SAP Customer Success Story Behn Meyer Group

We prefer SAP to do the upgrade for us as this is a relatively new requirement and we are confident SAP has the expertise and resources to manage the project well.
Angeline Cheah, Financial Controller, Behn Meyer Group

AT A GLANCE
Summary
Following revised financial reporting rules, the Behn Meyer group needed a solution to present its financial reporting in US currency for two of its subsidiaries which transact their business mainly in US dollars while the remaining subsidiaries in Singapore dollars. These companies operate their business on a single SAP system. Changes have to be made to the system and data, and historical transactions migrated to enable compliance with new standards

BEHN MEYER GROUP

Revised financial reporting standards prompt Behn Meyer to turn to SAP for a pioneer solution.

Website
www.behnmeyer.com

Key Challenge
New mandatory financial reporting standards require change in accounting system to measure transactions in the functional currency

As a supplier and distributor of specialty products from world-renowned manufacturers, the Behn Meyer Group (Behn Meyer) has long cultivated a strong global presence with trading operations from ASEAN to Germany and Jamaica. In recent years, the group has also started manufacturing in Malaysia and Thailand. Guided by a philosophy that emphasizes open and collaborative partnership with customers and principals, Behn Meyer has been leveraging SAP solutions since 1995 to ensure accounting transparency and operational efficiencies for its offices in Singapore, Malaysia and Thailand. In Singapore, the group has three businesses under its purview. Behn Meyer AgriCare (S) Pte Ltd (BM AgriCare) acts as a sourcing agent and distributor of fertilizers and agrochemicals, while Behn Meyer Chemical (S) Pte Ltd (BM Chemical) specializes in the global supply of specialty chemicals and process additives. A third company, Behn Meyer International (S) Pte Ltd, provides a primarily local market with quality imported paper and boards.

Project Objectives
Make system and data changes so that accounts may be presented in its functional currency in accordance with the Foreign Exchange Rates component (or FRS 21) of Singapores Financial Reporting Standards Migrate historical transactions and data to the functional currency

Solutions and Services

SAP Enterprise 4.7 Customisation services

Implementation Highlights
Implemented within one month

Key Benefit
Ability to do financial reporting for two companies in US currency while the remaining companies in Singapore dollars

Implementation Partner
SAP Consulting organization Diagonal Consulting

New reporting standards

A brave new world

Being a company that conducts a lot of international transactions, Behn Meyer is affected by recent amendments to the Financial Reporting Standards (FRS) issued by Singapores Council on Corporate Disclosure and Governance (CCDG). The FRS is a framework that ensures Singapore-incorporated companies adhere to a set of disclosure practices and reporting standards that are in accordance with internationally accepted accounting standards.

Behn Meyer began its search as early as February 2004 for a SAP services partner to customize a solution to suit the reporting requirement. Ms Cheah says, We spoke to three partners but as this was a new requirement, they could not propose a satisfactory solution and the execution cost was too high. For a pioneer project like this, there was too much uncertainty and risk to make the implementation worthwhile at that time.

To better reflect the economic substance of a companys After a lengthy deliberation, Behn Meyer decided to shelve business activities, amendments were made to FRS 21, The plans for a new solution temporarily. Instead, after discussion Effects of Changes in Foreign Exchange Rates. These with their auditors, the group decided to settle on a manual amendments were effective translation process in the interim 1 January 2005 and required which, although inefficient, each entity to determine its would help tide over the We are very pleased with the results of functional currency, i.e. the exigencies of FRS 21 until more the project. We are now in compliance currency of the primary appropriate and cost effective with the revised financial reporting economic environment in solutions were available. which the entity operates. standards with minimal disruption to The main reason why we did not FRS 21 details the factors our operations and hardly any manual want to rush into a solution was which should be taken into intervention. because all our companies were consideration in determining Angeline Cheah, Financial Controller, Behn Meyer Group running their business operations the functional currency. on one system, says Ms Cheah. Following from this The Group simply did not want determination, the results and to end up with a solution that does not fit well with its needs financial position of the entity are to be measured in the since two companies would be reporting in US currency while functional currency. the rest would be in Singapore currency. This means we can no longer maintain our books for We were worried that any changes made for one company BM AgriCare and BM Chemical in Singapore dollars since these would create unforeseen errors for another, she adds. businesses transact mostly in US dollars, says Angeline Cheah, Financial Controller, Behn Meyer Group. Behn Meyer was confident that its reporting dilemma would be She explains that currently, Behn Meyers large-volume fertilizer business is transacted mainly in US dollars. Similarly for its chemical business, Behn Meyer carries a wide range of products from countries such as the US, Europe, Korea and Japan, which it then supplies to customers in ASEAN. These transactions are also predominantly conducted in US dollars. We will have to change the functional currency for BM AgriCare and BM Chemical to US dollars, she adds. Previously, the SAP system has been configured to maintain the books in Singapore currency only. Since the adoption of FRS 21 is compulsory by law, Behn Meyers management decided to source for an add-on solution to address this regulatory requirement. resolved in due time as FRS 21 is a nationwide regulation that affect many SAP customers in Singapore. In the meantime, the group brought forward its SAP system release upgrade and redirected its energies towards upgrading its SAP system to SAP Enterprise 4.7 which supported a multicurrency environment. The upgrade to SAP Enterprise 4.7 took just under five months and went live in August 2004.

SAP Consulting saves the day

The upgrading exercise could not have come at a better time. Just two months after the system went live, SAP informed Behn Meyer that it had developed a solution to address the FRS 21 reporting requirement. As anticipated, the solution required SAP Enterprise 4.7s multi-currency platform to operate on. Behn Meyer reopened discussions with SAP Consulting, without hesitation. We prefer SAP to do the upgrade for us as this is a relatively new requirement and we are confident SAP has the expertise and resources to manage the project well, says Ms Cheah. Behn Meyers confidence in the new solution was further bolstered by the fact that SAP now has a better understanding of the FRS 21 requirements. The final push that sealed the deal with SAP Consulting was pure business acumen. Rather than rely on manual processes for a year or more, it was simply more cost- and resource-efficient to have the system adjusted before FRS 21 came into effect. It was a flurry of activity right from the start as the project team only had about a month to get the system up and running before the January deadline. SAP Consulting, together with another partner, Diagonal Consulting, had to create new company codes and reconfigure the controlling area to manage both US and SG currencies. Thereafter, the tedious process of migrating and translating current year opening balances, as well as converting historical transactions for 2004 began. As the system had to be up by 1 January 2005, the implementation team worked staunchly on a tight fleet. Behn Meyers management extended their fullest support by making the project a top priority. As such, user testing commenced concurrently across the two companies and the project went live as planned. Aside from a few minor bugs such as GST tolerance level, which are expected of a pioneer implementation, Behn Meyer is extremely pleased with how well the system has worked so far. We are very pleased with the results of the project. We are now in compliance with the revised financial reporting standards with minimal disruption to our operations and hardly any manual intervention. says Ms Cheah.

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2006/05 Company Registration No. 198902722M

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