Financial integration – financial system integration

This topic contains 6 replies, has 7 voices, and was last updated by  Poon Henry 3 weeks, 3 days ago.

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  • #113458

    Kent Anderson
    Participant

    Company financial systems are built over years and are full of nuance over time. What are the largest pitfalls in choosing one companies financial software over the other?

    #113679

    Arlene Clinkscales
    Participant

    Although most integration approach is to Assimilate, not just the operations, but the systems, there are instances in which the newco or even a brand new system is used for the merged companies. There are so many factors to consider that may lead to pitfalls, but here are a few:
    – focusing at the financial analysis as the primary drivers.. instead of the operational impacts.
    – trying to fit a round ball into a square peg… the newco business model is ignored (or not well understood) and focused fit into the parent co. ERP without much configuration
    – resources not available… the right ones and not enough

    #113933

    Lawrence Velasco
    Participant

    This is a challenging exercise in post merger integration. Most often than not, acquires have its existing accounting system. I guess the integration of financial systems must also be risk based. Is the current accounting system of the acquired not reliable or not up to par based on the internal control standards of the acquirer? If yes, then a robust transition plan must be in place. Otherwise, you will continue to doubt the data which will be a hindrance to overall post-merger synergy harvest.

    #115687

    Hari Pandiyat
    Participant

    When my bank merged and acquired 2 banks 2 years back, we had experienced a nightmare on the system integration side. There were lot of common customers who had account and banking facilities in both banks. Experienced few hiccups in cases when the banking facilities approved for both banks start getting duplicated in the system instead of getting consolidated, considering only one merged bank and system for the same customers going forward. That indirectly shows inflated exposure for those customers in our system which eventually impacted the security structure and risk rating etc. It took almost 2 months to fix that system issue at the time of integration and to make customers satisfied, until then we had to ensure that no additional loans / funds were released to the customer looking into the erroneous systems.

    #115711


    Participant

    We acquired a small family operation that had managed to create franchise operations while still using Cash management for AP/AR. We have almost everything automated and we found ourselves converting their manual books on our software as well as our billing software for hardware inventory. Understanding the biggest setback would be the accuracy of the data due to tech usage and accurate financial reporting, this financial integration had to be broken out into 3 phases (Mapping, Migrating, Training).

    Our biggest challenges were :
    1) Limited resources on the target end
    2) ERP complexity vs lack of SME on targets end
    3) Poor financial tracking performed manually of franchise locations led to bad data entry which was a mess at quarter-end

    #115792

    Gregory Weisser
    Participant

    When looking form a target perspective (in this case a small SME) integrating them into our ERP world issues were:
    – historical data was in-consistent and/or stored in different tools/places in parallel
    – little understanding/support by the target to move away from legacy systems (“the existing fin systems still and always worked well”)
    – resource constraints
    – incompatibility of integrating sub-systems (e.g. data platform which generates daily rev data for invoicing/rev reg) to new ERP

    #116002

    Poon Henry
    Participant

    Make sure the integration of the accounting system capture all the accounting records as once the system integrated, the company’s financial records rely on it. And you may need to inform the auditor earlier for the accounting system integration which may post significant audit risk in this year annual audit.

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