We all know the implementation phase of an ERP project is the most difficult one. But sometimes these projects can be more complicated when implementations require collaboration between multiple companies. When this happens, there are a specific set of ERP discovery questions tailored for the occasion that must be discussed in order to move forward.
How to Navigate Across Multiple Entities
Probably one of the biggest ERP discovery questions when dealing with multiple companies during the ERP implementation process is whether the companies are separate legal entities or not, i.e. if they have unique tax IDs or just one tax ID with separate operating divisions. Other items you need to clarify along these lines are are:
- Payroll Handling & 1099s – Are these prepared by each company individually or as one?
- Multi-Currency – Do the companies operate on different currencies?
- Multi-Language – Do the companies operate through different languages?
- Fiscal Year – Is the fiscal year the same for all companies involved?
- Public Status – Are the companies involved public or private?
- Transactions – What are the buy/sell transactions like between companies? For example, Transfer at Cost, Transfer with Markup/Profit, Buy/Sell Arrangement.
- Overhead – How is the overhead being allocated to companies, divisions, locations, etc.?
- Consolidation – Analyze the consolidation process between companies.
There are certain ERP discovery questions that arise in regards to the handling of accounts payable across the multiple companies, first being whether these payments are centralized or decentralized – how are invoice data entries and check printing handled? Is there one corporate cash disbursement account, or are there individual accounts per company?
What about employee expense reimbursements? Are employees reimbursed via payroll or AP? Are they operating on a paper or electronic system? What about corporate credit cards? How are they handled?
When discussing these accounts payable programs, it is important to provide an overview of how each of these items is handled.
Next, it is important the client shed light on corporate purchasing by providing an overview of purchasing activities. Examples of items that need to be cleared up include how purchasing is handled by each company or location, and whether it is common for purchasing responsibilities to be combined for any particular commodities or supplies. Do the parties involved make efforts to leverage combined spending across the multiple companies to negotiate better pricing and terms?
Accounts Receivable and Treasury Management
The method in which each company handles their accounts receivable is important, and the first question to ask is whether the companies involved have separate or consolidated bank accounts. Next the companies must disclose whether other accounts receivable activities, like customer invoice creation, cash posting, credit management, and collection calls, are separate or consolidated.
Understanding the financial reporting structure in place in regards to the current handling of the close of financial periods and the responsibilities and timing involved is crucial. To do this, the project team must discover an overview of the contents of the Reporting Package prepared at each location, and the recipients of this information.
To learn more about how to have a successful implementation, refer to our whitepaper “Best Practices for an Effective ERP Implementation.”