What is the least favorite day for the building materials distributors financial department? No doubt the month-end close out day. Typically, staff find themselves in a mad rush to collect, reconcile, and validate disparate financial data. The process is time consuming, anxiety provoking, demanding, and often frustrating. But there’s a game-changing solution on the horizon. A cloud Enterprise Resource Planning (ERP) solution removes much of the friction from the process.
The Challenges of Month-end Close for Building Materials Distributors
Many distributors rely on old technology platforms that are riddled with limitations. Their legacy financial systems bog down reconciliation and reporting in many ways including:
Duplicate Data Entry
Building Material Distributors manage a large and growing list of products, like lumber, cement, and roofing materials. The business revolves around tracking demand for such items, their availability, their price, and the company’s ability to ship the materials to customers.
Such information is generated in different point applications. As a result, data consistency is a problem. For instance, information about 2x4s is stored in a handful of systems and in different ways. Consequently, employees spend their time searching through applications and collecting and correlating data. Only then do they know availability and pricing when customers call for quotes.
Manual Adjustments, Accruals, and Allocations
Finance is inherently complex and labor-intensive, and oftentimes requires a series of non-standard activities. For example, corporations often defer revenue through various methods, while many allocate overhead expenses across multiple departments. Typically, such items require tediously prepared manual journal entries, a time-consuming and error-prone process. In numerous instances, company accountants create their own spreadsheets just to track all of the different data sources and adjustments, making the process opaque and error prone.
Incomplete or Erroneous Transaction Entries
Nowadays, markets evolve at a rapid pace. Consequently, employees spend their time coding changes as well as their daily duties. Therefore, items can be entered incorrectly, and documents are lost or misplaced in the constant shuffle.
Lack of Standardized Processes
The distributors’ business is in a constant state of flux. New accounts are added, new systems are implemented, and new regulatory requirements are updated. However, business processes typically evolve in a hodgepodge fashion, created by individuals in departments who follow their own routines. Updates move slowly and clumsily from department to department. So, each month brings new closing and reconciliation challenges. The variability in closing procedures across different business units leads to inefficiencies, which become harder to contain and manage as a business grows.
A Lack of Real-Time Financial Reporting
With disconnected systems and manual entries, getting an accurate picture of the company’s financial results is just about impossible. Collecting and reconciling the information takes time and is an imperfect process. Consequently, after a month is closed, no one truly understands why their numbers do not match accounting. Reconciling the finance department and business unit information becomes a frustrating process for both sides, one that drags on and on. The lack of accurate updated financial information hinders decision making. Executives can only move forward when they are sure they have accurate, current data.
Simplify Month-end Close
Moving away from older platforms to a modern cloud-based system ERP such as Acumatica improves financial close out processing in many ways for CFOs and their teams within distributors of building materials companies.
Manage proactively
Data silos are replaced by cross-department collaboration, communication, and consistency. Accountants and managers are finally freed from relying on tired, old reactive workflow and are now free to turn their attention to planning for the future.
Integrate Information and Applications More Easily
Find a solution with an intelligent design and open architecture, so it can be easily integrated with other systems. In some cases, CRM capabilities, sales and accounting were designed to work from a single set of numbers. Financial and operational data is integrated. Daily financial reports keep all departments aligned and informed about inventory levels and sales performance.
Automate Adjustments and Allocations
The right solution integrates data across systems, so automated transaction entries replace manual tracking, recording, and posting. Using deferral codes, various scenarios for automatic revenue and expense recognition can be established. Deferred revenue or expense is then automatically calculated based on those codes, which are assigned to individual line items. The automatic calculation of deferred revenue and expense recognition, and seamless intercompany transactions keep financial information fresh and flowing throughout the organization. The change not only reduces manual entry and errors, but also enables more efficient inventory management.
Enhance Efficiency and Productivity
Automated bank feeds and document attachments make daily reconciliations possible. Transaction feeds can be imported from banks that provide data in formats, like Open Financial Exchange (OFX), QuickBooks Online (QBO), QFX, or Excel. Users can then create daily reconciliations and have real-time access to true cash balances. No more waiting until the end of the month to close out accounts.
Digitized Transactions Improve Accuracy
The benefits of digital technology become clear. Companies relieve themselves of manual data entry. Automated workflows for invoice approval and coding reduce time spent on manual entries for bulk purchases. Automation of AP document creation and coding through AI and ML also reduces errors and speeds up the approval process.
Enhance Compliance and Lower Risk Management
Acumatica helps maintain compliance with regulatory requirements and manage risks associated with fluctuating material costs and supply chain disruptions. Automated tracking and reporting for GAAP compliance reduces the risk of errors and fines.
Become More Responsive
Traditional systems hinder decision-making and operational efficiency. Managers may be unable to bid on projects and lose customers who need to move fast. They may not be able to procure materials needed for a project and then have to delay its completion. Acumatica’s ability to provide real-time financial results enhances decision-making and is crucial to delivering competitive pricing and managing supply chain disruptions.
Simplify Data Access
Dashboards provide a clear view of financial performance, highlighting overdue accounts and those aged 60 or 90 days. With color-coded indicators, users can easily access detailed notes on each account.
Multi-dimensional financial statements meet the real-time needs of business leaders. uses segmented keys to define individual components of the chart of accounts as well as their purpose and length. Once account numbers are assigned, individual row and column parameters are used to create customized financial statements, including budget to actual comparisons if needed, that meet the needs of every user in the organization.
Spend Time More Wisely
Automation frees up time for accountants to focus on strategic tasks, improving overall productivity in managing large inventories and multiple locations. The reduction in time spent on reconciliations and manual data entry allows them to focus on strategic financial planning.
Improve Accuracy and Reduce Errors
Companies see a decrease in errors due to automated processes and integrated systems, which is critical in avoiding costly mistakes in material orders and deliveries. Fewer discrepancies between departmental and official accounting reports arise.
With the right automated system, the month-end becomes just another day on the calendar. The pressure for accountants to hurry up and get everything reconciled is eliminated. The books are always right, and records are all in one place. Closing is no longer a stand-alone, once a month process but instead part of the daily routine. Accounts are always in balance. Transactions flow from proposal to invoice to collection to the bank. The business leverages its assets more effectively and becomes a more significant force in the market.
Conclusion
Transform your month-end close from a dreaded chore into a seamless, stress-free process with the right ERP solution. By integrating Acumatica’s modern cloud-based system, you eliminate the inefficiencies and errors associated with legacy platforms. Acumatica provides a single source of truth, where product and financial information is stored in a central repository accessible to workers, customers, and partners. This powerful tool not only enhances accuracy and compliance but also empowers your team to focus on strategic initiatives rather than tedious manual tasks. Experience the benefits of real-time financial reporting, automated processes, and improved productivity. Embrace the future of financial management and gain a competitive edge in the market.
Spend Time More Wisely
Acumatica is a modern cloud ERP system designed to streamline your financial workflow. With Acumatica, intercompany transactions are automatically posted to impacted departments within a single database, eliminating duplicate data and the need for many of the month-end adjustments. This solution has helped many businesses simplify financial reporting, with one customer reducing such expenses by $50,000 a month. Partnering with i-Tech ensures you receive the best implementation and support for your Acumatica system. i-Tech stands out as the ideal partner due to their extensive experience, tailored solutions, and dedicated support team. They understand the unique challenges of your industry and are committed to helping your business achieve efficiency and growth through technology.
Want to learn more?
Are you ready to take the pain out of your month-end close? Partner with i-Tech and leverage Acumatica to streamline your financial operations and drive business growth. Contact us today to learn how our tailored solutions can transform your financial processes and elevate your business to new heights.
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