Microsoft Dynamics 365 solutions for growing companies expanding abroad

When analysing companies' requirements for a new information system, we often find that some problems are more recurrent than others. In today's article we have prepared an overview of situations that are most often a source of distress for CFOs of medium and large companies. At the same time, we'd like to give you an overview of how these situations can be handled in the modern ERP Microsoft Dynamics 365.

Trouble One - Timely reporting of consolidated financial results

Get timely consolidated financial results for the entire group with advanced reporting tools.

A typical problem that almost everyone struggles with, especially those who operate in an international environment. Reporting financial results to management and shareholders is very laborious, and it can take several days to prepare data for company-wide reporting. Therefore, it is not possible to report results whenever required, but perhaps only once a month. This can have a negative impact on the management of the company because management does not have the resources to make decisions in a timely manner.

The data for reporting comes from other countries or branches gradually and the data must first be transformed to make them comparable with each other. Thus, the values of the financial dimensions (countries, cost centres) need to be unified or the numbering in the national chart of accounts needs to be converted to a common reporting chart of accounts. Furthermore, the amounts of accounting transactions in the currencies of the companies of each country must be converted into the common reporting currency at the correct exchange rate. Only on top of the transformed data can the corresponding financial results reports be produced.

A key feature of the system Microsoft Dynamics 365 is the entry of all accounting transactions of all companies in the group into one system, into one database. This makes the data of all companies available for reporting at any time, online, without delay. Laborious data transformation is eliminated thanks to the existence of tools that perform the transformation for you. For example, the sharing of dials - dials such as financial dimensions, asset cards, products, etc. can be shared across different companies. If you use shared values for financial dimensions and a single organizational structure across all companies, for example, then there is no need to laboriously transform data for reporting.

Some dials are more suitable to be mapped, which is typical, for example, for a chart of accounts. The local chart of accounts is mapped to the reporting chart of accounts, so that costs or revenues recorded in the local chart of accounts are automatically allocated to the common reporting account. In the context of data consolidation, there is great flexibility in setting which exchange rates to use to convert transactions in the currency of each company into the reporting currency. The system allows for multiple levels of accounting, and it is easy to distinguish between local accounting standard, IFRS, or US GAAP accounting in reporting. Furthermore, the system has an advanced reporting tool, Management Reporter, which allows regular generation of reports and distribution among users according to selected rules.

Trouble Two - Costly Expansion into Other Countries

In the context of tenders for a new information system, we are more and more often meeting CFOs of Czech companies that are expanding abroad and opening branches there. This is a trend of recent years, which is due to the absence of trade barriers (duty-free zone within the EU), but also to the good competitiveness of Czech companies. The typical situation of such a Czech company is that it uses for purchasing, sales, logistics and finance an information system of Czech origin, with Czech, sometimes also Slovak legislation.

Focus your energy and resources on your business, not on dealing with necessary legislative changes to the system.

At the moment of expansion abroad, the current system is no longer sufficient to cover legislative requirements, such as VAT reporting and reporting, functionality à la electronic sales registration (more about our EET CZ solution in Microsoft Dynamics 365 here, obligations towards the EU (Intrastat, ESL) or other local specific functionalities (e.g. calculation of depreciation of assets or recording of advances). Or, maintaining the system in a form that complies with the legislation of each other country is very costly and costs a lot of energy of people across the company.

Microsoft Dynamics 365 is a system created and oriented towards international companies in the long term, allowing them to use off-the-shelf solutions without additional expansion costs and to focus the company's energy and financial resources on its own business. The key building blocks of this system are legislative support for 36 countries and the aforementioned sharing of dials. The implementation of the system in a new foreign company consists of three steps. The first is the creation of the company itself and the basic setup of the system. The legislative layer is automatically accessible, so it is a user setup corresponding to the legislative obligations and customs of the country, without programming, without additional costs.

The second step is data migration. If you are using a shared product catalogue, a shared organisational structure and other important dials, then you do not need to migrate these dials, but just set them as accessible for the new company. So for newly established branches abroad, we can practically cut the migration costs. The third step is to set up the main processes of the company - purchasing, sales, logistics, production. This step is critical for the further functioning of the company, and thanks to the energy and cost savings in the previous steps, you can concentrate fully on it.

Complete description of the EET solution for Dynamics AX in PDF

Trouble Three - And we'll have enough money to do it:

A third frequently mentioned topic in meetings with CFOs is the lack of insight into the company's current financial situation and future outlook. We don't know how much money we will have in the bank in 14 days, in a month. We can't predict how much we will need to cover all future expenses. There is no basis for deciding whether we need to take out a bridging loan on which interest is paid. It is not possible to responsibly identify the appropriate time for major investments.

A tool for addressing the information needs regarding future income and expenses in Microsoft Dynamics 365 is Cash flow forecasting. Based on current account balances, expected income (outstanding invoices to customers), expected expenses (outstanding invoices to suppliers, VAT), the system displays the cash balance at any future date. The more information that enters the model, the more accurate the cash flow prediction modeling becomes. In addition to the Accounts Receivable and Accounts Payable modules, the Cash Flow Forecast can also include the Budgets module, which can capture, for example, future expenditures on salaries, rent, etc.

Furthermore, the Cash Flow Forecast includes the Assets module (depreciation), the Human Resources module (taking into account the costs of employees according to the recruitment plan), the Projects module (planned expenditure on contractor remuneration and e.g. travel, planned project milestones and related invoicing) and also tools for forecasting purchases and sales, which, based on mathematical models, predict how purchases and sales will develop over a longer period of time, resulting in income and expenditure of funds. Thus, cash flow forecasting uses the synergy of all available information on the company's potential income and expenditure.

Summary

In today's article, we have prepared an overview of the three most common sources of woes for CFOs of medium and large companies and the tools to solve them in Microsoft Dynamics 365:

1. How to ensure timely reporting of consolidated financial results using consolidation features and reporting tools.
2. How to expand abroad without the additional cost of an information system with built-in legislative support for 36 countries and shared dials.
3. How to predict future cash position using Cash flow forecasting based on information from Accounts Receivable, Accounts Payable, Budget, Assets, Project and Sales and Purchase Forecast modules.