Integration: The Key to Simplified Accrual Rate Calculations

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Jacob
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Re: Corrective steps
Jacob   12/10/2013 11:04:45 PM
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"As I mentioned in the article, add-on financial accrual systems compromise on efficiency, accuracy, and total cost of ownership. The most streamlined and cost effective method is to calculate accruals in the same system as the rebates and incentive themselves. "

Jon, thanks for the clarification. How this becomes cost effective?

Jon Brier
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Re: 101
Jon Brier   12/9/2013 9:39:17 AM
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Thanks for the question Flyingscot.  I failed to provide a link to a post I had previously done that I called Financial Accruals 101.  Here is the link.  http://blog.revitasinc.com/2013/02/financial-accrual-calculations-101.html

Jon Brier
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Re: Corrective steps
Jon Brier   12/9/2013 9:37:49 AM
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Jacob  - As I mentioned in the article, add-on financial accrual systems compromise on efficiency, accuracy, and total cost of ownership. The most streamlined and cost effective method is to calculate accruals in the same system as the rebates and incentive themselves.  Layering an add-on application drives additional costs:
  • Total cost of ownership: You'd need to build interfaces to import historical rebate data as well as forecast data.  You'd also need to build interfaces to bring in the latest membership and product hierarchy data.  Since this data is already housed in a rebating system, you will need to maintain the interfaces as you upgrade your rebating the rebating system over time.  This is a cost that manufacturers may not account for in their decision.

  • Accuracy: Rebating systems store the incentive structures that financial accrual systems are trying to mimic.  By separating these solutions, you run the risk that what you accrue for does not match the current terms and conditions defined on the contract.  For industries where prices change frequently, it is critical to ensure that your accrual calculation always reflects the latest contract terms in effect.


Jacob
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Corrective steps
Jacob   12/4/2013 11:31:22 PM
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"Accrual calculation is a necessary encumbrance for many companies, and several solutions can improve the process. But in turning to an add-on solution, organizations might not be getting the most out of their investment."

Jon, according to you what are the reasons for that? Obliviously there may be many reasons like staff pattern, wages, business etc; but all can be got corrected.

Jacob
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Corrective steps
Jacob   12/4/2013 11:31:18 PM
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"Accrual calculation is a necessary encumbrance for many companies, and several solutions can improve the process. But in turning to an add-on solution, organizations might not be getting the most out of their investment."

Jon, according to you what are the reasons for that? Obliviously there may be many reasons like staff pattern, wages, business etc; but all can be got corrected.

FLYINGSCOT
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101
FLYINGSCOT   12/4/2013 4:56:23 PM
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For the uninitiated maybe you could give a micro tutorial on why accruals are necessary and how they are commonly done in practise.



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