Smart subledgers (or subsidiary ledgers) are the accounting department’s unsung heroes. They are playing an increasingly important role in accounting and are a real key element, especially in the area of international scaling. While general ledgers are, as the name implies, the general accounting system of a company, subledgers help maintain highly detailed sub-areas of accounting data, the total balances of which are later transferred to the general ledger. This enables companies to keep and manage detailed financial details on specific accounting areas such as collective debtor accounts or entire business areas like international digital business models. This allows companies to work with an accounting solution that is perfectly tailored to the respective business area and to easily manage the growing scale of their business while storing detailed information about each operation, providing clarity and traceability at all times.
In the wake of digitization, today’s subledgers are no longer just paper spreadsheets or excel tables. They are highly automated software systems at the heart of a company’s financial infrastructure, enabling real-time accounting and management.
Let’s explore what smart subledgers are and why they are the go-to tool for companies looking to roll out and scale their business on an international level.
Manage large amounts of data with a smart
If you want to scale your digital business model with millions of transactions and thousands of customers, this goes hand in hand with very large amounts of data. To keep your general ledger lean and still be able to process and present all financial data in a clear, detailed, and easy-to-understand fashion, the way forward is to work with a subledger software solution that is integrated into your financial IT infrastructure.
A monetization platform like Nitrobox not only enables automated billing and invoicing, but features also a state-of-the-art accounting system. This integrated smart subledger solution can process and post large amounts of data in near real-time. It empowers finance teams to work with faster visibility on information and present reports and analysis that general ledgers either can’t (due to technological limitations) or shouldn’t (as it’d be too messy).
Benefit from flexible subledger accounting that perfectly fits your digital business model
General ledger accounts are often unable to reflect the required level of detail of the respective business area or digital business model because that’s not what they were designed for in the first place. By working with subledgers, you can escape the rigid framework and define the accounts that precisely map the specific case in terms of accounting.
When you create a subledger with Nitrobox, it’s like a blank canvas that you can design entirely according to the specific needs of your business. Create the posting accounts and posting rules that reflect the data of the digital business model down to the last detail. And the same flexibility applies to the timing of postings and reports, which can range from month-end to weekly to daily or, ideally, real-time.
Create millions of debtor accounts
Let’s proceed with the creation of debtor accounts, which is a simple process with software that includes intelligent subledger accounting. Whereas companies working with general ledgers in ERP systems often face a number of difficulties, such as technical limitations on the maximum number of debtor accounts that can be created. Or the procedure for creating new debtor accounts is very time-consuming and complicated because the teams responsible for this are spread across different departments or even countries.
However, if you work with a real-time subledger system such as Nitrobox, you don’t have these limitations. Instead, you benefit from a great deal of freedom and flexibility by creating and managing as many debtor accounts as you need – automatically via API or with just a few clicks via the Nitrobox Self-Service Webportal.
Create the chart of accounts you need
Imagine being able to create exactly the chart of accounts that perfectly fit your business model. For example, define accounts for your different revenue types and distinguish between subscription revenue, usage-based revenue, and transaction revenue with just a few clicks. Or configure posting accounts for a variety of different business cases, taking into account additional criteria such as business units that accurately reflect your individual business cases. With Nitrobox’s smart subledger you can do just that and even more.
Define data-driven booking rules and logics for real-time posting
After you have all the accounts you need at hand, it’s time for your individual data-driven booking rules and booking logic. Instead of time-consuming manual processes, Nitrobox does all the work by booking the transactions automatically for you. Use the Nitrobox booking engine to define exactly how and where transactions are to be booked. For example, define booking rules for revenues based on criteria such as product categories, business areas, countries (or any other criteria you’d like). Create rules for the various VAT rates, down payments (deposits), payment providers, payment methods, and many more. In a nutshell: Through Nitrobox’s intelligent booking engine, you can use all available information to determine how and where to book a particular business transaction. Companies operating throughout various global markets—or that simultaneously offer multiple separate business models—benefit greatly from this flexibility, as their accounting is an exact image of their needs and requirements – every minute of the day.
Just a quick mention in passing regarding flexibility. Did you know that with Nitrobox you can react to changes immediately? Especially, when it comes to tax regulations and rates, we know that nothing is set in stone. They are subject to constant change. And sometimes at very short notice. For example, when the Second Corona Tax Relief Act 2020 in Germany reduced sales tax from 19% to 16% and from 7% to 5% for six months, companies had to implement this within a few weeks and, of course, revert to the original rates at the end of the six months. By creating tax rules in the Nitrobox system, you can determine on which date and time the change is to be completed automatically. A major benefit and business advantage that a general ledger cannot provide.
Enable customer-centric payment options
We all know that how consumers pay for goods has evolved significantly over the past years. Cash is no longer king. Instead, there is a large number of payment methods such as credit card, direct debit, bank transfer to mobile payments, buy now pay later (BNPL), or even payment in installments. ERP systems that often house the general ledger can’t handle this variety of payment methods and providers. But to be successful and stay ahead of the competition you have to offer the payment methods your customers expect.
This is why Nitrobox combines its state-of-the-art subledger with smart payment management capabilities. You can easily integrate your selected payment providers into Nitrobox to have all payments in one central place which makes international monetization a painless process. But that is not all. You can also automatically collect, trigger, or refund payments from multiple international markets from a single source of truth. And of course, you can also set up posting accounts for each payment method to better understand how your customers actually pay and which payment methods are most successful.
Post millions of transactions automatically
Ready, set – go! Now you have all the tools you need in one smart subledger system. Millions of transactions can be processed and booked automatically freeing you to focus on tasks that really move the needle. Concentrate on monitoring and measuring the success of your digital business models in real-time or take immediate actions if a business model pivots, knowing that your subledger can react to it flexibly.
How a smart subledger helps with a successful international expansion
Now, let’s take a closer look at when your company might use subledger accounting, especially when you want to operate in several markets with various business models. While it is exhilarating to take the leap into the world of global commerce and international expansion, you can’t simply sit back and leave your financial process as is.
Let’s say your company wants to launch a digital business model in “Mobility” including several countries, hundreds of product groups, and business segments. Those could be cases like electronic parking tickets, e-charging operations, and car sales, even subdivided by car brand.
Imagine the number of accounts you need to display such an extensive business undertaking. You need to ensure that your new revenues across multiple markets are booked correctly. In addition to the different types of revenue, other factors such as multi-currency accounting and segmenting financial reports come into play. This is where a general ledger will quickly reach its limits and in various places.
If you use a smart subledger system such as Nitrobox, all the previously mentioned advantages will take effect. You can create your “Mobility” subledger canvas as you need it – from debtor accounts to chart of accounts, booking rules and logic to payment management and reporting. This enables you to have your international “Mobility” business models in one subledger. Thus, you are always up to date with accounting while having a close eye on the performance of your individual business models in the various markets, making it easy to report on them in detail. How do the online car sales perform in country X versus country Y? How does the growth in e-charging for brand A compare to e-charging for brand B etc?
To get the numbers back to the main system, the balances of the finished subledger can be quickly and easily transferred to your company’s general ledger via API via a report that can be imported to your SAP, DATEV or similar G/L accounting system.
Maximize your success with Nitrobox
Expanding and scaling internationally is easier than it’s ever been before, but it requires thoughtfulness. A smart subledger system that grows with your business is one of the most important prerequisites for successful expansion and scaling. At Nitrobox we’re passionate about helping businesses achieve their potential through technology. Our smart billing and monetization software provides the accounting and finance solutions that you need to enter new markets with confidence and build a global business with ease.
Our innovative SaaS solution helps businesses to automate and scale their complex revenue processes, and manage smart billing and pricing models, such as subscriptions, pay-per-use, digital one-time transactions, or any hybrid model. It provides all order-to-cash capabilities in one central platform ranging from smart contracts, billing and invoicing, and revenue recognition to payments and dunning.
To learn more about how Nitrobox can become a key part of your new billing system, schedule a personal demo with one of our monetization experts. Or, get the free 30-day Nitrobox trial and try out how easy it can be to automate and globally scale billing for complex international business models with Nitrobox.