Oracle Financials Strategy

This entry is a continuation of my quest for understanding and knowledge of the hot topics in the Payments arena as a new Strategist for that module.  Please see the first part below:  A Primer on SEPA.

 

Why is SEPA important?

SEPA�s adoption means fewer charges on transactions and purchases in euros. On the consumer side of things, it could mean you'll be able to buy things on your card in another European country and pay nothing more than you would domestically. On the business side, it'll mean the same thing - moving money around should be as cheap as it is domestically. A more competitive and innovative euro retail payments market will bring with it higher service levels, more efficient products and cheaper alternatives for making payments. Banks will have to sharpen up their IT systems to replace manual processes with automatic ones in order to bring down costs � all good for corporates as well as consumers.

 

Do I care if I don�t do business in Europe?

YES!  No matter where you do business on the globe, standardization of retail payments is a goal to aspire to.  Making payments inefficiently is an avoidable drain on organizational resources. Transactions within the SEPA regime will be based upon the ISO20022 payment message � a global payment standard that will be made widely available on an �out-of the-box� basis by most (if not all) major software vendors.  You don�t have to go global to benefit from SEPA � but you can gain efficiencies and save on payment processing costs by adopting the global payment standard upon which it is based.

 

Helpful links:

SEPA Compliance (EBA)

SWIFT Community

The Road to the Single European Payments Area (Die Bank)

We get asked frequently about balancing segment values (BSVs), and we have definitely seen some cases of BSVs being...well...misused.

In short, the intention of balancing segments were to identify an entity that should produce a balance sheet or statement of financial position. According to FASB,

• Financial position, as it is reflected by the records and accounts
  from which the statement is prepared, is revealed in a presentation
  of the assets and liabilities of the entity.

• And an entity is defined as: Any legal structure used to conduct activities
  or to hold assets. Some examples of such structures are corporations,
  partnerships, limited liability companies, grantor trusts, and other
  trusts.

While this should seem pretty straightforward, the term "legal" used in the definition of entity always seems to lead to confusion.  Granted, you must produce a balance sheet for your legal entities, but many of our customers wish to produce balance sheets for sub-legal entities as well.    By sub-legal entity, I mean simply a portion of the legal entity.  This sub-legal entity could be a division, a department, a plant, or any other segment of the business.  In order to keep your accounting pristine, this sub-legal entity should always roll-up to a single legal entity.

So determining your balancing segment values is pretty simple:

I've seen some creative implementations in my time, and these implementations have definitely resulted in some creative heartaches.  The best advice that I can give is to just keep it simple and try to avoid those "if's" and "but's" that will inevitably lead you to one of those creative implementations or heartaches.