Digitization of major financial processes
In a niche market traditional financial systems do not have the required functionalities
Automating postings by making use of an algorithm
The company’s core business is that of a typical venture capitalist: investing in companies, supporting their growth, eventually divesting at a higher price.
Because of its sector reputation, the company needs strong and correct financial communication to build credibility with all its stakeholders (investors, shareholders and the finance community). The major item to report to the stakeholders is not a classical financial statement, but the growth of the portfolio by period. This growth, however, should be reflected in the financial statements, with two important elements to be respected: the communication should be correct and it should be delivered in a timely manner.
To follow up on investments, traditional financial systems do not have the desired functionalities. It is a niche market in which main providers of ERP or financial systems will not invest. On the other hand, these players will invest in the digitization of standard financial processes. Combining these two types of systems, made considerable efficiency gains possible in the finance department, also enabling faster reporting.
Within an 18 months time frame, the project was fully delivered: analysis; new finance & administration system selection; implementation of a reporting set.
In the analysis phase, specific attention was paid to the automation of the valorization of the portfolio. This manually executed process caused the biggest delay in periodic reporting. All transactions that impact the valorization of each participation were managed in a niche ERP tool that was consulted on a daily basis by the investment managers, as it contained data on dividend payments, loan payments, capital increases or decreases,etc. Transactions were imported in an enormous excel where a valorization of each participation was calculated. Afterwards this was then booked in the finance & administration package.
With transactions translated into excel, automation should be possible. MI&S experts built rules in a software engine to automate these valorisations on a daily basis. This engine was built with data from the ERP system and led to an automated booking in the new finance & administration package.
In addition to this major process, MI&S experts digitized the invoice approval flows and flow of expense notes. Needing a lot of manual intervention, this process suffered a lot of delays, especially because the company’s investment managers are active on an international level. Digitizing the process remedied this.
Being present in different countries, the company also urged for a multi-GAAP setup. On top, consolidated reporting was done following IFRS. Next to the possibility to have an automated valorization, this was an extra advantage presented in the reporting layer.
Given the specific niche the client is active in, this was a multi-dimensional project. The consultants learned about the industry and about algorithms to valorize companies. This knowledge needed to be translated in valuation rules. This functional knowledge also was translated into the new system. They gained experience with the setup of digitized approval flows and expense notes in the specific software the client is working with. As such we know the advantages and disadvantages of the different packages available.
Next to all these functional skills, a lot of project management tasks were performed by another consultant. The project manager also acted as a challenger towards the provider of the new system. Ample communication with all internal and external stakeholders and well-organized testing and training certainly made this project into a success for all participants.