The current RCS Group evolved from two independent businesses. The merger resulted in duplication and inefficiencies and led to extensive manual intervention.
RCS Group was operating on multiple financial accounting software systems, while the Foschini Group used SAP R/3 Financials. The amalgamation of these two companies resulted in the following challenges: Solution
It was decided to provide a single business management solution by replacing SAP R/3 and Pastel with one ERP system to ensure valid, accurate and complete financial records, as well as a fully integrated procurement system. Dynamics GP and the Information Worker suite of products were selected for this purpose.
This meant re-engineering all of the accounting processes and procedures. Data conversion and migration were also required for the historic financial information.
At the same time, various aspects were taken into consideration and ownership of financial results and commitments were transferred to the various cost centres, verbal communication and misunderstanding of the processes were ironed out and the amount of manual work, which led to duplication, was reduced. Another reduction was in the printing and paper costs which had previously been considerable.
The new system allowed creditor statement import for reconciliation, master record management, with respect to group creditors. including the management of the trading name, multiple addresses, contact details, VAT number, BBBEE score, public benefit organisations’ number, payment terms and settlement discount rates. The approval process of vendor reconciliation was also streamlined.
The maintenance of creditor bank details can now be better managed through segregating the capture and approval of changes to banking details and specific rights are required to perform these changes.
The procurement budget has been decentralised and, when a supplier has been used more than three times and the business owners have not completed a new vendor application, no funds will be disbursed until an executive has authorised such an invoice.
An exception report is required for immediate rejections of payments to creditors. These include an incorrect bank account number of the beneficiary, closed bank accounts, etc. The matching rejections must be authorised by a supervisor.
There is now improved reporting and reconciliation of creditors, bank accounts and general ledger accounts. Treasury reporting, a VAT leakage report and foreign exchange gains and losses (including foreign currency translation reserve) are automatically calculated in terms of IFRS.
The system is able to store and report against budget capital expenditure, by cost centre and asset category, and a consistent hierarchy of General Ledger accounts is available across all the companies, enabling financial reporting on the different company groups. Maintaining this integrity across group companies is critical. Centralised and controlled maintenance is required, preventing the creation of new GL accounts and vendors in the entity hierarchy, unless they exist in the master plan. Various other approval processes have been introduced. Benefits
The new system is secure and offers RCS Group IT compliance. The robust security and applied segregation of duties is important in managing the budget, expense authorisation, beneficiary banking details and creditor payments.
An established internal process, assigning responsibility to specific staff members, is now in place which means that access to information is through system controls and is easily managed.
With procurement, for instance, the automated processes ensure that the approximately 3 000 creditors’ invoices are processed across the group, monthly. The same applies to the company’s 300 trade creditors.
With the transfer of ownership for financial results and commitments to individual business units, the company is able to deliver accurate, complete and relevant financial information in a timely manner. This makes for better decision-making and enhances the RCS Group franchise value. Added to which administrative tasks have been simplified by keeping all financial records and reporting consolidated in one central system and location. Financial reporting, a checklist of the month-end finance calendar and bank statement processing are also simplified. © 2006 Microsoft Corporation. All rights reserved. This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY. Microsoft, [list other trademarks referenced] are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries. All other trademarks are property of their respective owners..