Page 22 —
COLORADO REAL ESTATE JOURNAL
— November 19-December 2, 2014
Law & Accounting
T
hroughout Colorado,
companies face many
issues in keeping their
operations running smoothly.
However, technology offers
numerous opportunities to
improve workflow efficiency in
the order-to-cash cycle. As we
complete workflow assessments
and help implement enterprise
resource planning systems, we’ve
noticed a significant amount of
manual, duplicate effort outside
the core business system.
It’s important to note that Excel
is not a core business system for
initiating, authorizing, processing
or reporting business transactions,
as it has no internal controls and
lacks enterprise data integrity.
Inthisarticle,we’ll identifysome
of themaster files in theO2Ccycle,
which includes maintaining the
customer, inventory item, bill of
material and pricing tables. We’ll
also identify some O2C events
and transactions, which include
obtaining a new customer, taking
the customer’s order, manufactur-
ing and shipping the item, billing
and obtaining payment for servic-
es and updating financial records.
The O2C cycle begins with esti-
mates and quotes. The company
receives purchase orders from
prospective customers. We often
see prospects captured in an Excel
file or Access database; we rec-
ommend managing prospects in
an ERP or customer relationship
management system. We also see
several other issues, including:
estimates and quotes prepared
in Excel without integration with
last purchase price or sales pricing
tables in the ERP inventory sys-
tem; sales individuals and engi-
neers with their own estimating
tools; and Excel-based BOMs.
We recommend preparing esti-
mates and quotes in the ERP sys-
temand leveraging cost data from
inventory, BOM, production rout-
ing and current selling prices. If
the estimate or quote is revised,
it’s difficult to determine who has
the current set of numbers, put-
ting target profit margin at risk.
Many ERP systems include a rule-
based configurator for preparing
estimates or quotes.
If the estimate or quote is accept-
ed by the customer, the duplica-
tive activities begin. The customer
is transferred fromExcel orAccess
to the ERP system and the BOM,
and routing is transferred from
Excel to the ERP system and the
Excel
esti-
mate or quote
is
entered
into ERP as
an order. All
this transfer-
ring and data
entry must
agree with the
Excel source
data, which is
highly depen-
dent on qual-
ity data entry
and the ERP
system con-
figuration. If the estimate or quote
is originated in the ERP system, it
can become the sales order – and
eventually the production work
order – with no duplicate data
entry.
Once the order process is com-
pleted, it’s time to manufacture
and ship the order. Too often,
production and delivery sched-
ules are maintained outside the
ERP system, typically in Excel.
This requires an individual to take
the sales order from the ERP sys-
tem and enter it into the Excel
production schedule. We often
notice these Excel-based produc-
tion schedules are nothing more
than a listing of customer orders
by requested delivery date; they
rarely include consideration for
capacity planning, work-center
throughput or production routing
elapse time. As new sales orders
are obtained andproductionwork
orders are completed, employees
involved in the processes manip-
ulate the Excel schedule. This
process is further complicated
by emergency orders and back
orders. Typically, these processes
createmultiple sources to observe;
imagine what happens when the
customer calls for an order status.
We recommend leveraging the
ERP system’s production sched-
uling utilities, which take into
consideration estimated time to
complete the steps in the routing,
tooling and work-center configu-
ration and set up time and qual-
ity control inspections as well as
work-in-process on the floor and
open work orders.
Once the company has manu-
factured the product, it’s ready for
shipping. If the company uses the
ERP system, the production work
order is closed, manufacturing
costs are captured, inventories are
updated and the systemgenerates
shipping requisitions and invoice
documents.
Consider the
effort required
to manually
update all the
data
silos
in the Excel
manufactur-
ing environ-
ment. Notice
we didn’t say
“information.”
We see bills of
lading, pick-
ing sheets and
packing lists prepared in Excel
from the Excel production sched-
ule and ERP sales order list. The
ERP system shipment includes
the pick/pack materials, BOL and
other shipping documentation
based on the completed produc-
tion work order. We don’t have
time here to cover all the manual
effort required to manage freight.
At the end of the day, someone
in the back office is entering all the
Excel production and shipping
data into the AR system so the
company can bill the customer.
If the company is using the ERP
system, the shipment is “shipped”
and the system generates a bill-
ing invoice. If the ERP system is
configured correctly, sales tax and
freight (and sales commissions)
are automatically included and
the invoice is electronically deliv-
ered to the customer via email.
Other related areas of consider-
ation include inventory, purchas-
ing and general ledger updates. In
the Excel environment, at the end
of the week or month, someone
in the back office must update
the ERP system subledgers and
the general ledger. This creates
massive duplicate data entry and
opportunities for manual errors.
Why does this environment
exist? In general, it’s due to a lack
of technical knowledge about the
system. Those who implemented
the system are long gone, and no
one has kept the ERP system cur-
rent or maintained the knowledge
base. In certain situations, the ERP
system lacks complete end-to-end
functionality. We recommend
staying current with annual main-
tenance and engaging a knowl-
edgeable system implementer.
Let’s extend this approach to
financial statements. At the core of
a company’s financial statement
audits are controls over data and
Timothy Beranek
Partner, BKD
Technologies, a
division of BKD LLP,
St. Louis, Missouri
Rob MaCoy
Partner, BKD CPAs &
Advisors, Denver
GreenbergTraurig isa servicemarkand tradenameofGreenbergTraurig,LLPandGreenbergTraurig,P.A.©2014GreenbergTraurig,LLP.
Attorneys at Law. All rights reserved. °These numbers are subject to fluctuation.
24124
The Tabor Center
1200 17th Street, Suite 2400
Denver, CO 802
1750 Attorneys | 36 Locati
Greenberg Traurig’s Denver-based attorneys provide
multidisciplinary legal services for real estate developers,
construction companies, lenders and other clients
throughout the industry – helping them break ground on
their great ideas.
Helping clients
break new ground
Deep roots reach higher.
Developing deals, navigating complex regulatory
hurdles, responding to disputes, growing an enterprise –
experience the difference that law elevated makes.
n
REAL ESTATE
n
REGULATORY COMPLIANCE
n
BUSINESS TRANSACTIONS
n
LAND USE & ENTITLEMENT
MATTERS
n
FINANCING
n
TAX
n
WORKOUTS
n
URBAN RENEWAL & PUBLIC/
PRIVATE PARTNERSHIPS
n
EMINENT DOMAIN
n
RESTRUCTURING
n
BANKRUPTCY/
FORECLOSURES
n
COMMERCIAL LITIGATION
950 17TH STREET, SUITE 1600 | DENVER, CO 80202 | T 303.825.8400 | F 303.825.6525
