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EPICOR Strengths: multibooks and consolidations

One of the challenges faced by organizations with multiple branches in different countries is the differences in the legal systems regarding the keeping of financial accounts. On the one hand, this requires the books to be kept by local regulations; on the other hand, it means that the information from these books needs to be consolidated into a single chart of accounts common to the entire organization.

The Epicor ERP system is a powerful, proven solution used by organizations in many industries around the world. One of its strengths is maintaining multiple ledgers within a single system installation. This feature is referred to as multi-books functionality or multi-books. But, who may need the ability to support various books within a single company, and when?

For instance, let us consider a subsidiary of a big foreign company operating in Poland. Poland customarily uses the chart of accounts with a specific account numbering. For example, versions starting with 0 refer to fixed assets, with 1 to cash, 2 to accounts payable and accounts receivable, 3 to stocks, and so on. Although, in theory, this is only a suggestion and not a requirement imposed on companies by the Accounting Act, the use of such a numbering scheme has become common. Accountants prefer to use this de facto standard, and most companies in Poland have charts of accounts compliant with such a template. However, it may differ or have to be different in other countries. Not only the account numbering in the chart of accounts may be different. Polish law defines precisely how specific events are to be posted. Therefore, the same events will be accounted for differently under US GAAP or international accounting standards.

The multi-books feature allows Epicor to be configured to operate on two or more charts of accounts simultaneously. In this way, an accountant at the Polish subsidiary will use a ledger with the Polish chart of accounts, while an accountant at the US, French or German head office will use a different one.

At the same time, it is possible to establish relationships between accounts, i.e., to map charts of accounts. This means that what is posted to account number X in one chart of funds will be mailed to account number Y in another chart of accounts and to account number Z in yet another chart of accounts. For example, the Polish subsidiary may need detailed information and use five funds for something. Still, from the perspective of the head office, this allocation split may no longer make sense, and everything will go into a single account. This could be, for example, office running costs, which will be energy, water, waste disposal, and the like. For the head office, the total will be necessary; for managers in Poland, accurate information will provide greater control and optimization opportunities.

Moreover, it is not just account mapping. The system can automatically, on the fly, convert everything into the relevant currencies according to defined rules – either according to the spot exchange rate or the average monthly exchange rates taken from the budget. Accounting in Poland is done in Polish zlotys. Head offices abroad will undoubtedly prefer to see entries in dollars, euros, or other currencies.

In this way, the multi-book functionality makes life much easier for everyone – everyone can work as the law requires them to, as they like and as they are used to, plus it makes it easier to carry out an internal or an IRS audit.

In addition, separate entries can be kept within an additional ledger. This is important because, for example, international accounting or corporate rules may impose an obligation to make some write-downs, which may not be mandatory in Poland. When making such an entry in one ledger, there is no need to do it in another.

Of course, it is not only possible to split but also to consolidate accounts. It works similarly. Mapping or integrating charges and currency conversion allows the head office to collect data from several subsidiaries. For example, a business with Epicor installations in subsidiaries in different countries has the data of each subsidiary. Each subsidiary is a company. However, it is possible to create a separate company to consolidate all this data and illustrate the result for the entire group.

This also allows intra-group transactions to be accounted for and presented between individual companies. For example, a Polish company buys something from a US company. Viewed separately, there is a liability and a receivable. However, from the group’s point of view, it turns out to be zero. Appropriate mapping of accounts makes it possible to balance such intra-organizational transactions, so they do not obscure the overall picture.

In summary, multi-books functionality is an intelligent feature that facilitates accounting in geographically distributed organizations. The important thing is that it is built-in and takes minimal effort to set up and operate. All it requires is a simple mapping and defining a few rules, and you’re done. You have legal compliance, and, at the same time, you satisfy management’s financial information requirements.