With Corporate Planner and CP-Cons, planning and consolidation are connected in an integrated system - for faster and better quality financial statements.
Head of Controlling & Corporate Development
- P&L planning
- Balance sheet planning
New financial reporting and consolidation requirements at Ranger Marketing
With the arrival of an investor, the financial reporting requirements at Ranger Marketing were set to change. Besides, the corporate landscape was being transformed from a loose association of businesses to a fully-fledged group. These were certainly good reasons for introducing the consolidation software CP-Cons.
The direct selling group, with almost 140 sales offices in Europe, distributes the products of more than 35 clients in the telecommunication, TV, energy, commerce, financial services and media sectors. In 2010, a private equity investor got involved. Back then, Corporate Planner, the CP-Suite module for planning, analysis and reporting, and the CP-Suite consolidation module CP-Cons had been deployed at Ranger Marketing. While the software was already used extensively in corporate performance management, many of the consolidation module’s potential applications were still almost untapped. However, the new situation raised the stakes in financial planning and reporting, so the entire consolidation process and reporting system needed to be professionalised.
For the relaunch, Hendrik Hucke, Head of Controlling & Corporate Development at Ranger Marketing in Dusseldorf, set himself the objectives of greater flexibility and better schedule performance, a display of monthly management figures and legal consolidation, a group chart of accounts, stable structures and data security, simplified currency translation, instant inter-company checks, a rapid integration of new companies, and last but not least, professional reporting for shareholders and banks. At that time, however, things were still looking completely different. Consolidation was a complicated task carried out in an Excel solution. There was no ERP system, no consistent structure for accounting entries, and no uniform chart of accounts. Almost every one of the eighteen group companies used its own charts of accounts. All this meant that the data structures in the companies were extremely heterogeneous. The whole system was very prone to error and came nowhere near to meeting the expectations of a private equity investor.
With the support of Corporate Planning, Hendrik Hucke tackled the changeover. First, a group chart of accounts was defined, in which the various company charts of accounts were combined into a consistent system. All the relevant corporate performance management data from all the pre-systems were merged in Corporate Planner. This is where the data, subdivided into a number of master items, are displayed in three distinct structures: a P&L analysis in German Commercial Code (HGB) format, a management classification for the P&L and balance sheet, and a separate P&L and balance sheet planning structure.
The resulting structures were mirrored so that analyses in the local currency could be maintained alongside evaluations in group currency for reporting purposes. These data and structures form the basis for consolidation in CP-Cons.
To satisfy the requirements of the various report users, the management accountant decided to use two different CP-Cons clients, one for displaying the legal consolidation and the other for management reporting. Here, the business figures are arranged in a classification which enables analyses tailored to the business model. To keep things simple, a monthly consolidation is carried out with constant exchange rates. The consolidation for statutory reporting is maintained in a separate client in which all the specifications of the German Commercial Code (HGB) are depicted year by year, and which serves as the basis for the group audit. In CP-Cons, the balance sheet, P&L and cash flow statement are displayed. In practice, the consolidation procedure then consists of two steps. Before the consolidation itself is carried out, most of the reconciliation work has already been done in Corporate Planner. For instance, offsetting differences from the elimination of intercompany liabilities and intercompany expenses and revenues are reconciled there so that the adjusted data can be transferred to CP-Cons. With the help of the consolidation workflow, all the steps are performed systematically – from the currency translation through the elimination of intercompany investments, liabilities, expenses and income, and on to creating the reports.
Integrated: planning and consolidation
Looking back at the initial situation, Hendrik Hucke has certainly achieved a great deal: the monthly, quarterly, half-yearly and annual financial statements are now created with a systematic approach, which has considerably increased the options for documentation. This provides reassurance that the financial data of every single company are within easy reach. With Corporate Planner and CP-Cons, planning and consolidation are connected in an integrated system – resulting in faster and better quality financial statements.
Mr Hucke now feels confident about making the required reports available to the various recipients. With an integrated software solution for corporate performance management and consolidation, Ranger Marketing has been able to lay the foundations for satisfying the specifications for the private equity investor’s acquisition-driven buy-and-build strategy as far as corporate performance management is concerned.