Expert InformationManagement - 20.04.16

"Go West": ERP in the USA

The USA is a major global economic power and therefore a very attractive market for European companies. proALPHA's US subsidiary has supported customers entering this market since 1998. Wolfram von Schoen, CEO and managing director of proALPHA Software Corporation, highlights country-specific challenges in the following interview. He has more than 15 years of experience in both markets and holds two passports.

Why is the USA such an interesting market for German SMEs?

A well-positioned German SME is definitely able to achieve good results in the US market within a short time. German employees are highly skilled and often speak a foreign language. Companies in Germany are well organized and have a high level of integration, especially in the fields of production and logistics. Their expert knowledge clearly gives German companies an edge.

At the same time, demands in the North American market are quite similar to those in the German market. The flexibility of the USA is a great advantage, too: if in doubt, justget started and make corrections as you go along.

What do you think are the biggest differences in daily business?

The US tax system is a real challenge. While Germany has two VAT rates for the entire country, the USA has numerous different VAT rates at the national, municipal and even local level. Things get really difficult when excise tax has to be included: this now often has to be paid in the state where the product generates added value.

In order to map these complex structures, we have created a country-specific component. This incorporates the relevant third-party tax cases.

Which special features does ERP software have to offer in the USA for financial accounting?

First of all, US companies have to comply with the United States Generally Accepted Accounting Principles, which are completely different from the German principles. They allow posting periods to be defined more freely, for example: German companies typically work with month-end closings, but in the USA it is also possible to divide posting periods into weeks.

What else has to be taken into consideration with respect to financial accounting?

There are a number of slight differences. For example, US companies have to include work in progress in inventory management because the cost of sales method is used in the USA. In Germany, however, most companies use the total cost method, according to which work in progress is not automatically posted as a rule. Moreover, external employees are managed differently in terms of tax: the US IRS stipulates that they have to be reported separately so that tax reports can be reconciled.

Last but not least, and perhaps surprisingly, it is very common in the USA to pay with checks. This is why we also offer a feature for check management.

Are there any other special functions?

Yes, mainly in service and logistics. Complaint and call management as well as return management with return material authorizations play an important role in US service processes. In Germany, or at least in many mid-sized enterprises, these concepts have only just started to gain importance.

In addition to a country-specific logistics component to directly connect service providers, we offer our US customers barcode and mobile solutions for warehousing and plant data collection. Moreover, our country version contains functions tailored to logistics processes between a European parent company and its North American subsidiary.

Has the focus of proALPHA US subsidiary shifted?

At first we mainly supported existing customers and followed our European customers to the USA. But since Bregal became our investor and our management changed we have focused attention more on our US business.

And we did a good job: today, about 70 customers rely on us in 28 US states and in Canada. Many of them are subsidiaries and plants of European proALPHA customers.

You joined proALPHA in August 2014. What do you aim to focus on?

On attracting natives to our team and improving our organization. In the last one and a half years we significantly increased the number of consultants, developers, support specialists, and Academy trainers working for us, hiring solely US citizens for long-term local employment.

We now have a powerful team and can offer our customers services with greater continuity and capacity. That's something we're very proud of.

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