Case Study

Faster consolidation of financials and accounts

SPI leveraged Sage Accpac ERP to get a company-wide consolidated view of its financial data and expenses. By Akhtar Pasha

Software Paradigms International (SPI) leverages an onshore/offshore business model to deliver quality IT and BPO solutions. Headquartered in Atlanta, GA, the company's offshore facilities are located at Mysore. The company offers BPO services in medical transcription and billing, legal coding, accounting and finance BPO, data entry and validation and image processing. It has rapidly expanded its business in Mangalore, Canada and Singapore in the recent past. Looking for a scalable solution that could help in consolidating its financials and improve customer service across its lines of business,

Inconsistent data

SPI was using two distinct accounting systems for consolidating its Profit & Loss statements, accounts receivables, accounts payables, general ledger and project costs, which made the consolidation of accounting data difficult as it followed manual procedures. Sid Mookerji, CEO, SPI, said, “We were using two different accounting systems in India and the US for P&L statements and other reports. Our Indian operations were using the Tally accounting package while Peachtree Accounting (entry-level accounting software from Accpac) was used by the US operations. This led to lots of inconsistent and inaccurate data and the process was error prone. Since the file format was different, we had to download the financial data separately and manually reenter the data to get a consolidated view of revenues, expenses and P&L statements.” Additionally the company used other legacy applications to capture financial and expense data from its other regions such as Canada and Singapore.

Mookerji added, “Since we have operations in multiple regions, Tally and spreadsheets did not provide the controls and system checks that we needed. Additionally, we wanted a scalable system that would help us expand our business.” For e.g., getting a profitability account by location, customers or project-wise was becoming a time consuming task. Compiling financial and expense data across regions and then reentering the same into Excel sheets meant duplication and many man hours spent on consolidating data. Recalling statements pertaining to Booking Expense Management was impossible in the Tally system. The same was the case with Project Job Costing. There was no automation of timesheets attached to the billing process that led to lots of inconsistent data being generated. For e.g., time tracking for employees working on various projects was not captured as per actuals, which led to inaccuracies in estimating the price of the project and subsequent P&L statements. Tracking job profitability against estimates across legal entities combining both onsite and offshore costs had become a paramount concern for SPI.

Handling multiple currencies

Mookerji said, “We had to comply with various accounting standards as per the local governing law as we geared towards International Financial Reporting Standards (IFRS). We were unable to capture the exact currency exchange rates identified at a period of time while booking transactions using Tally. For e.g., if a booking price for a certain period of time was Rs 50 per dollar and if while making the payment the rupee depreciated by Rs 2, it could affect our earnings and the billing reports would becomes inaccurate. We were converting local currencies manually in the Tally system.”

Similarly for booking P&L and expense management, SPI had to manually convert all the financial data, an error prone process.

ERP evaluation

The company chose Sage Accpac 500 ERP 5.4v. Mookerji said, “When we were evaluating ERP systems we found Microsoft and Oracle Financials to be quite exhaustive while SAP did not meet our business requirement (dealing with multi-currency modules). We found that only Sage Accpac was coming close to our business requirement but it was not exactly an out-of-the-box solution and we had to build that capability ourselves to get the desired results. For e.g., the P&L statement on a monthly basis was not readily available and it was not 100% compatible with the taxation laws in various countries.”

Mookerji added, “The vertical experience [IT/ITES] of the Sage Accpac SI partner, New-Age Business Consultants (NABC) came in handy while implementing the ERP system and training our people. NABC was helpful in getting BI reports from the ERP system with ease.”

SPI choose the following modules for the implementation—multi-currently accounting, general ledger, accounts receivables, accounts payables, GL consolidation, electronic fund transfer, purchase order, project & job costing, fixed asset management and BI tools such as Sage Accpac Insite Author for data warehousing, Insite viewer and Insite Alert.

SPI went live with Sage Accpac 500 ERP 5.4v in January 2008 and it has successfully completely two financial years without any disruption said Mookerji.

Unified view

“For an organization such as ours that has operations in multiple time zones and countries, getting an online consolidated view of all transactions without Sage Accpac 500 ERP would be next to impossible—we would have been forced to acquire three or four pieces of software to achieve this.”

In the previous legacy system, the company had to manually adjust and convert the local currencies for booking expenses. Those conversions automatically take place with Sage Accpac ERP. SPI has programmed the applications in such as way that the ERP system automatically converts currencies (capturing current price fluctuations) when billing is triggered. According to Mookerji, post implementation, SPI can transact in any currency or do process payments or receipts in any currency. It can restate outstanding source currency balances and transactions as exchange rates fluctuate. Today SPI can choose when to recognize revenues, based on GAAP requirements and business needs.

Clearly there is greater visibility of financial and expense data today than in the past. Mookerji said, “The consolidation of P&L statements and closure of books are much faster because of the online availability of data across our companies. The data is accurate. The system gave us a company-wide unified view of all our expenses incurred in servicing a customer and it helped reduce our expenses year-on-year.” SPI can allocate indirect costs to its lines of business, department or project-wise and produce reports at any level to view revenues, costs and profitability.

Today, SPI can dive deep into the financial data to get various reports such as profitability—by customers, projects or regions and across business lines. Mookerji said, “Post implementation of Sage Accpac ERP we have experienced an incremental increase in our profits, which was not possible using Tally systems. We can manage our business and customers a lot better with these standard systems than we did in the past.”

There is a clear demarcation of billable and non-billable expenses (that get billed to customer) when an employee is working on multiple customer accounts. So expenses incurred internally by an employee cannot be included in the final bill to the customer. This helps in getting the fixed price of the project.

SPI can review each project status, its profitability per account, and make estimate-to-actual comparisons combining revenues and costs from multiple companies.

akhtar.pasha@expressindia.com