Grow Your Company, Remove Risks & Dangers of Spreadsheets

Know what you own, and know why you own it

Eliminating the dangers of spreadsheets

Depreciation: Eliminating the dangers of spreadsheets

© 2014 Sage. Proprietary and confidential. 2

Depreciation: Eliminating the dangers of spreadsheets

Why shouldn’t I be using spreadsheets to manage my fixed assets? What are the risks? What alternatives are available to me?

11/19/14 © 2014 Sage. Proprietary and confidential. 3

Data control

Data control with spreadsheets is a headache. Here’s why:


•  Spreadsheets do not validate data entry

•  Introduces the challenge of “version control”

•  Minimal security and access control options

•  Spreadsheets do not scale well with growing businesses

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Data integrity

Dirty data impacts multiple parts of your business:


•  Bad reports •  Inaccurate asset values •  Inaccurate asset counts •  Potential audits

Real world companies


Eastman Kodak Company “Eastman Kodak Company restated financial results for the first and second quarters by $2 million and $13 million, respectively, due to an erroneous spreadsheet that calculated severance and special pension-related termination benefits.” RedEnvelope, Inc. “Shares of RedEnvelope Inc. tumbled more than 25 percent because they were underestimating the cost of goods sold. The budgeting error was simply due to a number misrecorded in one cell of a spreadsheet that then threw off the cost forecast.

CECO “CECO’s in-house accounting staff has discovered an accounting error in the spreadsheet calculations. The net effect will be a cumulative reduction in revenue of $1,969,000 over the four year period 2000 to 2003 with an equivalent charge to pretax net income.”

Spreadsheets kill data integrity The facts:


•  “64% of financial spreadsheets audited contained errors. Of those spreadsheets with errors, they found ten had an error exceeding $100,000, six over $10 million, and one in excess of $100 million.”1

•  “AMR has repeatedly found that 65 percent of fixed asset data is incomplete, inaccurate, or altogether missing, while 10 percent to 30 percent of fixed assets are no longer owned.”2

•  “30 to 90% of all spreadsheets tested suffer from at least one major user error. In addition, none of the tests included spreadsheets with more than 200 line items, where the probability of error approaches 100 percent.”3

1. http://panko.shidler.hawaii.edu/SSR/Mypapers/whatknow.htm 2.Data Validation the Best Practice for Data Quality in Fixed Asset Management,” www.amrnow.com 3. 2007 study Tucks School of Business at Dartmouth College

What about the rest of the Fixed Asset Process?

November 19, 2014


How does inaccurate asset data impact my bottom line? We can estimate the potential impact of inaccurate asset counts using some averages:


•  Average federal tax rate: 30%

•  Average state tax rate: 6%

•  Average property tax rate: 3.4%

•  Average insurance rate of 0.01 per 1$

Begin taking physical inventories of your assets! We can estimate the potential impact of inaccurate asset counts using some averages:


SFA Tracking takes advantage of existing data in SFA Depreciation software

When you perform a physical inventory in SFA Tracking, you are ensuring asset data is accurate and up to date

Perform Inventory

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Point to Bar Code

Press Scan button

Perform Inventory

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Perform Inventory

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Use Smart List to Select value

Reconciliation

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Reconciliation

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Reconciliation

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Reconciliation

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Reconciliation

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Reconciliation

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Reconciliation

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Reconciliation

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Reconciliation

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Fixed Asset Before Template

Reconciliation

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Fixed Asset After Template is applied

Plan, budget and place WIP’s into service

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Within SFA Planning, Invoices are compared to budgets, and finished assets are passed

into the SFA Database

Sage Fixed Assets Planning

Sage Fixed Assets Database

Benefits of an Integrated Solution

November 19, 2014


Sage Fixed Assets Integrated with your Sage ERP Solution

Questions we hope to answer today:


•  What is the cost to maintain Fixed Assets without a Fixed Assets software?

•  What are the benefits of an integrated solution?

•  How do Sage Fixed Assets and Sage ERP communicate with each other?

What is the Cost to Maintain Fixed Assets without a Fixed Assets Software? If a company wanted to maintain compliance of their fixed assets regulations on their own, what would be the cost?

•  CPA on Staff = $20,000 •  Tax Service and CPE Credits = $15,000 •  Total potential cost = $35,000 / Year

Outsourced Cost: $1,000 - $1,500 per month/ per 500k in annual sales or

1.0% to 1.75% of a companies annual revenue •  CPA Consultant

According to the 2012 Robert Half Benchmarking the Finance Function Report

How do Sage’s ERP Systems Currently Handle Fixed Asset Management?

Fixed Asset Management is an important part of your business, and it is

not a problem addressed by most ERP offerings.

ERP Offering Out of the Box Capabilities

Sage 100 None

Sage 300 None

Sage 500 None

Sage X3 Straight Line Depreciation only. No Tax Laws Included

Why should I consider integration? We don’t need it…

Purchase new assets in Sage

ERP

Manually export new asset data

from ERP AP/PO Format data for

SFA import

Manually import new assets into

SFA Run Depreciation

in SFA

Generate GL Posting report

based on recent Depreciation

Manually export GL posting report

Format GL posting report for import

Manually Import entries into ERP’s

GL

Automated Process Manual Process with chance for error Without Integration…

•  Data must be manipulated manually, leading to dirty data

•  Additional time and people needed to format data for export/import

•  Must manually confirm that both systems data is in sync

For more information about Sage Fixed Assets or for a personal demo, please contact: Oasis Solutions Group: Annette Manias, President (New sales) Phone: 502-429-6902 ext 222 Email: [email protected] or Jody Patterson, Client Care Manager (existing client sales) Phone: 502-429-6902 ext 225 Email: [email protected]