Five Problems With SAP Business One’s Financial Reporting

SAP Business One generally gets pretty good reviews when it comes to general-purpose reporting. When SAP bought BusinessObjects a number of years ago, it acquired Crystal Reports as part of that package. At the time, Crystal was the industry standard for SMEs, and it has been steadily improving ever since.

Unfortunately, the positive feedback about SAP B1 generally doesn’t extend to basic financial reports like an income statement, a balance sheet, and a statement of cash flows. These are fundamentally different from kind of the tabular list-based reports that Crystal is designed to produce. They require a lot of ad hoc adjustments to individual line items, such as the consolidation of multiple GL accounts into a single row on the income statement or balance sheet. They also display columnar data that defies the standard logic inherent in the tabular-style reports that Crystal is so good at producing.

What’s the problem with SAP B1 Financial Reports?

B1’s financial reports generally look OK in a demo, but when customers set out to use them in a real-world situation, they usually hit the wall pretty quickly. This can be especially confounding because it flies in the face of what customers have seen with respect to SAP’s overall reporting capabilities.

One reviewer expresses his disappointment in this way: “The standard reports are quite rigid and ugly. It is not possible to run reports in transaction currency – they are all in functional and reporting currency. This is an issue if you are a multi-currency business, as it makes reconciliations very difficult.” While this reviewer is focused on currency problems, in particular, the “rigid and ugly” comment is something we hear a lot about B1’s financial reports.

Let’s drill down into further detail to understand the challenges of working with SAP Business One’s out-of-the-box management reporting capabilities. (If you’re running multiple companies in B1, or if you have other entities running a different ERP system, be sure to read through to the end. The last item on our list will be especially important for you.)

#1: B1’s Financial Report Formats are Too Rigid

When someone initially creates a chart of accounts (or adds new accounts), chances are they do so in a way that will align the COA structure with the desired output of the income statement and balance sheet. Similar accounts will be grouped together and will easily lend themselves to being summarized as distinct ranges of accounts.

Later, a new CFO decides that things should look a bit different. Or someone adds a GL account that doesn’t fit well into an existing sequence. Suddenly, the rows on your income statement don’t add up quite so easily. You need to start making adjustments to the row formats to get things to show up the way you want them.

Tabular reporting tools simply don’t offer this kind of flexibility. In SAP Business One, you can associate GL accounts and ranges with different “levels” of reporting detail, allowing you to display an income statement at the summary level, at a next level of detail, and so on, – down to the individual GL account level. But that’s a rather crude approach to solving a problem. Most accounting users prefer to have much greater control over their reporting formats.

Purpose-built financial reporting tools, – backed by a robust accounting hub that can store subledger detail and unlimited multicurrency data, – provide complete flexibility without creating a lot of extra work, and without requiring specialized technical skills.

#2: Multicurrency Reporting Options are Limited

Generally speaking, SAP Business One does a fairly decent job of processing multicurrency transactions. The system allows users to set up a company with a company currency, a system currency (for example, if the parent company operates in a different currency from the base company), and multiple transaction currencies. B1 automatically adjusts for realized gains and losses at a transaction level (e.g. when a payment is received to settle a foreign currency transaction), or unrealized gains and losses (e.g. when balance sheet accounts are revalued to reflect end-of-period exchange rates).

When it comes to financial reports, though, B1’s multicurrency capabilities begin to fall short. As the reviewer we cited earlier notes, the native financial reports within SAP Business One don’t allow reporting in the transaction currency, making it difficult to reconcile accounts. That, in turn, slows down your period-end closing processes.

A more flexible approach allows for an unlimited number of currencies to be associated with any given transaction, and accommodates financial reports in any currency. For global companies that must comply with reporting requirements in multiple jurisdictions, this requirement can be critical.

#3: B1 Doesn’t Allow Reporting in both GAAP and IFRS (or other standards)

Another feature common to many global organizations is the need to generate financial statements that conform to US-GAAP, IFRS, or other standards. As IFRS gains more widespread adoption around the world, we’re likely to see this trend accelerate further.

The fundamental problem is that in an ERP system like SAP Business One, it’s assumed that you’re only dealing with a single financial reporting standard for each distinct company that you manage. What happens when you need to report to a local government agency in IFRS, but you want to run consolidated reports that roll that entity up to a parent company reporting in US-GAAP? You’ll need to make adjustments during the consolidation process (which we’ll discuss in the next section), or if you’re building reports manually (which is slow, tedious, and prone to errors), you can change the numbers on an ad hoc basis. Neither solution offers an efficient approach to generating automated financial reports based on up-to-date system information.

#4: B1 Doesn’t Handle Statutory Reporting Formats Well

A related issue has to do with the statutory reporting requirements that virtually every global company faces in dealing with multiple regulatory jurisdictions. Distinguishing US-GAAP from other country-specific GAAP variants and IFRS is one matter, but it’s another thing to handle complex mappings from the chart of accounts in your ERP system (or multiple ERP systems) to statutory reports for three, four, or five different countries.

Although SAP Business One allows users to assign an “External Code” for each General Ledger account, it simply doesn’t meet the needs of companies generating reports for multiple countries.  There is no way to map each GL account directly to two or more alternate charts, no ability to run a Trial Balance, P&L, Balance Sheet, or Cash Flow statement using these alternate charts; nor can users drill-down to the transactions underlying those mapped statutory balances. This makes complying with the reporting requirements of multiple local authorities difficult, time-consuming, and error-prone.

#5: B1 Doesn’t Do Consolidations

The lack of consolidated financial reporting has long been a major pain point for Business One users running multiple companies. In an increasingly globalized economy, though, it’s a problem for more SAP B1 customers than ever before.

Assuming that all of your companies are running SAP Business One and have been set up with a common system currency, you can export financial reports from each company, build a consolidation in Excel, and eventually get what you need. Unfortunately, that’s a difficult process, especially when you’re scrambling to close the books at the end of the month.

Then there is the matter of eliminations entries. If you’ve already gone through the trouble of building your consolidated financial reports in a spreadsheet, then this part might not require a whole lot more effort. Nevertheless, it adds one more step to a long string of manual processes required to produce consolidated financial reports in this way.

The problem for most companies doing consolidated reporting is the simple fact that SAP can’t handle it out of the box. During the month-end close, it’s not uncommon to re-run financial reports multiple times as adjusting entries are being made. Manual workarounds simply don’t lend themselves to an efficient period-end closing process.

There is a better way. CRx from Mondial Software provides a centralized accounting hub that works with any ERP. Our SAP Business One connector provides automated real-time integration between transactional detail in your source ERP system and the CRx hub that serves as the “last mile” in financial reporting and compliance.

In CRx, you can make adjustments and generate financial reports that conform to US-GAAP, IFRS, or country-specific GAAP standards from the same dataset, and automatically manage companies within your group that have overlapping accounting periods or different financial year-ends.

Mondial CRx solves all five of the problems with SAP Business One financial reporting outlined above.  CRx delivers powerful, efficient, next-generation financial compliance reporting for any ERP whatever accounting system you use. Contact us today to find out more!

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