Telecom operators have thousands of tower sites spread across different geographies. Each of these sites has its own passive infrastructure setup and operational cost in terms of rent, location, power consumption, fuel used, equipment installed etc. Multiple operators share the same tower site for installation of their active equipment, and distribute the cost of operation between themselves.
Reconciliation processes are required at different stages (Asset Management, Operator Billing, Vendor Billing, Diesel Allocation) of Telecom Tower Industry. Each business function (O&M, Finance, Opex Controller) performs several steps of reconciliation to reach to the desired outcome.
Organizations that use third-party vendors’ reconciliation solutions that are not properly equipped to address the challenges related with reconciliation of asset data. Multiple stakeholders often simultaneously work on same image of data in isolation at times duplicate the images. Reconciliation work increases.
Organizations that still use Microsoft Excel are limited to a basic matching engine with minimal data validation and no audit functionality to track changes to the data within back-office operations. In some cases, organizations are manually reconciling their data, introducing a new set of risks of having inaccurate account total value when generating client invoices at month-end, and having multiple reconciliation processes that leads to loss of faith in data. Over a period of time, these copies are further changed which cascades into increased discrepancies in the data.
In this article, I will take you through asset reconciliation.
Asset Reconciliation – Benefits / Importance of asset data / Evaluation of tool
Asset reconciliation is an important part of asset management. It is the capability of reconciling the discrepancies between a physical inventory of what actually exists and the Asset record as it exists in the accounting system. This reconciliation process is essential for financial compliance management and is often a governance or regulatory requirement.
Benefits of Intelligent Reconciliation module:
The reconciliation system holds a unique position in the asset manager’s back office operation. With the huge amount of data it processes ,key is to identify the discrepancies along with a reason, which if made accessible enables operational efficiency, cost control, transparency, and margin preservation—all impacting organization’s bottom line.
Why it is important to comprehend asset data?
¨ According to research done by our team, below findings leads to poor financial performance:
· Top 30 Telcos have $2.4 trillion book value of assets
· Average Debt to Equity Ratio across top 30 Telcos >1, Highly leveraged
· 15-16% of sales invested in fixed assets each year
¨ Un-optimized Asset Data/No single source of truth leads to:
· 10-30% of fixed assets are no longer owned
· 65% of fixed asset data is inaccurate, incomplete or missing
· Multiple copies of same data:
o Error in data get accumulated over a period of time
o Changes done by users are not logged properly
¨ Lack of Central Repository
· Mismatch of tower type records in different copies of data with Finance, O&M and Inventory
· Incorrect site location/circle name.
· Tenancy changed in the middle of the month- Active directory isn’t updated in real time while O&M data records the tenancy change
¨ No Asset Tracking
· Lack of real time tracking of Asset movement (DG, Battery or BTS) from one site to another
· Incorrect entry of mode of procurement ( Sold, Purchased or leased) of same asset in different copies of data
· Damaged/Out of order assets are not reflected in the FAR immediately
¨ Poor Billing Compliance
· Missing records of Request for Installation (RFI) & Request for Service (RFS) dates in parameters for billing
· Site status changed or Site upgraded from 2G to 3G but not reflected in Fixed Asset register (FAR)
How to evaluate reconciliation module?
Telecom Tower Industry should be looking for reconciliation solutions to overcome the above asset data challenges. One of the most important things to consider when evaluating options for an automated reconciliation solution is that it should help in making fact based decisions with accurate asset data to eliminate process redundancy. They should also consider a solution that supports not only today’s reconciliation requirements, but those of tomorrow.
· Analyze to understand the assets data like assets age, type and available detail will define the field data requirements and help in identifying how to conduct the reconciliation.
· Data Completeness to get an accurate picture of what assets exist, where they are and their present condition. This provides the basis against which the reconciliation will be developed.
· Automate to eliminate reconciliation process redundancy for accurate and faster decision making.
· Correlate the different data sets to identify discrepancies.
· Results to identifying assets found, not found, added and relocated during the process along with a reason. And iRecon will help streamline asset management tool.
To know more about how to eliminate the unnecessary reconciliations, please feel free to reach out to me or my team