There are solutions designed to make intercompany relationship management and balance settlement operate as smoothly as possible. This leads to a more efficient period close.
However, there are various types of solutions, including customizations, configurations and native. All have different benefits and drawbacks which companies should be aware of if they’re to make best use of the solution for their intercompany relationship management.
Developed/customized solutions are well-known and many people wonder if they’re the best choice when it comes to intercompany decisions.
Here are the advantages and disadvantages of a developed/customized solution and how it compares to Oracle AGIS.
What is a Developed/Customized Solution and How Useful is it?
A customized solution is one that has been custom coded. Because it’s been built from scratch, it means you can have a solution that’s completely designed for your business processes and requirements.
Having total control over your solution is advantageous if your business is in a very niche industry and you have working processes that need to be followed in a specific way.
The Drawbacks of a Developed/Customized Solution Must Be Taken Into Account
The custom coded aspect of this type of solution can be as much of a drawback as it can be a benefit.
Custom coding is a time consuming and expensive process. If you’re not already an expert, you’ll need to hire specialists.
When the solution’s been built, it doesn’t mean it’s ready to be used. It still needs to be tested to ensure that it works the way it’s been designed to and complies with regulatory standards.
Because it’s custom coded, it means that when your software needs to be updated, complications will arise. If the original software developer releases a newer version or patches, you’ll have to update the part of your custom coding that relates to it otherwise your solution won’t work properly anymore.
The same principle applies to if your business evolves and you find that aspects of your solution need to be altered in order to meet new requirements.
This then leads to the issue that you’ll need to ensure you’re constantly monitoring the software developer or the industry and related regulations. When they release an update or laws change, your solution will have to be changed accordingly.
Another major problem of having a customized solution is that you have no support from an external source. As you created the solution from scratch, via custom coding, you’re responsible for any troubleshooting if you ever encounter problems.
A customized solution is a complicated, time consuming and expensive business decision. That’s why it’s recommended you don’t invest in creating one, unless you absolutely need to.
What is Oracle AGIS and How Does it Compare to a Developed/Customized Solution?
Oracle Advanced Global Intercompany System, also known as Oracle AGIS, is a module that’s a part of Oracle eBusiness Suite (EBS). It’s a centralized intercompany accounting system designed to facilitate the creation and approval of intercompany cross charges and their subsequent reconciliation.
There are various benefits to using Oracle AGIS over a developed/customized solution. It’s supported by Oracle so if they ever release any updates, patches or changes to industry regulations, AGIS will automatically upgrade itself.
This is in contrast to a developed/customized solution where you have to monitor these changes and manually alter the coding. This automated process is far more time and cost efficient.
In addition, you have access to Oracle’s customer service who can offer you support if you ever encounter problems with AGIS - unlike a customized solution where you’re solely responsible for troubleshooting.
But AGIS Has its Disadvantages and a Developed/Customized Solution isn’t Enough…
However, Oracle AGIS is dependent on Oracle for new functionalities to meet your new business requirements. In other words, when your company evolves and you have new requirements to fulfil, AGIS might not be sufficient.
AGIS is a centralized intercompany accounting system but it does have some limitations. For example, it does not maintain intercompany balances. It only allows the creation of intercompany journals, which means other processes like settlement, reconciliation or reporting are not supported. Maintaining intercompany balance effectively becomes a challenging, time consuming task.
So, a company will struggle to maintain such balance if they rely solely on AGIS. Does that mean they should switch to a developed/customized solution? Not necessarily as it might not be a suitable decision either.
In these cases, it’s time to look for a third option. A configured solution, like Virtual Trader, can help. Virtual Trader (VT) is software that’s designed specifically for the maintenance of intercompany balances, automating the process to ensure intercompany relationships run as smoothly as possible. This helps to significantly reduce the time spent on reconciliation at period close.
Hosted by Oracle, VT doesn’t just resemble the Oracle interface (which means your IT team doesn’t need to learn any additional skills on top of what they already know to run Oracle). It enhances AGIS’ existing functionalities.
AGIS allows you to create intercompany journals, which is useful for entering and processing cross charges and management accounting entries within an organisation but it lacks the ability for settlement, reconciliation and reporting.
VT does offer these functionalities, providing advanced settlement options to effectively highlight reconciliation problems before they happen. It helps to automate the entire process, from journal creation and management to settlement and the subsequent reconciliation.
There are more advantages to using a configured solution like VT. Because VT is hosted by Oracle, it means when Oracle updates, VT automatically updates. There’s no need to change the coding yourself.
It doesn’t mean that you can’t adjust VT to suit your business requirements either. Although you can’t customize the coding, you can customize the business rules - meaning VT can still be adapted to what you require for your business.
This is extremely useful for evolving businesses as it means VT is flexible enough to grow with your business, in contrast to customized solutions which are typically designed for short term expediency.
Want to Read More About Virtual Trader and How it Compares to Other Intercompany Accounting Solutions?
Virtual Trader is a mature, comprehensive product of nearly 20 years. In that time, the software has developed to offer extensive flexibility when it comes to managing intercompany relationships.
From the Business Rules feature which allows the solution to grow with your company to whole life support, VT greatly enhances AGIS’ mechanism and allows companies to enter, process and manage intercompany accounting more seamlessly than ever.
Download our eBook for a deeper evaluation of VT’s functionalities below and learn how it compares to other popular intercompany solutions.