Monday, 19 May 2008

Shake the Trees Early

It doesn't matter how good your accounts department is, when you start shaking the trees, skeletons will start to fall. So rather start shaking that trees sooner than later because the ensuing cleanup/cover up could take some time.

You may remember from my previous posts that we are moving from our current ERP system to Dynamics AX 2009 (Formerly 5.0 but re branded recently to fall in with Microsofts standards). As soon as we got the go ahead I put my hard hat on and ran into the tree, shoulder first.

So what do we mean but this. When one moves to a new ERP system, all the relevant data in the old one need to be migrated across. The very first place to start looking is subsidiary ledgers and control accounts. To illustrate this concept I am going to use Accounts Payable (AP) as my example. At any point in time all the open vouchers in the system should tie up to the AP ledger which in turn should balance to the General Ledger control account. It is also very important to start identifying how you can isolate the open/unpaid vouchers in your old system from an SQL script point of view. The outcome of this exercise will be that you should be able to clean up your data and have a full understanding of what needs to be extracted for the conversion.

I does not help to only balance up the subsidiary ledger. One should also look at the open/unpaid items and take a view on validity. As a yard stick I would suggest that any vouchers older than 6 months should be reviewed and taken care of prior to go live. In our situation I found a number of vouchers that were quite old but if you take the debit and credit memo's they balance to zero for a specific vendor. It thus came to light that zero payments were not being made on these nett-offs, resulting in an unusually high number of open items.

By making these numbers and transactions available to the accountants we have managed to clear a significant number of vouchers which will now not have to be taken on in the future.

A parting word of caution, always look up when shaking the tree, you need to side step the falling elephants that everybody can see but nobody wants to talk about.

- Paul Steynberg

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