Application agnostic list of steps that form a checklist in the implementation of a basic G/L, A/P and A/R accounting system. Suitable for SME-sized organizations.
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| 1 | Validate Countries and Languages
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Determine all countries and languages to be supported. Watch out for issues such as European dot/comma swap, the use of semi-colons as delimiters, time zone settings for batch jobs etc. |
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| 2 | Validate Currencies
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Determine all input currencies and consolidation currency |
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| 3 | Define roles and access
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Define security access to business units, ledgers and modular functionality |
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| 4 | Management Reports
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Analyze Management Reporting Requirements (incl consolidated reporting) |
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| 5 | Chart field definition
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Determine number of analysis fields - product, dept, project, employee etc. |
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| 6 | Identify non-monetary data
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Determine the non-monetary data to capture (statistics, time, counts etc) |
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| 7 | Rules on auto numbering and document seq
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Determine numbering sequences for all transactions (journals, invoices etc) |
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| 8 | Corporate Consolidation
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If multiple entities then define consolidation structure and chart of accounts |
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| 9 | Chart of Accounts coding Syste,
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Design coding system for accounts (e.g. Accounts 10000 - 30000 are B/S). Avoid leading zeros (Excel integration) and allow sufficient digits for expansion |
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| 10 | Chart field coding style
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Design coding system for all other fields (e.g. Projects are Client-MM-YYYY-Type) |
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| 11 | Design P&L Accounts
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Define P&L chart of accounts to match management reporting |
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| 12 | Statutory Reporting
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Capture statutory reporting requirements - taxes and others. Make sure you can handle both the capture of required data AND the government's preferred submission method. |
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| 13 | Define Control Accounts
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Determine Control Account requirements for Taxes, Banks, Debtors and Creditors |
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| 14 | S**t happens. Deal with it in the system
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Determine Suspense account requirements and cleardown process |
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| 15 | Complete Chart of Accounts
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Define Balance Sheet chart of accounts (after all Control Accounts are known) |
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| 16 | Cut-off Definition
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Determine Period End and data cut-off dates (revenue, payable invoices etc). Pay particular attention to the need to close AP and AR earlier than the GL. Also if consolidating, there will be a lag between local and corporate Period End. |
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| 17 | Period End Timetable
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Create and publish Period End timetable and responsibility matrix. AP and AR functions must know how to operate when AP and AR are in a different period to GL. |
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| 18 | Year End Timetable
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Create and publish Year End timetable and responsibility matrix. Very unlikely that IT will not have to be involved in this process. |
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| 19 | Settlement Terms
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Define settlement terms for purchases and sales |
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| 20 | Customer Invoicing Templates
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Create invoice template (ensure capture of data like terms, due dates, taxes etc). Check requirement to create pro-forma invoice. Do you require additional data like text on invoices. Is the invoice protected so it cannot be altered once issued? |
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| 21 | Customer Reporting
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Create customer statements and dunning letters. Define cadence (interval) for sending these out and filters (small amounts, invoices in dispute etc). |
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| 22 | Revenue Analysis
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Capture Customer reporting requirements (e.g. By ABC grouping, by Sales Rep etc) |
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| 23 | Debt Analysis (Creditors)
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Capture Supplier reporting requirements. You may want to report by Payment groups (e.g. Regular Suppliers, Utilities/Government, Employee Expenses etc.). You might also want to report by liability due date or by volume of spend by supplier. |
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| 24 | Aged Creditors
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Check Aged Creditor requirements (aging buckets and supplier selection). Report is assumed to be standard in the accounting system. |
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| 25 | Aged Debtors
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Check Aged Debtor requirements (aging buckets and supplier selection). Report is assumed to be standard in the accounting system. |
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| 26 | Witholding Taxes
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Define any witholding tax processes (sales and purchasing) |
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| 27 | Non-Recoverable and Partially Recoverable VAT/GST
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Define processes and structures for dealing with sub 100% recoverable VAT/GST. These should ideally be automatically linked to the suppliers/customers/goods or services that they apply to. |
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| 28 | Multiple Supplier locations
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Define treatment of single supplier with multiple addresses |
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| 29 | Multiple Customer Locations
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Define treatment of single customer with multiple addresses |
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| 30 | Credit Control Setup
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Define Credit Control check mechanisms, tracking mechanisms and reports |
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| 31 | Cash Application
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Determine Cash Application method in Receivables (open balance/invoice). Investigate how cash is identified as belonging to a customer/invoice. |
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| 32 | Printed Stationery
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Produce all standard printed output e.g. Cheques (checks) and statements |
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| 33 | Electronic Payments
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Produce all 3rd party electronic payment formats. Remember that you need to perform at least one test run with the bank. Remember too that banks rarely provide this type of service for free. |
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| 34 | Electronic Statements
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Obtain and test all electronic bank statements is using auto reconciliation. Only valid if your bank is sending your statement in electronic format. You may be able to use such a statement for auto/semi-auto cash application in AR. |
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| 35 | Cash on Account
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Document process for handling cash on account. Not all payments can easily be tracked to the debtor and the system should handle ANY input to the bank, recognised or not. |
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| 36 | Offsetting debt and liabilities
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Document process for offsetting debits and credits. This should almost always be done from AR by the Credit Controller. Occurs when a customer is also a supplier or where a customer has a credit that they wish to be offset against an invoice. |
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| 37 | Approval Workflow
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Specify and document approval workflow for transactions in all ledgers. This can be driven by monetary value or events and should include handling high value transactions, write-offs, inter-company transactions and all payments. |
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| 38 | Non Basic AP Transactions
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Determine how to handle prepayments, prepaid expenses and registered invoices. You should consider every type of non-standard AP transaction, for example VAT/GST only invoices or factored invoices where the invoicing and remitting supplier are different etc. |
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| 39 | DSO Calculations
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Define DSO calculations |
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| 40 | Bank Reconciliation
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Specify bank reconciliation process, timings and sign-off |
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| 41 | Payment Cycles
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Specify payment cycles and rules for making and tracking manual payments. How often and when should each supplier group be paid? What is the process for making sure that there is enough money in the bank? What is the sign-off/approval of the payment run? etc. |
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| 42 | Inter-Company
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Define inter-company processing, rules and reconciliation. Try to treat inter-company entities as suppliers or customers and use a coding system to identify them rather than just tracking these in the GL (where they will get muddled and lost over time). |
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| 43 | Control Account Reconciliation
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Define Sales, Purchase and Tax Control account reconciliation and intervals (pref weekly) |
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| 44 | Standard Journals
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Create repeating and spread journals |
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| 45 | Standard Invoices
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Create repeating/templated AP and AR invoices |
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| 46 | The Budget Definition
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Determine granularity of budget tracking and consolidation (incl budget currency). Remember that the budget should track at the same level that entities are required to report at. If entities have to report sales by channel then the need to budget sales by channel etc. |
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| 47 | Budget Intervals
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Determine budget cadence (Q1, Q2, Q3 etc.) and budget + actual mix (e.g. 5+7) |
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| 48 | Asset Management
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If no Asset Management System, define depreciation calc mechanism and postings |
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| 49 | Project Costing
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If no Project Costing System define year end process to roll over project P&L balances |
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| 50 | Write-off security
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Specify and document bad debt, underpayments and Fx write-off (with security) |
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| 51 | Customer/Supplier Transfers
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Define processes for handling open transactions on wrong customer/supplier |
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| 52 | Customer/Supplier Transfers (Closed)
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Define processes for handling closed transactions on wrong customer/supplier |
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| 53 | Metadata Maintenance
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Specify and document process for creating new:SuppliersCustomersAccounts and other Chart of Accounts codesUsers and Rolesetc. |
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| 54 | Batch Processing
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Document and specify any batch or overnight processing. Against each job track timings and recognise that jobs will increase in length as data volumes grow. |
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| 55 | External Interfaces
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Document and specify all external interfaces (e.g. Billing, Procurement Portal). Be sure to capture the process and responsibility matrix for handling issues in any external interface. Who receives the daily error log for example, and who acts on its contents? |
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| 56 | Issue Management
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Document and specify all error handling and issue management. Define the Change/Enhancement Request process as well as the issue escalation workflow. |
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| 57 | S**t happens on a daily basis!
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Define processes for reversing EVERY type of monetary transaction. This process should ALWAYS involve the creation of an audited, negating transaction and NEVER the removal or unaudited modification of the original, offending transaction. Monetary transactions in an accounting system that affect a ledger's balance should NEVER be deleted or altered. |
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| 58 | Help!
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Ensure the creation of user guides and the availability to all users of appropriate help. It is a false economy to scrimp on this process. |
