A Chinese trade company with worldwide operations entered the Russian market in 2021 and soon after starting operations asked LowLands for support with the accounting for their Russian subsidiary.
First challenge with Russian accountig
In first instance the internal financial department in China assumed to be able to handle the local Russian accounting by themselves. This soon turned out to be impossible due to practical obstacles (electronic keys), language problems (all reporting in Russia should be in Russian) and a lack of understanding of local rules (from standard forms required in Russia to specific accounting rules that would need to be applied).
Outsourcing of Russian accounting to LowLands brought the solution
Outsourcing the local accounting for its Russian subsidiary to LowLands immediately solved all the problems. In coordination with the Chinese financial department all banking, invoicing, and reporting operations were integrated into the standard operating procedures already in place in the Chinese headquarters. Within the shortest period of time, the company was fully compliant with Russian legislation, while operationally still in full control from China.
The next challenge with ERP system
Having outsourced the Russian accounting to LowLands, it turned out that the company used their own internal ERP system to provide for inventory accounting and control. However, this system could not provide the documents and data input that were required locally in Russia.
Finding the optimal accounting solution
After joint consultations with the client’s Finance and IT departments and in close cooperation with LowLands 1C consultancy partners in Russia, it was concluded that adjusting the client’s existing internal ERP system to be able to provide Russian documents and reporting, would be a too complicated mission at this stage. At the same time, banking on broad experience from similar situations in the past, LowLands advised against a completely stand-alone system for Russian accounting and reporting purposes only.
The ultimate solution implemented was a hybrid system where:
1. the client’s existing internal ERP system is be the leading system and the Russian 1C solution is working as an addition to this, not a replacement;
2. electronic data exchange between two systems is used wherever possible in order to avoid double data entry as much as possible;
3. both systems stay in continuous sync.
With the system implemented the client was able to quickly scale its business in Russia without having to make any concessions to control and be assured of compliance at all time.
The ultimate solution implemented was a hybrid system where:
1. the client’s existing internal ERP system is be the leading system and the Russian 1C solution is working as an addition to this, not a replacement;
2. electronic data exchange between two systems is used wherever possible in order to avoid double data entry as much as possible;
3. both systems stay in continuous sync.
With the system implemented the client was able to quickly scale its business in Russia without having to make any concessions to control and be assured of compliance at all time.
If you encounter similar challenges, or would like to learn more about integrated solutions for international businesses with activities in Russia? Feel free to contact us via via info@lowlands.biz
