W H I T E PA P E R

ERP and
FP&A
Platform Best
Practices
W H I T E PA P E R

ERP and FP&A

Platform Best Practices
TA B L E O F C O N T E N T S

Using ERP for All Your Consolidations and Reporting Needs

Costs
Customization
Value Add Activities
Solving the ERP Problem
Providing Financial Information to the Entire Organization
Single System for Financial Close and Reporting
Pre-built, Complex Adjustments
Managed by Finance
Flexibility
New Opportunities
Mergers, Acquisitions and Restructures
Operational Data and Integration

Key Attributes of an Integrated Consolidation and Reporting System

Business Rules
Organizational Rules
Currency Conversion Rules
Allocation Rules
Consolidation Rules
Intercompany Elimination Fuctionality

Conclusion

PLANFUL.COM 2
 W H I T E PA P E R | P L A N F U L . C O M

In today’s economy the ability to make fact-based decisions faster and with
a higher degree of confidence can be the difference between success as a
growing business or a company becoming part of a statistic. The tools that
are at business’ disposal aren’t always equal in their ability to provide this
confidence or the numbers to support these decisions. In other words, not all
systems are created equal.

In the world of financial consolidations and

reporting there are three main options that
companies can leverage to drive this process—
enterprise resource planning (ERP) and financial
planning and analysis (FP&A) platforms, or a
spreadsheet tool like MS Excel.
While each of these tools has the capability
to consolidate, close, and make financial
information available to limited parts of the
organization, there is one that stands out.
FP&A platforms are the clear leaders to provide
all those capabilities along with the flexibility,
advanced analytics, and better decision making
that financial leaders need to provide all
decision makers today more than ever.
The following discussion will demonstrate the
clear advantages that these applications have
over ERPs and spreadsheets with the primary
focus centered on the difference between ERP
and FP&A platforms. Spreadsheet tools are
ripe with audit, scalability, latency and accuracy
concerns that they can’t be considered as a
solution for financial consolidation and close
reporting in today’s ever changing regulatory
environment.
Using Erp For All Your
Consolidations And
Reporting Needs
Enterprise Resource Planning systems were
created to provide corporations with a single
system that could handle all of the reporting
and analysis for the operations of a business
from their billings to their book of record and
everything in between. Unfortunately, ERP
vendors have never been able to deliver on
that promise. Below, we highlight several of the
most significant: cost, flexibility, and a lack of
analytics.
COSTS
ERPs by their very nature (large number of
modules, complex technical architecture,
and focused on transactions not analytics)
are complex and require a large amount of
expertise to not only implement but maintain
on an annual basis. To handle the complexity of
ERP systems, companies need to involve their
IT organization or outsource the function which
creates a layer of overhead that can become
costly.

3

The additional headcount to manage the
implementation, monitor the servers, and
maintain the healthy operation of the system
creates a significant salary burden for
companies. In addition, the cost of the servers
required to run the application need to be
considered when you have such a complex
environment to maintain. These additional
resources—people and technology—become a
significant addition to costs.
C U S T O M I Z AT I O N
The customization options for ERPs can
vary by vendor but in general their level of
customization is not what a typical company
would require to run their business the most
effective way. Just as “one size doesn’t fit
all”, not one ERP design fits all either. With
today’s constantly changing domestic and
global landscape, companies need to have
the opportunity to simulate and test various
scenarios for their financial results. The
effects of adopting or delaying new policies,
merger and acquisition initiatives, or regulatory
requirements (IFRS, Basel II, XBRL) are
important factors in the financial and legal
health of a company. Without having the
flexibility to model, consolidate results, and
report on these occurrences companies are at
a significant disadvantage to their competitors.
ERPs don’t have the level of customization
required to allow companies to perform these
activities and one could argue they shouldn’t.
• ERPs are the book of record for companies
and, as such, need a level of rigidity that is
required for audit ability.
• ERP vendors didn’t design their applications
for customization, but rather configuration.
W H I T E PA P E R | P L A N F U L . C O M
As such, companies will need to work within
the given framework without the ability to
extend their applications to accommodate their
growing or changing needs.
VA L U E A D D A C T I V I T I E S
Lastly, ERPs have not been able to deliver
on the promise of “less time aggregating
data, and more time analyzing”. Analytics is
at the heart of better, faster decisions. ERP
systems are not architected to support the
level of analysis that companies in the global
environment require. An ERP system was
designed to focus on transactional modules—
accounts payable, accounts receivable, fixed
assets, purchasing, and inventory control. Each
module is purpose built to accommodate the
operation of that function specifically, not how
that module contributes to the overall health of
the organization. As such there isn’t a robust
analytical engine that is supporting the users of
ERP systems to help them take the next step of
analyzing the results of their company for more
effective decision making.
S O LV I N G T H E E R P P R O B L E M
FP&A platforms have been purpose built to
satisfy the needs of Finance departments
and beyond within an organization. Realizing
that ERPs were not able to deliver on all of
their promises to support the enterprise these
solutions have been architected to provide
solutions for key areas such as budgeting and
planning, financial consolidation, and reporting
and analytics. Financial consolidation and
reporting software specifically addresses many
of the key areas where ERPs have fallen down.
The following sections will describe the unique
features of financial consolidation and reporting
applications and how they meet the needs of
4

customers while delivering additional value to
grow the organization.
PROVIDING FINANCIAL
I N F O R M AT I O N T O T H E E N T I R E
O R G A N I Z AT I O N
Access to financial information can be the
difference between a world class organization
and one that is still looking to break free. The
dissemination, update, and consolidation of
financial information should not be restricted
by an application. Instead the system should
encourage the participation of all users
across a company that are data providers,
data manipulators, or reviewers. In these
applications all decision makers should
participate in the process and contribute their
information, review related information for
making more informed decisions, or analyze
the final results.
It doesn’t matter if you are a sales
representative, operations manager, or financial
analyst, the availability of data and access
to the tools for managing and reviewing the
data are provided. This is markedly different
than ERPs for example, where you wouldn’t
want users such as sales representatives in
your book of record making modifications.
However, within FP&A platforms all user types
are enabled to contribute and participate in the
processes.
SINGLE SYSTEM FOR FINANCIAL
CLO SE AND RE PO RTING
Just as you wouldn’t take your clothes to
one store to have them dry cleaned and
W H I T E PA P E R | P L A N F U L . C O M
another store to have them pressed, you
wouldn’t want to consolidate your financial
operations in one system and then take
those results and put them in another for
reporting purposes.Organizations need a
single solution for integrated financial close
and reporting activities. This is important as
the financial close process is very iterative.
Therefore, the reporting of information doesn’t
occur only once the data is consolidated, but
rather it requires reporting throughout the
process. With integrated reporting capabilities
these applications help companies achieve
efficiencies in reducing the close cycle to world
class standards.
In addition, once the consolidation is
complete then all of the information for
reporting purposes is in a single repository
and is available for internal management and
external regulatory reporting. FP&A platforms
provide enhanced reporting through financial
intelligence of underlying metadata, integrated
financial statements, creation and management
of key performance indicators (KPIs), and
presentation style report outputs (PDF, HTML).
The reporting can also be extended to meet
recent external reporting requirements such
as XBRL filings and “Edgarization” of SEC filed
financial statements. These systems more
readily support these reporting requirements
as they contain the financial statements that
need to be filed and tagged. As the market
consolidates you will see vendors adding this
functionality through partnerships or direct
5

builds within their applications.
P R E - B U I LT, C O M P L E X
ADJUSTMENTS
A consolidation performed in an ERP is
only able to accomplish a portion of the
requirements to satisfy internal controls
and regulatory compliance. FP&A platforms
complete the consolidation process
through the availability of functionality such
as: intercompany eliminations; minority
interest eliminations; post-ERP close journal
adjustments; “top-side” journal adjustments;
dynamic journal calculations for management
ratios like Days Sales Outstanding (DSO); and
additional foreign exchange adjustments,
reconciliation and risk assessments. This is
provided in pre-built, customizable formats that
allow companies to tailor their functionality to
their specific needs or leveraging best practices
in consolidations.
To extend the effectiveness of these modules,
standardized reporting functionality is
provided to enable companies to see the
combined impact of adjustments across the
entire organization. The reporting provides an
audit trail of financial information through a
consolidation process that can be analyzed for
efficiencies and opportunities. Opportunities
are exposed through analysis of the data
and modeling of scenarios such as hedging
strategies to mitigate foreign exchange risk
or analyzing a minority interest venture to
determine if a larger stake could reap additional
benefits from an operational and financial
perspective.
M AN AGED BY FIN ANCE
The Finance organization is responsible for
the management and reporting of the financial
W H I T E PA P E R | P L A N F U L . C O M
consolidation process. Therefore, the Finance
organization should be responsible for the
administration of the system that supports
the financial consolidation process. Reporting
applications need to be architected for
finance people by finance people and don’t
require significant, if any, involvement by the
IT organization. In short, this allows for a less
costly, more intuitive system that is purpose
built for the finance users.
FLEXIBILITY
As was discussed at the beginning of this
whitepaper, ERPs just aren’t flexible enough
to accommodate the changing needs of an
organization.
NEW OPPORTUNITIES
FP&A platforms are designed to be adaptable
to ensure that all decision makers can
model scenarios, analyze data, and make
modifications quickly when plans change.
Companies are constantly looking for
opportunities to expand their business and
this may require analyzing different options in
the market such as mergers and acquisitions,
introduction of a new product line, building of
a new plant or relocating. You need to not only
handle the scenario and initiative modeling but
also grow as the business expands.
MERGERS, ACQUISITIONS AND
RESTRUCTURES
With the addition of new subsidiaries or
acquired companies these systems enable
the seamless transition through the support
of multiple charts of accounts (COA), a
consolidated COA for reporting purposes, as
well as drill back to source systems for detailed
analysis. In addition, FP&A platforms also
support what if modeling that allows for full
6
 W H I T E PA P E R | P L A N F U L . C O M

consolidation processes to be run to determine
best case/worst case outcomes for cases such
as restructures, divestures, and acquisitions.
All of this flexibility including currency
management and scenario modeling, provides
the final version of the truth and also the
detail to support those decisions through
adjustments and purpose built modules.
O P E R AT I O N A L D ATA A N D
I N T E G R AT I O N
information with the same rigor that is used
for statutory consolidations. Processes
such as intercompany eliminations, foreign
currency exchange impact, and minority
interest calculations are all relevant processes
which can be applied to budget and forecast
scenarios to drive more accurate plans. FP&A
platforms deliver on this functionality through
integrated modules that leverage a consistent
data model for consolidating and reporting
budget, forecast and actual data.

The prior sections have focused on the

importance of having a system that Key Attributes Of An
consolidates financial data and allows for Integrated Consolidation
modeling around financial decisions to report
both internally and externally. Let’s focus now And Reporting System
on the flexible architecture that allows for the The following rules are provided in an FP&A
combination of financial and non-financial data platform to ensure the proper and effective
within a single model to make more effective consolidation and reporting of financial and
decisions. operational information.

FP&A platforms can be utilized to plan, monitor

and report on non-financial data which in a
typical ERP wouldn’t even exist. This type of
information doesn’t even typically get recorded
on the general ledger; however it can have
tremendous value to an organization and
their business decisions. Decisions based
upon headcount, square footage under use or
employee turnover can enable companies to
make better decisions that will affect company
performance.

In addition, the integration between a

consolidation application and a budgeting
and forecasting application allows companies
to more accurately predict their future needs
and opportunities. Many companies employ
the best practice of consolidating their budget

7
 W H I T E PA P E R | P L A N F U L . C O M

BUSINESS RULES
Offer a simple way to manage the complexity
of the consolidation process without needing a
cryptic scripting language.
O R G A N I Z AT I O N R U L E S
Manage the complexities of minority interest
calculations, subsidiaries on multiple fiscal
years, complex equity ownership, multi-
level elimination journal entries and multiple
accounting methods.
CURRENCY CONVERSION RULES
Manage currency conversion based on
FASB 8, 52, and 95, including the temporal
method of currency conversion as required
for re-measurement or hyperinflationary
environments.
A L L O C AT I O N R U L E S
Allow for the configuration of multi-level
allocations across divisions and departments.
Conclusion
The consolidation and reporting requirements
are only going to continue to increase in
complexity and users involved. A system that
can support the ever changing needs of internal
and external pressures, either self-imposed
for performance improvements or regulatory
measures meant to standardize and protect, will
become more and more important. Systems
that are designed specifically to handle the
consolidation and reporting needs with “Best
Practice” design and easy to implement
modules can position companies to focus on
their core competency—running their business.
FP&A platforms are the only systems available
that provide this level of sophistication and
flexibility to meet the needs of today’s global
economy.

C O N S O L I D AT I O N R U L E S
Manage the sequence and processing of
subsidiaries in the financial consolidation
process.

I N T E R C O M PA N Y E L I M I N AT I O N
FUNCTIONALITY
Perform automated matching and elimination
of intercompany balances.

I N T E G R AT E D B U D G E T I N G A N D
PLANNING
Companies can implement the same rigor in
the consolidation of the budget as they do to
their actual statutory consolidation.