Top Ten Problems Solved by Infor SunSystems Cloud in the Financial Services Sector. Problem #3: Multi-Entity and Multi-Currency Complexity
In this blog, the third in our series, we focus on the problems associated with multi-entity and multi-currency complexity. In many cases the scope and complexity of financial services operations demand a level of flexibility that is beyond the scope of many financial management systems. SunSystems, however, is more than up to the challenge.
The problem
Financial services firms are often structurally complex, with multi-entity group structures that increase accounting and reporting complexity.
Taking a couple of our clients as examples – one a bank, the other an investment manager. The bank is made up of a parent company, three trading subsidiaries, along with a number of special purpose vehicles, funding and securitisation vehicles, and an overseas entity. The investment management company is made up of eight UK entities and an overseas company.
Financial services firms are complex in other ways too. Investment portfolios are likely to be global. The range of products and services they provide can be many and varied. They may also operate from multiple locations within the UK and around the world.
There is also the matter of regulation. Financial services are subject to regulation that requires a level of reporting and transparency above and beyond that of other sectors.
How SunSystems Cloud from LAKE can help
Consolidated Financial Reporting
In SunSystems you can maintain unlimited numbers of entities, each with their own base and group reporting currencies. One of these entities can be configured to act as a consolidation business unit from which you report group-level information.
Multi-entity accounting can also be implemented by deploying a single business unit in which ‘Company’ is simply an Analysis Dimension. In this scenario, all companies share a common chart of accounts. As transactions are entered, they are simply tagged as belonging to one company or another using the appropriate Analysis Dimension.
Multi-Currency Management
Operating across global markets demands accurate, real-time multi-currency accounting control. In SunSystems every transaction can store up to five different currency values (transaction, base, reporting, a fourth currency, and lastly a memo / statistical value). SunSystems will allow you to maintain any number of conversion rates per currency and apply them based on your own posting rules. You can also automate calculation of realised and unrealised gains or losses. These calculations can generate ledger postings or may be for reporting only.
Compliance and Regulation
Financial services providers are heavily regulated. Each sector – e.g. insurance, banking, and investment – has different compliance needs. And each country in which you operate may impose different legal, regulatory and taxation frameworks.
In SunSystems, each company may have a different structure to its chart of accounts to reflect different types of activity and reporting obligations. There is no constraint on the structure of a chart of accounts; it can be whatever you need. This is particularly important when considering the differences in typical chart of accounts of, say, an insurer vs an investment manager.
Another factor to consider is that SunSystems does not constrain you in the setup of transaction types or integrations with line of business applications. Once again, these can be whatever you need.
Resource Allocation and Performance Evaluation
Different entities within a financial services organisation may have unique business goals, strategies, and performance metrics.
SunSystems is renowned for its flexible system of analysis. Each company can have Analysis Dimensions tailored to the reporting needs of that entity. Company A may choose Product, Location, Cost Centre, Employee, etc. Company B may choose Department, Branch, Region, Product, Sales Channel, and so on.
Take the next step
In the next blog in this series, we highlight the impact of slow financial close and reconciliation.
To find out how Infor SunSystems Cloud from LAKE could help your organisation, download a copy of our SunSystems Cloud Beginner’s Guide – Commercial.
By Jon Isherwood