Supercharged Catalog Accounting

Although catalog companies are data-driven businesses, most catalogers are dysfunctional when it comes to integrating their data technology. Often masking the gaps in the systems architecture is the overarching umbrella of the order management system (OMS). Catalogers are unique in benefiting from systems that have traditionally handled customers, orders, and inventory in a single, comprehensive application. Those not in the business often refer to it, misleadingly, as a “back office” solution or even an enterprise resource planning (ERP) package.

Not true. A catalog order management system is a combination multichannel order entry, order management, customer relationship management, inventory management, and fulfillment package, with reporting functions that serve the vast majority of day-to-day analysis needs.

That’s the view from a distance. Up close, there are some major disconnects. One of these is content management. While e-commerce sites may be fully integrated with regard to customer, order, and inventory data, they are frequently as divorced from the inventory image data in the OMS as the catalog design group is. Coordinating images for all uses (each catalog version, each Web page, each e-mail) requires a content management solution.

Another disconnect is robust database marketing. As we have noted many times, this requires a data warehouse or data mart as well as a variety of analytical tools, all of which usually exist independently of the OMS — as well they should. Coordinating and synchronizing the data between the two platforms (operations vs. analysis) is a lot easier said than done, however.

Reconciling the dollars

The gap we want to focus on is the financial one. Perhaps the most common complaint about otherwise acceptable order management solutions is that the financial data in the reports they generate can’t be reconciled or are internally inconsistent. There are some simple explanations for this, such as returns that take place in an accounting period different from when orders were placed (probably the number-one issue).

There can also be differences in the way the order management system defines “orders” (based on demand, for instance) and the way the accounting system defines them (based on shipments). If you have an order with back-order shipments and partial payments…and returns on some of the shipped items before the back-ordered lines have been filled…and the customer’s credit card has been stolen in the meanwhile, well, you can just imagine the gymnastics required of both the order management system and the accounting system not only to keep up with this internally but to keep in sync as well.

But wait — there’s more! Though few would like to admit it, many catalog companies of all sizes (shame on the larger ones) still use the clunkiest methods to link their order management and accounting systems, including diskettes and manual rekeying. It doesn’t get any clunkier than rekeying, of course, which is not only time-consuming but error-prone as well. And when errors are discovered, tracking them down can be even more time-consuming.

Integrating an accounting package with an order management system is harder than you think, but it’s not rocket science, either. Think of The Odd Couple. From the point of view of accounting systems, which are by definition fastidious Felix, the OMS is like Oscar, the incurable slob. Transaction systems are just not optimized for the kind of neat and tidy data compartmentalization that accounting systems require. For one thing, they are not built as accounting systems are around a chart of accounts. They can play games with data in ways that accounting systems can’t, such as maintaining multiple valuations for an SKU in the same data file. And of course, on an order-by-order basis, the way the OMS handles money has nothing to do with double-entry bookkeeping.

Even when the OMS is “responsible” for handling things like accounts receivable billing, it does so in a much more simplistic manner than an accounting system does. But it gets the job done.

Bridging the gap

Direct marketing technology provider Marketing Concepts knows full well how destructive the gaps in a catalog systems architecture can be. The Delray Beach, FL-based company designed its Ability Reports several years ago to smoothly bridge the reporting and analysis gap on the catalog database marketing front. Its new Ability Content claims to handle not only your image and multiple description headaches but also all kinds of other content issues including PDFs, MP3s, links to suppliers’ info, sizing charts, and so on.

Marketing Concepts has now expanded its gap-defeating software suite with Ability Financials (AF). The company has chosen Microsoft’s Great Plains (GP) accounting package as its foundation. It doesn’t hurt that GP is easily configured by value-added resellers (VARs) such as Marketing Concepts, using the GP software development kit and the Dexterity programming language that GP is written in.

Imagine a mother for Oscar who is also a girlfriend for Felix (…or maybe it’s the other way around!). In any case, Ability Financials not only cleans up the OMS act to conform to the rigors of GP, but it makes GP data more accessible to the OMS as well.

The initial set-up consists of “data mapping” that lets you make point-to-point correlations between records in the OMS and the chart of accounts in GP while also supporting reconfiguration of the chart of accounts to accommodate any special OMS functions that the accounting system needs to be aware of (with a write-back to the chart of account changes posted to the OMS).

After importing all accounts payable, accounts receivable, and general ledger records from the OMS, Ability Financials gives you the tools you need to verify the accuracy of the import before posting these data in GP (full data imports take about two hours per historical year). There is also detailed “error trapping” in the import process to automatically flag obvious discrepancies in the data.

The import process supports importing of vendor master records as well. You can use either the OMS or GP to update and add vendor records, but Marketing Concepts suggests you will find it easier and better to let GP do that work, since it requires only a mouse-click to update vendor data in the OMS from GP using Ability Financials. AF can also produce a very nice comprehensive vendor (financial) activity report.

Once set up, Ability Financials keeps your OMS and GP totally in sync. You tell the system how often you want to update and review your financials, and AF automatically handles it all.

Just as you can reconfigure the chart of accounts, you can also manage reason codes in a more dynamic way in Ability Financials than you can using a standard accounting package — or standard GP, for that matter. Whatever the reasons for returns or inventory adjustments or what have you, you can import these into GP via AF and track all instances where financial adjustments are required, by reason code, with reason codes optionally tied to the appropriate account numbers in the chart of accounts.

Simplifying the complex

Ability Financials makes easy work of financial complexities such as split invoices. If you finance a purchase from your supplier over multiple payments, the system will automatically create multiple invoices for you (which you can edit for date of payment and amount), tracking each as a subrecord of the original invoice. When importing payables, you designate which checking account the payables should be handled in.

As far as its reporting tools, AF really understands promotional source codes (which by itself GP doesn’t track so well). In addition to the native data warehouse that comes with GP, AF gives you drill-down analytical capabilities on your data. Doing a mini income statement to track margins is no big deal for AF; it can even generate a report of likely keying errors on the OMS side.

Prices for AF were not finalized at press time. But Marketing Concepts is forming a user group, which will help not only chief financial officers and other Felix-types in the catalog business to make better use of AF but also Marketing Concepts to keep up with increasingly sophisticated user requirements as well.

In fact, in addition to the tangible benefits of Ability Financials, whose ROI should be measured in just a few months, getting to participate in the user group with your catalog accounting peers is probably worth the cost of the system all by itself.


Ernie Schell is president of Marketing Systems Analysis, a Southampton, PA-based database marketing solutions consultancy.