GEOTEK Holding automated management accounting and treasury using the 1C: Consolidation system

December 19, 2014. GEOTEK Holding Group announced project completion^[1] of automation of treasury using the 1C: Consolidation system. The management tool by cash flows and planning of payments for management company of group — GEOTEK Holding Ltd, and the largest asset of group — JSC GEOTEK Seysmorazvedka is created.

Management accounting

Project Tasks

In structure of holding of 20 key business units located in the main oil-extracting regions of Russia and Kazakhstan. For effective management top management of holding and the management of financial and economic division of the company need to possess up-to-date and exact information about activity of each business unit.

There was a need for the solution for operational data collection from the different systems of affiliated enterprises, unification of a packet of the management reporting and acceleration of its formation. Implementation was carried out by Rice group. The project is implemented on the 1C: Consolidation 8 platform.

Project Progress

During the project seamless integration of the 1C: Consolidation system with the 1C: Document Flow program which is applied at the enterprise for review of internal documents was executed. For review requests for a funds expenditure and accomplishment of treasurer functions mechanisms of approval and electronic archive of documents from "1C are used now : Dokumentoobot". At the moment in a system more than 100 users work.

Project Results

For April 2, 2014 in a system more than 100 users in 20 business units of the company work. During the course of performance the project the following purposes and tasks were implemented:

• The problem of operational data collection from accounting and operational production systems of business units is solved. A set of reference books, forms of loadings and output forms of the reporting containing production and financial information is for this purpose completely unified. As a result significantly labor costs of the financial and economic block on collecting and processing of the entering data decreased, and the set-up time of the monthly individual and consolidated statements was reduced to two days. In the program 12 report groups form: reconciliation of intra group turnovers, the fact of the Income and expenditure budget on the project, a business unit, group in general, Balance and working capital on a business unit and Group, the reporting under separate functional units (fuel and lubricants, materials, number).
• Managerial adjustments and amendments for the purposes of formation of the management reporting and the reporting of IFRS are unified, standardized and automated.
• In a system the convenient automated algorithm of reconciliation and elimination of intra group turnovers is implemented. It excludes the probability of emergence of errors when forming intra group transactions and increases reliability and justification of data of the financial and management reporting.
• Integration of the 1C: Consolidation system with the system of the production operational fact and an automated system of budget management and the reporting allowed to integrate information systems in a common information space, to increase quality of the received reporting and to lower load of employees of the financial and economic block.
• The flexibility and scalability of a system allowed to lay the foundation for expansion of functionality in the perspective directions: settlings with personnel, corporate finances, logistics.
• The mechanism of "seamless" integration with a single corporate system of 1C: Manufacturing Enterprise Management which allows to provide the "drill down" tool (immersion) before primary economic operation on all range of managerial reports is developed and implemented. It allows the management not only to analyze these or those indicators of activity, but also to reveal their prime causes.
• Users had an opportunity to work in a single system both at approval of internal documents, and at accomplishment of treasurer functions. It expelled need of repeated transfer by e-mail of requests from subsidiaries in management company and back. Significantly the efficiency of creation, approval and approval of requests for a funds expenditure increased;
• Loading of bank statements and diversity of payments is made in the system of the centralized treasury now. It allowed to accelerate process of collecting and processing of bank statements;
• The dynamic payment schedule became the convenient and evident tool for control of payments, installation of limits, initiation of treasurer transactions and formation of the register of payments;
• Information processing rate about liquidity in the company is significantly increased. The solutions connected with installation of payment limits and accomplishment of treasurer transactions are accepted much quicker. It managed to be reached, having integrated the processes of management of in cash of separate companies of group and a task falling within the scope of responsibility of management company in the centralized information system: control of payments, installation of limits, ensuring liquidity and others.

All this helped to provide control of a funds expenditure of the companies of group, with preserving of an auditor trace according to all requests for expenditure of means and effected payments.

Risks of delay of payments, critical for the company, were significantly reduced.

The internal efficiency of the company — due to fall forward of interaction between divisions on initiation, approval and execution of payments increased.

The efficiency of use of financial resources of the enterprise is increased.

Result

Project deliverables are considered successful. It is going to replicate the created treasurer system on all enterprises which are included into GEOTEK Holding.

A new system allowed to unify processes of approval of requests for a funds expenditure. Processing speed of payment documents increased by 2.5 times. The efficiency at execution of payment regulations in which a large number of employees is involved is provided. Control of observance of payment limits is strengthened, risks of delay of payments, critical for the company, are reduced. The efficiency of use of financial resources of the enterprise increased.

According to the chief financial executive of GEOTEK Holding Ilona Petrova: "Thanks to automation of the block "Treasury', we received complete confidence in accomplishment of tasks of control of limits, reduced the risks connected with passing of payments, received the tool for monitoring of all payments of the company in real time, increased the speed of approval of requests for an expense. Within the project we also standardized business processes and redistributed areas of responsibility between divisions. The efficiency of work of our treasurers significantly increased".

The treasurer systems - treasury

Daily legal entities entering into holding register more than 400 payments several thousand agreements signed with several hundred partners. The treasurer system of group works with a large number of checking accounts in different banks across all Russia and abroad. Each payment should be approved both at the level of separate companies of group, and at the level of holding in general. The employee initiating payment approves the request for expenditure of means at first with the management of the division, and then with payment committee of child dependent society (UO) which this division treats. The chief financial officer of management company sets limits on a funds expenditure within which the staff of treasury and payment committee of UO makes payments. At the same time the chief financial officer of management company can block any request for expenditure of means of any UO or block payments concerning the certain partner^[2].

Before the request for expenditure of means, registers and calendars of payments were created in spreadsheets and for review were repeatedly sent from subsidiaries to management company and back by e-mail. Such practice did not allow to consolidate quickly enough all payment requests of subsidiaries at the level of management company and required essential time for their processing and making decision on payments and treasurer transactions. The information system which would allow to unify processes of management of money was required for the enterprise and to accelerate approval of payments.

The decision to carry out a pilot project on development of a treasurer system and its implementation to GEOTEK Holding Ltd (Moscow) - management company, and in JSC GEOTEK Seysmorazvedka (Tyumen) - the largest asset of holding which performs the greatest number of payments and has the specifics characteristic of most the companies of group was made.

As a basis for creation of a system the 1C: Consolidation software product which was purchased especially for the solution of this was selected and develops in the companies for the solution of other tasks: management reporting, budgeting.

Execute a pilot project the group of Advanced Analytix company which specializes in management systems for money was invited and could offer the concept of the solution which is most suitable business of holding.

During the project seamless integration of the 1C: Consolidation system with the 1C: Document Flow program which is applied at the enterprise for review of internal documents was executed. For review requests for a funds expenditure and accomplishment of treasurer functions mechanisms of approval and electronic archive of documents from "1C are used now: Dokumentoobot". At the moment in a system more than 100 users work.

Key results of the project:

• Users had an opportunity to work in a single system both at approval of internal documents, and at accomplishment of treasurer functions. It expelled need of repeated transfer by e-mail of requests from subsidiaries in management company and back. Significantly the efficiency of creation, approval and approval of requests for a funds expenditure increased;
• Loading of bank statements and diversity of payments is made in the system of the centralized treasury now. It allowed to accelerate process of collecting and processing of bank statements;
• The dynamic payment schedule became the convenient and evident tool for control of payments, installation of limits, initiation of treasurer transactions and formation of the register of payments;
• Information processing rate about liquidity in the company is significantly increased. The solutions connected with installation of payment limits and accomplishment of treasurer transactions are accepted much quicker. It managed to be reached, having integrated the processes of management of in cash of separate companies of group and a task falling within the scope of responsibility of management company in the centralized information system: control of payments, installation of limits, ensuring liquidity and others.

All this helped to provide control of a funds expenditure of the companies of group, with preserving of an auditor trace according to all requests for expenditure of means and effected payments.

Risks of delay of payments, critical for the company, were significantly reduced.

The internal efficiency of the company - due to fall forward of interaction between divisions on initiation, approval and execution of payments increased.

The efficiency of use of financial resources of the enterprise is increased.

Notes