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Accenture provides consulting and outsourcing services in more than 300 legal entities spanning more than 75 countries around the world. It increasingly relies upon a global workforce model to provide these services, which has resulted in a substantial increase in intercompany activity. In fiscal year 2012, for example, Accenture billed $20 billion of intercompany activity, representing a 75 percent increase over five years.
Since the complexity of the business has increased, both in terms of the scope of products and services that it provides to clients and the global nature of its projects and commercial arrangements, Accenture made the decision to implement a single, global enterprise resource planning (ERP) system on SAP. As a result of its investment in intercompany solutions and processes, the firm has been able to scale the business dramatically without scaling the support organization.
Today, Accenture enjoys an automated, robust and stable intercompany solution that has grown with the business and been flexible enough to accommodate change.
In the early 2000s, Accenture operated a custom solution to manage internal financials. Intercompany invoices were processed in batches at the end of each month, and processes were not optimized to settle the invoices on a timely basis.
To support its strategic growth objective, Accenture made the decision to implement a single, global enterprise resource-planning (ERP) system on SAP. The intercompany billing capability in SAP was one of the drivers behind Accenture’s ERP system selection, and the intercompany billing functionality that was deployed represents one of the value drivers for the ERP implementation project.
With a heavy focus on the business processes and internal controls to support the business strategy, the design and build of the solution needed to complement strategic efforts to develop a comprehensive design of the solution.
At the core of Accenture’s intercompany billing solution are standard SAP components–Dynamic Item Processor, SD Resource Related Billing, Pricing Procedures and Conditions, and Material Master. Although the guiding principle was to use standard SAP functionality as much as possible, minor customization was required in order to accommodate the scale and complexity of Accenture’s business.
The resulting intercompany solution reads SAP financial postings and identifies intercompany activity based on the nature of the transaction and entities charged. It automatically creates intercompany receivables, payables and the associated intercompany revenue and expense postings. The solution accurately records invoicing and settlement activity in both functional and global currency, thereby leveraging standard SAP functionality to record foreign currency gain/loss.
In addition to SAP, Accenture also implemented custom intercompany billing solutions for royalties, central training, cost sharing and share-based compensation. These custom systems source information that is maintained outside of SAP, create intercompany billing journals and interface them into SAP, where they are invoiced and settled.
Accenture also deployed the SAP Treasury module, which brought Accenture onto a single treasury system. As part of this effort, Accenture automated the settlement of intercompany invoices through the use of in-house banking. Because intercompany billing customization was minimal at the outset, compatibility among the standard SAP modules was maintained, enabling the settlement process to occur easily and smoothly.
Additionally, Accenture enhanced its corporate-forecasting system to include Income Before Tax by legal entity, which has enabled forecasting intercompany revenue and expense geographically across the management organizations.
The implementation of SAP Intercompany and Treasury has delivered numerous benefits.
Accenture has automated the end-to-end intercompany process from billing through settlement and has put in place industry-leading intercompany processes. The solution creates intercompany invoices daily, for each day’s activity. Through end-to-end automation and process improvement, Accenture is able to reconcile all intercompany accounts at the trading partner level and resolve elimination errors before the end of the month, preventing delays in the monthly close process.
Reconciled Intercompany accounts in combination with the SAP Treasury module have enabled automated settlement of intercompany invoices within 10 days of the month-end close, which represents a 35-day improvement since 2001. Accelerated settlement substantially mitigates Accenture’s foreign currency risk.
Additionally, the combination of robust document traceability, detailed reporting and standardized transfer pricing provide the necessary support for financial statement, tax return and regulatory audits. Other overall benefits include having real-time reconciliation across all time zones as well as having consistent data and processes in every country due to the single SAP instance.
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