1. MANUFACTURING FINANCE
PRIANKA SINGHPersonal Goals & Objectives
As a returning intern, I hoped to gain more exposure to the business, while finding areas of
interest to develop a long-term career in Accounting/Finance.
Summer Projects
• Gain exposure to Manufacturing Finance functions.
• Support month-end close actvities for royalty expense, finished goods inventory
classification, and fixed overhead accounting.
• Co-lead and participate in Financial Analyst Learning Circle.
• Assist in increasing accuracy of labor rate to measure standard labor costs through a new
SAP report.
• Create and refresh existing desktop procedures related to standard costing processes.
• Understand process for determining reserves for Excess and Obsolete inventory.
• Support UAT efforts for E&O Automation Project.
• Additional Ad-Hoc projects TBD.
• Develop blueprint and action plan to automate royalty expense accounting process.
1
Background
A variety of ISI Instruments and Accessories contain intellectual property from external vendors,
for which we have contracted licenses to pay royalty fees on. Business partners have
negotiated specific pricing for each licensed material. On the basis of the accrual accounting
method, royalty fees are calculated as each of the licenses are used.
Issues with Current Process
On a monthly basis, a series of manual procedures are performed to calculate royalty expense
for the current month or quarter. This process takes an average of 8-10 hours, and because it is
manual, it is highly suseptible to errors.
Proposed Solutions
Depending on budgetary restrictions, there are two proposed solutions.
1. SAP offers a Billing Engine Application for IP Management for Outgoing Royalties (BEA_IPMO).
This application processes data from various sources in SAP, and communicates with the
Accrual Engine to automatically generate credit-side billing documents on a regular basis.
These documents are used to pay license fees for the current period. While this option is ideal,
it could be costly to the business if ISI has not already purchased the rights to this application.
2. Build a custom report to output a list of all royalty-related I&A, with relevant logic to decipher
vendors, internal vs. external shipments, how royalties are calculated for each material, and
monthly royalty fees. While this solution does not allow for automated accrual calculations
and postings, it generates a report which can easily be manipulated for internal and external
reporting.
Impact on Business & Finance Org.
With this implementation, there are a series of potential positive outcomes:
• Manufacturing Finance able to redirect 1-2 workdays per month away from manual
calculations and data entry to a more productive output.
• Increase in accuracy of accrual and subsequent payment.
• Implementation of automation enables for improved budgeting and forecasting ability.
• More timely results to allow for spending resources on analysis rather than calculation.
• Opportunity to have more accurate data as an input for actual cost tool.
Royalty Expense Accounting Automation Project
As-Is Business Process
1. Payment List
2. Excel File 3. Journal Entries
2 3
Outcomes
A business process
blueprint requests, in
detail, the proposed
automation in SAP.
Implementation of the
proposed solutions
continue, and this will
continue as a sand
project for IT.
Manufacturing Finance Accounts