Presented by

3E FOR GLOBAL FIRMS

Simon Jarrett & Kerwin Thomas

Simon Jarrett, Senior Business Applications Consultant (simon.jarrett@tr.com) • Has worked for over 25 years in the IT, Finance and Legal sectors• 10 years’ experience with Elite, working with major global firms (incl.

DLA Piper, Ashurst, White & Case, Kennedys, Allen & Overy, etc.)• Has helped firms transition from using 3E in a single country,

currency and language to a multi-currency, multi-language 3E environment as they extend their reach globally

Kerwin Thomas, Applications Consultant (kerwin.thomas@tr.com) • Has worked for over 19 years within the legal finance industry within

some of the country’s top Law Firms• Experienced in consulting on finance software implementation at

boutique law firms and consultancy houses

SPEAKERS

Please reserve questions for Q&A at the end of the session

A FEW REQUESTS…

• Going global has great rewards – and great risks Effects of the global financial crisis Demand for legal services is flat Clients are driving globalisation Business is global – follow the money! Cross-border work is more profitable Opportunity, necessity and risk – all three

• 3E can help your firm comply with local statutory requirements, keep tabs on profitability and MI as you grow, leverage data to track trends, manage risks, and even produce bills in multiple languages

INTRODUCTION

• Risks and rewards Global 3E implementations – success factors “The Knowledge” The rewards of good testing

• 3E and regional requirements Local books and local charts of accounts Units and unit posting drivers (parallel postings) Currency handling and FX revaluation Taxation (VAT, GST, PST and other alphabet soup) Billing (Fiscal invoicing, E-billing, Inter-company) Different Fiscal Years, etc.

AGENDA

• Every day is a school day Keeping abreast of regional requirements is not easy! Statutory requirement vs. “we’ve always done it that way” Implementing across languages and cultures• Multi-language Templates

• Q&A

AGENDA, CONT’D

RISKS AND REWARDSThe importance of finding out what you don’t know

• Going global: great opportunity, tempered by great risk

REWARDS

The “honey” for law firms?

Profit Growth Reputation

• Don’t get stung!

The bigger firms are already there – competition is fierce Significant capital investment required Long lead time before profit is realised There can be onerous local statutory requirements Lack of knowledge about your target cities

RISKS

• Early buy-in from your regions, led by the firm sponsor(s)• Willingness to listen, learn and adapt• Good research into local statutory requirements• “The Knowledge” – local experience counts• “Firm first” – but with local books and requirements on tap• Get the right people at the right time• Involve the regional offices!• Multi-language, multi-culture• Testing, testing…

KEY ELEMENTS OF A GOOD MULTI-NATIONAL 3E IMPLEMENTATION

THE IMPORTANCE OF UAT

3E AND REGIONAL REQUIREMENTSHow we can help you be a truly global firm

• Can keep “Firm books” and one or more “Local books”

GL BOOKS AND GL TYPES IN 3EFi

rm B

ooks Accrual GL

Type

Cash GL Type

Period 13 GL Type

Fre

nch

Loca

l Boo

ks

France Accrual GL Type

France Cash GL Type

• In 3E, postings to the GL can be made into one or more GL Types at once

• The 3E masking engine allows these parallel postings to happen automatically into multiple GL Types at certain stages in the life of a sub-ledger transaction, based on characteristics of the sub-ledger posting Revenue recognition can follow the Office of the Fee Earner

whose time is being billed Revenue recognition can follow the Office of the Matter being

billed Many other options exist in 3E – discuss with your consultant

• Certain GL Types may well be used for masking only

GL BOOKS AND GL TYPES IN 3E – CONT’D

• The 3E Trial Balance and GL Detail reports (and also Elite Financial Reporting) all use GL Books, not GL Types

• A given GL Book may contain more than one GL Type, e.g. you could create a GL Book called “Firm Management Books” which may possibly contain the following GL Types: Accrual Cash Period 13 Adjustments

• This means that the firm can, for example, run a year end TB that includes so-called “Period 13” (Year End) adjustments, but run monthly operational TB’s that do not contain Period 13 adjustments

GL BOOKS AND GL TYPES IN 3E – CONT’D

• In each case, it is the GL Book that the user selects in the GL Trial Balance report’s parameter screen that determines which GL postings are included / excluded from the TB results

• More importantly, it means that international offices can have their own local GL Books that allow them to make postings and run reports using accounting treatments that are different from the firm’s global accounting treatment (firm books vs. local books)

GL BOOKS AND GL TYPES IN 3E – CONT’D

• The Chart of Accounts (C.o.A.) in 3E is numbered by way of a GL segment called the “Natural” segment

• 3E fully supports Local Charts of Accounts for each of your business units that operates in a country or jurisdiction where a different C.o.A. is required

• The Naturals are mapped to the Local chart numbers, so that all postings that happen at the firm level but involve a local element get posted in parallel to firm and to local books, with local GL accounts Example: The “Plan comptable général” in France requires that

firms with offices in France generate all local books using French GAAP (Generally Accepted Accounting Practice) and the French state-mandated C.o.A.

CHARTS OF ACCOUNTS

• 3E incorporates a segmented GL structure that is mirrored by setups that reflect the overall company structure of the firm – especially useful for global firms

• In 3E, each “company” within the firm can be run as an entirely separate business unit, and in Unit Setup firms can set up their business units to have their own currency, Fiscal Year, registered names, addresses, numbering sequences (for invoices, for example), etc. Each Unit has an Office or many Offices attached to it Unit in 3E is a key required segment in the GL Account

structure

UNITS IN 3E

Natural Unit Office Dept Section

3E TRANSACTIONAL DATA FLOW

There are six of these GL Detail tables

• The powerful masking engine in 3E allows firms to post any given transaction to multiple GL Types at once (parallel posting) – and thereby allows reporting of GL postings in multiple sets of books (firm books and local books)

• Unit Posting Drivers allow firms to choose when and how to post to multiple GL Types

• Example: Fee Earner Unit <> Matter Unit Standard postings are done

to firm books, PLUS postings to local books via GL Types, using different masking variables that are available, based on Cash or Accrual accounting regimes in those Units

3E MASKING AND UNIT POSTING DRIVERS

3E MASKING AND UNIT POSTING DRIVERS

Bill Poste

d

Accrual GL Type

Cash GL

Type

French Accrual GL Type

• Global firms have to deal with transactions in multiple currencies. 3E’s multicurrency capabilities are built in, and can help you limit your firm’s exposure to currency fluctuations. Both realised and unrealised FX gains and losses can be calculated and tracked automatically

• Compliance is a key element of international business, and Elite is constantly striving to keep 3E in step with local requirements, such as reporting in a state-mandated currency, or dealing with state-mandated exchange rates

3E IS TRUE MULTI-CURRENCY

• 3E allows you to set up multi-currency charge-out rates, so that a global matter that has lawyers from different countries working on it will charge the right rate for each

• 3E allows you to pay foreign currency supplier invoices (“vouchers”) out of any of your Office Banks, e.g. pay Euro vouchers from a GBP Office Bank

• 3E allows you to record vouchers in any currency as disbursements on a Matter that is in a different currency

• Firms can set up any number of Exchange Rates to use, including automatically updated daily rates

3E IS TRUE MULTI-CURRENCY

• 3E will automatically calculate realised FX gains/losses and provides the flexibility to direct the gain/loss postings to separate expense or balance sheet GL accounts By individual GL account By rollups of GL accounts (AP controls, AR controls, etc.)

• Provides additional detail to determine which types of transactions have the most significant impact Could you change your business practices to minimise your FX

losses?• Unrealised gains/losses can be calculated and posted at

any time the firm desires

FX REVALUATION IN 3E

• 3E accommodates the usual Input and Output taxes, automatically calculating tax based on effective-dated percentages on the Taxes setup

• 3E also accommodates both Billing and AP Withholding Taxes, as well as EU Reverse Charges taxes and VAT reclamation for Counsel Fees

• Global firms also have the option of using the Tax Area Matrix in 3E, which automatically selects the appropriate tax codes based on a matrix of “From” and “To” Tax Area rules

WITH 3E, TAXATION NEED NOT BE TAXING

• Allows firms to create a matrix of default tax codes to use with different combinations of from/to Tax Areas (countries), with exceptions by Cost Type or Time Type The "from" tax area is set in Office for each billing office, and

the "to" tax area is set at the Payor or Matter level Will auto-calculate and apply taxes in Proforma Edit when the

proformas are generated, based on validation of the Tax Area of the billing office (the “From” area) against the country in the Payor’s primary site (the “To” area), taking into account any exceptions (e.g. services in regard to property in the EU)

Can be used in conjunction with Billing Rules in 3E to manage exceptions (e.g. UK timekeepers incorporated on a German office bill)

TAX AREA MATRIX

• 3E has both summary and detail Tax Journal reports, plus AP Withholding Tax reports and the EU Sales and EU Acquisitions List reports

• 3E incorporates Tax Clearing, which allows firms to clear their Input and Output GL Accounts at the end of every tax reporting period, and pass these values into a Tax Clearing GL Account

• Tax returns are paid over to the authorities from this Tax Clearing Account

TAX REPORTING AND RETURNS

• 3E allows Fiscal invoicing, where the Payor is sent a proforma invoice with a provisional invoice number, but the invoice is then given a Fiscal invoice number when the Payor agrees to the amount payable (this is a requirement in Turkey, Indonesia and Italy)

• 3E incorporates electronic billing via our eBillingHub product, using UTBMS codes and a regularly updated set of e-billing templates

• Both group billing and split billing are fully supported in 3E• Inter-company billing (ICB) is a module of 3E that allows

firms to generate and settle bills between their business units, especially for cross-border work and transfer pricing

GLOBAL BILLING OUT OF 3E

LEARNING NEVER STOPS“Every day is a school day”

Keeping abreast of regional requirements is not easy, but Thomson Reuters is ideally placed to get the answers you need when you need them

3E is constantly being updated and developed to meet the needs of our customers and keep abreast of new statutory requirements across jurisdictions

Top Tip: you may be told by an international office of your firm that something is a statutory requirement, when really it’s just that “we’ve always done it that way and we like it”

THOMSON REUTERS – THE ANSWER COMPANY

• Our consultants may not always speak the local language, but our software is language-enabled

• Implementing across languages is possible in 3E due to its language-enabled features, allowing not only the user interface to be presented in a local language if required, but also allowing the output of bills in multiple languages

WE SPEAK YOUR LANGUAGE

• Business is global, and increasingly law firms are going global too

• 3E can help your firm to best manage its global presence, reduce risk, calculate profitability, meet local requirements and leverage financial data

• What are the next steps? Depending on your current position, you could:• Contact a Thomson Reuters Elite Sales / Relationship Manager• Contact the Thomson Reuters Elite Consulting team for help• Test the features discussed today on your own test 3E system• Incorporate the features presented today into your live 3E system

SUMMARY / NEXT STEPS

Thomson Reuters Elite Knowledge Base: http://kb.elite.com Article 127383: 3E Standard Features and Navigation User Guide Article 127264: Billing Transactions User Guide - 3E 2.7 Article 127353: Accounts Payable User Guide - 3E 2.7 Article 128266: EBilling User Guide - 3E 2.7 Article 127419: Intercompany Billing User Guide - 3E 2.7 Article 127401: General Ledger User Guide - 3E 2.7 Article 127422: Language User Guide - 3E 2.7 Article 131183: 3E 2.7 Fiscal and Tax Invoice Auto-numbering Article 133819: 3E 2.7.3 Inter-company Inter-currency (IC-IX) White

Paper - What ALL Firms Need To Know 2013 Business of Law Seminar: Going Global: Opportunity, Necessity or

Threat? (Allen & Overy) http://www.allenovery.com/SiteCollectionDocuments/Going%20global.pdf

RELATED KNOWLEDGE BASE ARTICLES / RESOURCES

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THANK YOU