Having fully integrated financials written specifically for the rental industry delivers huge benefits when it comes to managing your business in a timely manner.
Whether you’ve used SAP, JD Edwards or Oracle in the past or one of the slightly smaller ERPs such as Sage, Microsoft or Infor, what you’ll know is that they all offer very similar financial functionality. There is a general thought process that says accounts are accounts are accounts, it doesn’t matter that much what you use because an AR needs to deal with the same processes wherever you are.
To a certain extent that is true, but, when you start looking at specialist industries such as rental, having a generic financial system is not necessarily going to deliver real benefits to you on a long-term basis. You may find yourself spending too much time crunching numbers and GL data via spreadsheet to prepare journal uploads and not enough analyzing the data that’s automatically generated into your GL. The benefit you gain from having a financial application that inherently understands the needs of the rental industry is huge.
Some things simply don’t work in standard financial packages, the ones we see causing issues most often are: credit management, re-rental procurement/invoice matching, and revenue recognition/rental accruals.
Most standard financials systems see the value of an order/contract, as being the value to be passed through the credit check. Of course in a rental business, if that order is for a 6-month rental, then the risk really isn’t the full 6 months, it’s 1 month. If the customer doesn’t pay you can go and get your asset back, so standard credit management doesn’t really work. When you’re in the middle of the rental you don’t just need to know what’s on the account due for payment, you also need to know what hasn’t been billed yet but will be on the next billing anniversary. If you have fully integrated rental industry financials then this is something that can be accommodated out of the box.
Re-rental procurement and invoice matching:
Most standard financial systems understand a PO as a document with a quantity, a price, and a product. If you’re renting something then obviously you also need to consider duration. More importantly, you may need to be able to post multiple invoices against that PO over time depending on how long your re-rental lasts. This is something that standard financials really struggle with and you’ll find yourself creating multiple GRNs to fool the AP into letting you post additional invoices. Fully integrated rental industry financials will be able to deliver without forcing you into unnecessary processes.
Revenue Recognition / Rental Accruals:
When you work in the rental industry it is part of your normal working practice that at any point in the month you may have some contracts that have already been charged, others that are awaiting charge at the end of the month and others you may have charged in advance. You may make it even more complex by using best rate calculations, 28 day charging or bi-monthly billing. It’s unlikely that a standard financial package will be able to manage these automatically within the ledger when it comes to revenue recognition so you’ll find yourself building reports and uploading journals to make the numbers work in your GL. Again if your financials are built from the ground up for the rental industry, these are options that should function out of the box.
If you are interested in learning more about a rental-focused ERP solution, check out this free e-book.