. Your staff staff needs to work on complex payment
needs to be in constant contact with the calculations so that they can focus on
appropriate business units in your company activities such as analyzing project costs to
to ensure that project deliverables have determine areas where money can be saved
indeed been completed and that payment for future projects. With its financials, services
can be recognized, collected and released business and sales operations all running
to the contractor. Coordination with accounts on NetSuite, W2O Group, an independent
payable for payment processing also needs network of complementary integrated
to be performed with detailed line items of Marketing, PR, and Communications firms,
the various deliverables the contractor has employees can drill down to transaction levels
provided at each stage. The situation gets in reports, executives can compare margins
more complicated when multiple contractors across W2O’s eight subsidiaries, and project
are involved and can take up even more of management is more proactive and efficient
your finance staff’s valuable time. than ever. Streamlined project management
processes have freed staff to devote more
When the project-to-bill process is integrated
time to clients and project execution.
with the finance and accounting systems,
stakeholders have complete real-time visibility Robust project-based billing capabilities
into the relevant aspects of the project serve as a threshold for complex contracts
and no longer must spend time retrieving management. Many companies suffer
this information from other groups. Best-in- revenue leakage and customer churn
class financial management systems can because they rely on cumbersome, inefficient
Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 21and sluggish manual processes to manage Uplift and discounting are critical aspects
contracts. The many spreadsheets and of the contract management process. As
organizational handoffs involved introduce you renew a customer, you may increase
costly errors and project delays, and rob pricing based on a pre-defined price book,
companies of the opportunity to capitalize a standard across-the-board increase, or
on the full potential of their contract-based you might increase pricing for only some of
business. In many cases, companies leave your customers. Similarly, you may extend
money on the table because they cannot discounts to select customers. It’s important
respond quickly enough to expiring that you have the flexibility to implement and
customer relationships. customize uplifts and discounts across any
range of customers. However, managing
One of the many issues around contracts
this process with spreadsheets introduces
management is managing the multiple
the risk of error, lost revenue and customer
transactions that typically occur with a
dissatisfaction. It’s essential that your financial
customer over the course of a year. Some of
management system supply features that
these may be one-time transactions, while
enable uplifts to be managed across the
others are annual contract renewals for
board or on a customer or contract basis,
new users, product and module licenses, or
while supporting granular discounting down
support and maintenance entitlements. A
to the individual transaction level.
good financial management system simplifies
this process for both you and your customer
by allowing the co-termination of multiple
transactions into a single contract with a
single renewal. At the same time, multi-
contract support provides for additional
flexibility when it may not be appropriate
to co-terminate all items under a single
contract. This streamlined approach helps
ensure maximum revenue during the renewal
process. This streamlined approach helps
ensure maximum revenue during the
renewal process.
Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 22Chapter 8
ACTIONABLE BUSINESS
INTELLIGENCE
Getting an accurate view of your company’s measure performance against benchmarks
operations can often be a challenge. Data is and goals specific to lines of business, and
frequently fragmented and scattered across show key variances and period-on-period
several systems, and spreadsheets are trends. Once anomalies have been identified,
often out of date, error-prone and hard to you should be able to drill down from this
maintain. Traditional add-on analytics tools are summary level to greater detail, all the way to
expensive to implement, and often lack the the underlying transaction.
key business intelligence components and
Beyond historical comparisons, the ideal
easy access required to make them pervasive.
solution will give your finance staffers a
What are the key business intelligence real-time view into KPIs and performance
components that you need for both a holistic metrics that span the full 360 degrees of
and detailed view of business operations? your operations—across sales, marketing,
For a broad overview of the performance of service and fulfillment—to enable analysis
your various divisions, you need role-based of financial impacts and cross-departmental
dashboards that deliver personalized insights dynamics. Real-time data, accessible on
tailored to each finance user’s need—be it demand over the web, delivers actionable
the controller, financial planning and analysis insights that improve your ability to rapidly
managers, analysts or the CFO. These address issues as they arise and capitalize on
dashboards need to extract data from a single, opportunities. For instance, after a rapid, two
centralized data repository so that the data is month implementation of NetSuite OneWorld,
real-time and “multiple versions of the truth” alternative finance leader, Avant, can now
are eliminated. make data-driven decisions with real-time
access to KPIs. Streamlined financial reporting
To analyze the performance of your company
saved the company an estimated $120,000
correctly, you need quantitative metrics
per year while the SuiteCloud Development
and KPIs to evaluate the success or failure
Platform lets the business tailor its workflows.
of various activities within your company
departments. These KPIs enable you to
Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 23Chapter 9
ADAPTABILITY TO
SPECIFIC BUSINESS MODELS
Your financial processes need to be robust, In the software sector, because of the
auditable and as automated as possible to intangible nature of the assets involved, you
maximize efficiency and provide detailed may need detailed amortization schedules
visibility into your company operations. In to depreciate these assets appropriately.
re-engineering your processes to meet these Revenue recognition requirements in the
goals, you need to be sure that your financial software industry are complex with a need
management system is flexible. When your to be able to easily assess and report on
company tries to enter new industry verticals historical fair market value. These examples
or expand to new sales channels or markets, are only a sampling of the several use cases
your financial management systems need you may encounter with specific industries.
to be agile enough to adapt to these new
In addition to industry-specific capabilities, the
business models.
system should have built-in configurability,
Your financial management system should ease of customization and flexible workflow
be able to address the needs of your unique management to align with your unique
industry and business model. In industries business processes. The workflow engine
such as manufacturing, for example, you will must be able to rapidly edit the actions and
want to integrate your financials with your rules that impact a particular financial process
suppliers’ manufacturing processes to reduce and be able to specify conditions for workflow
lag between your customers’ demands transitions to help with back-office automation.
and your ability to plan your manufacturing In fact, workflow handling can be a major part
resources. When dealing with wholesale and of process improvement—in the case of CB
distribution companies, one way to improve Engineering, a specialized equipment provider
your cash flows is to shorten your Days Sales with complex technology, the time to compile
Outstanding (DSO) with automated billing and a 100-line custom-order proposal dropped
collections management. from three hours to thirty minutes with NetSuite.
Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 24The financial management system should also contain graphical customization components so that your staff can more easily and rapidly create customizations and custom objects by simply selecting various logic elements. Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 25
“We sell multi-period engagements
and have to manage complicated
revenue recognition schedules.
Our business was growing and
NetSuite was able to render
the scalability needed without
incurring incremental spend for IT
related resources or headcount.”
Glassdoor
Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 26Chapter 10
LOW TOTAL COST OF
OWNERSHIP AND
SUPERIOR EASE OF USE
A typical finance team has to contend It is only through a cloud-based financial
with several applications ranging from management solution that your staff can easily
accounting to financial planning, business access data in real-time without having to
intelligence, inventory management and rely on IT. This type of solution is managed
front-office systems like order management, and operated by a provider and all of your
CRM and ecommerce. Your IT department transactional and customer data is housed at
has to spend valuable time to plan, deploy, the provider’s data center together with the
manage, integrate and maintain these multiple hardware and software infrastructure to run it.
applications. Capital-intensive hardware
This kind of financial management system
infrastructure, servers and software licenses,
is called multi-tenant, which means that the
combined with expensive, time-consuming
provider is able to achieve economies of
upgrades, drive up your operating expenses—
scale by running the application for thousands
and those costs can get out of control the
of customers across a shared infrastructure,
faster you grow. Furthermore, your finance
with cost efficiencies that are impossible
staff may be dispersed in multiple locations,
to achieve for an individual department to
and may have to deal with a cumbersome
realize on its own. The result is that a cloud-
and slow VPN client to access your
based multi-tenant financials application
financial systems.
can be more than 50% cheaper to run than
Your core business management system its on-premise alternative. In an Institute
should not only perform essential finance of Management Accountants (IMA) survey,
functions but also minimize overhead and respondents cited lower TCO as the number
help manage costs. Selecting a cloud-based one benefit of moving to the cloud, followed
financial management system is a sure- by anytime, anywhere access. A study by
fire way to reduce the TCO (Total Cost of Hurwitz and Associates seems to back
Ownership) of your solution. this assertion—Hurwitz found that the TCO
Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 275% Speed of Deployment
21 %
Lower total cost of ownership
Access data anytime, anywhere
30 %
7% Easy upgrades
9% Lower cap ex
Streamlines business process
28 %
Figure 1: Benefits of Moving to the Cloud
savings for a cloud versus an on-premise "We have tripled our productivity,
business application ranges anywhere
from 35-55%.
enhanced our risk management
and reduced our overall
For example, Roku, the creator of a
popular streaming platform for delivering ecommerce IT expenditures by
entertainment to the TV, reduced its monthly more than 20% by switching to
financial close time by 500%, while not adding NetSuite."
personnel in finance, order management or IT. — Magellan GPS
An added benefit of a cloud-based financial
management system is that there is a single reimplementing customizations. The result
version of the application. This means that is a seamless upgrade process taken care
your finance department receives automated of by your vendor, such that your finance
upgrades and functionality (such as support department will always be running on the
for the latest accounting and regulatory latest software and hardware.
changes) without requiring they undertake
With a cloud-based financial management
a time consuming and painful patching
system, your employees have anytime,
and upgrade process. It also means that
anywhere access to their systems through a
customizations you make to your system carry
web browser. This enables your finance staff
over seamlessly during automatic upgrades,
to always have access to critical information
and IT does not have to be burdened with
Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 28such as cash on hand, cash flows, liabilities, debts, profit margins and more. A state of the art, modern cloud based financial management system should be built on a robust cloud infrastructure that is scalable with true multi-tenant architecture giving you freedom from the legacy processes of buying and setting up hardware, installing software, building out security models, setting up reporting engines and integrations and defining user access and authentication systems. The infrastructure should include all of the above IT processes as well as fully redundant hardware including third party security and operations audits (such as SSAE 16 Type II, SOC1, ISAE 3402 Type II, US-EU Safe Harbor framework, PCI compliance, NIST 800-30 and ISO 27000 series of standards), housed in multiple failover datacenters—all in a proven, turnkey, guaranteed available service that grows and scales as your business and compute needs change. These performance, compliance and audit levels are very expensive for individual companies to gain and maintain. They represent both comfort for the boards, CFOs, CIOs who are looking for assurance, compliance and reliability. Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 29
CONCLUSION A financial management system is key to running your operations profitably. You need to have real-time insights into numerous financial metrics such as profitability ratios, inventory margins, liabilities, fixed assets and taxes. An integrated financial management system that brings together your order-to-cash and procure-to-pay processes provides you with great business visibility while allowing your staff to perform their jobs much quicker. An adaptable financial management system with rich business planning, comprehensive system integration and solid reporting capabilities that operates in the cloud will position you for the next stage of growth. Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 30
FMS Checklist
Core Financial Management Quote, Order and Billing Management
General Ledger, Accounts Receivable and Accounts Payable Electronic Routing for Drop Shipping
Expense Management Automatic Quote-to-Order Transformation
Tax Management Automatic Order-to-Invoice Transformation
Compliance Management Integrated Pricing and Discounting with Quote Management
Asset Acquisition, Depreciation, Disposal and Revaluation Integrated Order Management and RMA
Depreciation Management Automation of Different Payment Terms
Asset Process Accounting Automation Support For One-Time, Partial, Pro-Rated, or Recurring Billing
Cash Flow Management Monitor DSO and Aging
Revenue Recognition Governance, Risk and Compliance
Support for Key Revenue Recognition Rules Annual reports on Statement on Controls, SOC reports (SOC1
Revenue Recognition Management on Multi-Element Sales under SSAE No. 16 and ISAE 34021 , SOC2), for the IT General
Controls (ITGC)
Custom Revenue Recognition Templates
Consolidation of commonly siloed GRC processes
Financial Planning and Reporting
Central storage of GRC data and documents
Budgeting and Forecasting
Role-based configurable dashboards/notifications
Modeling and Administration
Common workflow and rules engine, Regulatory Intelligence
Inventory Management
Change Management, Revision Management, Audit Management
Inventory Cost Management
Comprehensive Reporting, Closed loop process between GRC
Product Margin Management
and Legal
Inventory Control Capabilities Business Intelligence
Monitor Inventory Turnover Real-Time Dashboards
Demand and Supply Planning Key Performance Indicators
Purchasing and Vendor Management Self-Service Reporting
Purchasing Audit Trails Multi-Subsidiary Management
Automatic PO Generation Support for Multiple Currencies and Tax Rates
Shipping and Fulfillment Local Entity and Inter-Entity Reporting
Integration With Shipping Carriers Real-Time Exchange Rates
Self-Service Viewing of Shipping Status Project Accounting and Contracts Management
Monitor Inventory Backorder Resource Management
Allow Selection of Shipping Priority Contract Renewal Management
Logistics Tracking Proportional Payments
Support Multi-Step Fulfillment Project Costing
Custom Uplifts and Discounting
Multiple Transactions Management
Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Page 31www.netsuite.com info@netsuite.com 877-638-7848
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