How can I improve financial and operational accuracy?

Sounds like you have some fun challenges. I think the first solution is doing nothing more than requiring all transactions to be input on the system immediately. Let's discuss A/P first....If a PO isn't used, or in other words, if someone is not complying, tell them payment to their vendor will be delayed. This should get their attention and if there are any training issues, they may self correct. You have to use system controls that Sage provides, but you can add some sequential numbering or other review processes to ensure accuracy.

I am not too familiar with Sage, but on the revenue side, you need to get to the point of establishing a customer master (with appropriate controls). Sage should have a project or work order process where you can log all revenue as orders are received. Require all new business to be logged or an order is entered.

Based on what you described, there has to be leakage across the organization (duplicate payments, unbilled work). You need to start from ground zero and ensure these basic controls are prevalent, or you will be battling symptoms rather than the cause.

Thanks Patrick. I have provided training and sent letters to majority of our supplier telling them not to provide services without a PO because it could cause delays. All my managers across sites have also been informed of possible delays to payment if they don't provide suppliers with PO but it hasn't stopped invoices coming in without PO. I then have to go into the PO system to find a possible matching PO which takes me off my core tasks. Unfortunately we are a growing business and our Sage license only covers head office and and therefore usage across sites is impossible. Thats why I created an income tracker to all the managers unfortunately thats not being used properly even after training has been provided. You are correct theres income leakage and I am tasked with resucing or eliminating these as well. This is indeed a fun challenge but it would be more fun if I can correct it and make the system less complicated.

Well said Pat.

You may need to do a high-level review and ask some critical questions; the type I would ask if you were a cllient.:

"Why do you have seven subsidiaries "where each of the subsidiaries provide similar services"? Is it really necessary to have seven or could they (ideally) be rolled up into one or some other fewer number. Why seven?

If there is some critical need for seven companies (e.g., they're overseas subsidiaries) then I would ask:

"Why can't we do our billing and procurement through a shared services agreement, where we have a stand alone company whose sole purpose is billings, collections, payroll, etc. that are billed out at FMV to the subsidiaries?"

These are big picture issues that should be addressed, first, by you and, perhaps, with your company's counsel or management. After that, you should consider pitching the notions of (a) a single company with operating divisions; or (b) a single corporate services company to senior management..

Not a quick answer by any means. (If you're calendar, you'd be looking at a change, probably, at the earliest January 1, 2015, although it could be done earlier but with higher higher compliance costs.) But the long-term benefits would be invaluable in terms of efficiencies and control, and also offer a quick payback.

A few thoughts that may be helpful:

1) PO/Payable Processes
* Controlling supplier behavior along with internal behavior is challenging. Most people - most companies that are not in the Fortune 2000 - have less than total leverage over people.
* PO processes are designed to include approval for significant expenses prior to them occurring. They also add administrative overhead to your company - so there is a cost for these processes. Given the challenges of your PO system you could benefit from narrowing the areas where they are needed. Sometimes people use corporate purchase plans (with credit cards) for people with spending authority to distribute pre-authorized spending plans (up to $X per month based on your need).
* Independent contractors are a unique challenge. They are often independent for a reason – and at the same time you are not hiring them for a reason. They aren’t going to work to the same standard as internal employees. What we have found works best is standard requests for invoices to all independent contractor every week. Most of these folks respond to personal touch but not a corporate policy. This is the sort of thing that could be pushed to all of the subsidiaries.

2) Leveraging Sage 50. I’m not familiar with the product or the licensing model. However most on premise solutions are licensed by the site (installation on a specific server) and not by the number of subsidiaries or legal entities tracked in the system. To expand access to this system you could move the product to a cloud/hosting platform or put technology in place internally to support broader access to your system. You need to check your license agreement – I’m guessing you are a technical solution away from broad access.
3) Revenue and Invoicing Processes
* It sounds like this is a dynamic and flexible process. It also is what drives your company forward. Leveraging your financial solution to do invoicing would be a start (getting customers setup and billed in the system).
* To streamline this you could look one step back to your sales process. Do you leverage internal resources or outside contractors? Or are these eCommerce type sales? Whatever the go to market model it could benefit from its own software to support the process – some type of CRM solution potentially. You can then look at integrating the sales process (prospect to customer, quote to invoice). This would have the added benefit of exposing the sales pipeline to you to support your internal financial projections.

Bob Scarborough
www.tensoft.com

Thanks Bob and J.G. Collins. Your suggestions are very insightful. They are a real eye opener to better alternatives. I will incorporate them into my plans for the new year. Change is tough but it is necessary especially in my situation. The earlier I streamlined the process the better is for the company and me.

This problem must be enormously frustrating for you but when you have improved the process you will be able to use it to demonstrate the value you bring to your company. I would take a moment to prepare a change management plan for the issue: the problem seems obvious, the benefit from resolving it seems obvious yet change hasn't happened, so you need to understand why? What is stopping people from making the change to a smoother system? Take the time to understand the root cause of the missing documentation: is it simply a software issue? Is it remoteness from the central office? Are people being rewarded for the wrong actions? What KPIs do they see?

I would also be aware that the needs of the finance department are sometimes seen as pointless bureaucracy so ask yourself what support you need: do you need a change champion at each location? Do you need the CEO to send out your communications so that people understand it is a corporate objective not just a finance nice-to-have?

As I said earlier, when you have resolved this issue it will be a highlight of your career so I wish you good luck.