A New Jersey-based Mid-Market Manufacturing and Wholesale Company provided specifications to Asian Manufacturers for private-label Consumer Products which they then shipped to various retailers and wholesalers.
The company’s management team needed accurate and reliable financial data to make informed decisions and prepare timely financial reports. In particular, they sought financial consistency between their ERP (Enterprise Resource Planning) and their GL (General Ledger) Accounting Systems. The current lack of consistency had created a significant challenge. The accounting financial reports indicated substantially lower costs of goods sold than the actuals. This discrepancy led to an overstatement of net income. The company hired The A Team to implement solutions to improve the health of their financial data by providing accurate, timely and reliable processes.
The A Team, a fractional CFO, accounting, and accounting technology firm, first analyzed the company’s operational and accounting issues. Next, they identified and implemented solutions and then they documented their work so that the company had reference materials going forward.
The A Team used the following “IDS” methodology:
- Identify: The A Team interviewed company staff to understand their current processes and procedures. They analyzed the data from both the ERP system and the GL Accounting System to identify the root cause of the company’s issues.
- Discuss: The A Team advised the company that inconsistencies arose due to the custom interface between their ERP and GL Accounting systems not performing adequate testing, and several costs were not correctly flowing through to the GL Accounting System.
- Solve: The A Team corrected the interface between the two systems and then tested the revised interface to make sure that costs were recorded correctly in the GL Accounting System.
As a result of the engagement, the company management was able to rely on their data. The timely and reliable financial reporting systems allowed the management team to now have timely and accurate numbers in order to make informed decisions.
Engagement Benefits for the Mid-Market Manufacturing and Wholesale Company:
- Accurate financial data through optimized financial reports that reflected the actual costs of goods sold, resulting in reliable net income information.
- Increased Operations efficiency based on accurate financial data allowed the company to improve its profitability.
- A revised ERP and GL Accounting Systems interface improved the company’s financial reporting process.
The A Team analyzed the situation and provided a solution to correct the inconsistencies between the company’s ERP and GL Accounting Systems. This resulted in accurate and timely financial reporting, informed decision-making, and overall improved efficiency for the company.