Five challenges of being a business with multiple locations

Growth is one of the key goals for most businesses and in a truly global marketplace such growth can lead to expansion in location and geography. This presents businesses with the challenge of ensuring that reporting and processes are consistent across multiple sites and multiple countries. The finance system is pivotal to solving this challenge so businesses embarking on expansion will need to consider whether they have a finance platform that will support and underpin their growth ambitions. In some instances, the platform will not provide the scalability and we have witnessed the issues that this creates. Many organisations have chosen to work with us because of our depth of experience and expertise in this area

We recently compiled a white paper ‘Businesses with multiple sites: Understanding accounting challenges and making it simple’. And in this document we identify the five key challenges for organisations that are expanding. Here is some food for thought if your businesses is growing and you’re are considering options:-

1. Keeping track of finances
The more dispersed an organisation becomes, the harder it is to obtain an overall picture of the company’s financial position. The Head Office needs to know what revenue and profit is being generated and where it is attributable; what costs are being incurred and the level of overheads. However, when each office/location/country is running on a separate ERP system, actions aren’t always recorded and tracked in a consistent organisation wide framework. The production of information for key decision makers is slow, fragmented and, ultimately, out of date by the time it is available simply because the raw data requires manipulation and reformatting. This delay introduces uncertainty and, therefore, risk to the business with inaccurate, untimely reporting; lack of compliance and perhaps, most importantly a tendency on the part of some locations to “go their own way”. Control is absent and this will lead to business units and divisions working in “silos” thereby destroying the prospect of the organisation realising any economies of scale in its operations. Cross selling opportunities will be unrealised due to multiple platforms.

2. Lack of visibility at site level
Tracking product lines, managing inventory and general accounting is a challenge across multiple sites, especially when you need to pull individual data sets to analyse. Many businesses need to keep inventory, manufacturing and accounting separate for different types of products and sites but allow for a single view at Group level.

3. Lacking real time reporting
When individual sites run on separate ERP systems, Group loses out on real time reporting. Consequently, decision-making capabilities are hindered, as it is hard to collate and analyse data swiftly. Organisations operating across multiple sites also struggle to respond quickly to changing dynamics and to identify potential cost savings across an organisation.

4. Dealing in foreign currency and languages
When a parent company is overseeing global businesses, it will need a sophisticated ERP system to deal with multiple currencies and languages. Companies that choose not to consolidate, lose the ability to have one global view of their business. Divisions are always going to need to operate in their local currency and language. This leaves the parent company with a major challenge filtering information into a single format and the individual divisions unable to share the same data.

5. Managing multiple legislations
When sites are located in different parts of the globe, multiple legislations need to be followed. To do this, an ERP system need to accommodate both local needs and the global requirements of the Group as a whole.

Summary

When businesses expand across multiple sites and locations, this present challenges for the teams that manage the finances. Too often, the solution is a cumbersome procedure whereby Head Office or the Holding company is reliant on each site to calculate their own numbers and feed them back in the right way. This equates to poor visibility, labour-intensive processes and sometimes currency and language barriers. The ideal solution is for all companies to be on the same system, which can be accessed by everyone.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *