Entering Beginning Bank Balance for Dynamics NAV (Navision) for a New Implementation

During a new implementation of Dynamics NAV (Navision), most Dynamics NAV (Navision) consultants understand how to load in A/R and A/P beginning balances. However, when it comes to bank beginning balance. The subject is usually more murky. On one hand, you need to put in the bank balance so it shows up on the bank ledger, on the other hand, if you put in just a lump sum, doing the first bank reconciliation will be a nightmare.

The goal when entering a beginning bank balance, is to update the bank ledger to ensure the amounts are correct. In addition, the bank transactions that are not cleared needs to be come up so it can be properly reconciled.

In this example, we’re going to assume the Navision client is going live on 1/1/2010.

Here’s the information we need from the client:
1. The G/L bank ending balance as of 12/31/2009
2. The last bank statement (from the bank obviously) on 12/31/09
3. The beginning G/L balance

First of all, the Dynamics NAV (Navision) client or the consultant needs to itemize what checks are outstanding (not cleared yet as of the 12/31/09 bank statement).

We all know that to load in beginning G/L balance, we use the General Journal. We typically use loading of beginning balance as the same step as we load in the bank balance.

Let’s say the Dynamics NAV (Navision) client has the following:
Bank Balance on 12/31/09: $10,000.00
Outstanding Check #123: -$2,500.00
Outstanding Check #124: -$500.00
Deposit on Hold: $1,000.00

While we load in the beginning balance, we set the Account Type as Bank Account. Doing this will automatically update the bank ledger and the G/L ledger based on your Bank Account Posting Group.

So your beginning G/L balance would look like the following:

Beginning Entry for Bank Balance for Dynamics NAV
Beginning Entry for Bank Balance for Dynamics NAV

Assuming you received a bank statement on 1/31/2010. There were no transactions that were cleared and no additional transaction made to the bank. Your bank rec would look like the following:
Doing so, the transactions will match exactly to the bank statement and to the G/L.

In conclusion, you can say that the bank beginning balance is the Bank Balance + Outstanding Checks – Deposits on hold.

Average Cost to Implement Microsoft Dynamics NAV (Navision)

First of all, there are no 2 businesses that are exactly the same. I don’t care if they’re in the same industry, if the owners are siblings, and/or if they live in the same household. Companies are as unique as the fingerprints of the owners that run them.

As such, no 2 implementations are exactly the same. This is because the people that work inside the companies are unique. They live the company culture that are defined by their managers. And the company culture are as unique as the personalities of the people setting them.

There has been countless times where I hear “we do everything like everyone else” or “can’t we take what you did for other customers and implement it here?”. No. You don’t do everything like everyone else and no, we will not take other implementations and apply it here. Unless we want to guarantee failure.

If you’re a robot and have no personalities, or you want to fit your business process to the software, then use Quickbooks. Any other unique data that you need to keep track of, use Excel. Don’t bother buying an expensive hard-to-modify software that you will have the same problems with if you were using Quickbooks.

For the record, Microsoft Dynamics NAV (Navision) is an easy to modify software that fits your business like a glove. As such, there are setups that will be involved to fit the software to your business.

There are definately similarities that applies, however, the task is up to the implementor to make recommendations on how to implement these similarities without making too much distruptions to your business.

Having said that, making a post about the average cost to implement Microsoft Dynamics NAV (Navision) will surely draw criticism. This post is about MY experiences implementing Navision. OUR Dynamics NAV (Navision) practice is DIFFERENT than other company’s practice. OUR company is unique, just every company out there is unique. So before you flame me, remember this is based on MY experience, NOT yours because you are not me and I am not you. You and I live in different areas, grew up with different environment, eat different foods, breathe different air, is allergic by different things. Did I get my point across? Good.

These numbers are based on the implementation using the Classic client. We find that the Role Tailor Client is more suitable for management for doing analysis and running reports, not for data entry. For order processing, manufacturing processing, etc. we find that using the Classic client is a lot more fitting and more user friendly.

The initial implementation is to always to replace their old system with NAVision. The new features and functionalities are nice and will definitely reduce the expenses for the company, but unless they’re mission critical, we usually recommenend holding off introducing new processes until NAV is up and running. The reason we do this is because we don’t want to overload end users with too much new information where they will feel overwhelmed. For example, if the companies uses 3rd party software to process EDI and the users are used to it, we would hold off integrating EDI into NAV on the next phase whenever the customer is ready.

As a rule, we always recommend the client purchase the base of any addons they may use in the future. For example, if the client plan to integrate EDI into NAV, we always recommend the client to buy Packing (the minimum requirement) and use Lanham’s E-Ship/EDI database from the beginning. This will reduce time to merge the objects when everything is up and running.

Ok, so here it goes.

Our typical new NAV client for us has the following traits:
– Users: 11 to 20 users
– Locations: 1-3 location
– A distrubtion based company. (They usually import goods from overseas, repackage it, and sell them in the US.)
– Sometimes with light manufacturing (at most, running production BOMs without using MRP)
– Light warehousing (maybe using warehouse receipt and warehouse shipments).
– Some EDI Trading Partners

The time spent on an implementation like this are, based on the quotes I’ve written, are between 120 – 200 hours.

Some of the basic time required are (NAV2009 and prior):
Initial Analysis and Writeup (30 – 40 hours)
Database installation and setup (10 hours)
Development (30 – 60 hours)
Training (30 – 50 hours)
Onsite after Live date (20 – 40 hours)

The development usually includes:
– Customer information Import
– Vendor information Import
– Item imformation Import
– A/R balance import
– A/P balance import
– G/L balance import
– Open Sales Orders import
– Open Purchase Orders import
– Inventory balance import
– Busines forms modification (SO, PO, customer statement, etc)
– Mission critical modifications that’s not in base NAV
– Misc. tweaks during user training
– Transfer of all data with dataports written on the day before live

The software price is set by Microsoft. There’s nothing we can do about that. The hourly rate are different by region, so do your homework and find what the hourly rate for your region is. Around my area, it’s about $150 – $200 an hour. But don’t print out my blog to use as a bargaining tool. It won’t work.

My Microsoft Conundrum

First of all, let me state that I’m a amateur investor in the stock market. I have a discipline when it comes to stock investing in that I look for companies with good products and/or strong management. One of the major holdings I have is Microsoft (MSFT), in fact, my Microsoft stocks takes up about 20% of my portfolio.  As an investor, I want to see the stock shoot up and demostrate increased sales of the product quarter after quarter. Likewise, I want to see the profit increase quarter after quarter.

The reason I bought Microsoft stock is because I believe in their products. I believe in their vision of “business software” will be. As to what I believe their vision is, that’s a separate BLOG post.

As you all know, I’m also the principle of AP Commerce, Inc. based in Los Angeles. We are a small Certified NAV partner; we do nothing else other than to implement Microsoft Dynamics NAV (Navision). Personally, I’ve been working with NAV since 1999 and have been involved in hundreds of implementations to date. Our company is created to be a service company, not a software sales company. It just so happens that NAV is the product that we uses so we can help our customer achieve greater success.

However, this post is not to discuss accomplishments. It’s a genuine conundrum I have being an investor of Microsoft and a business owner doing business with Microsoft.

Before I continue, let’s make one thing clear about Microsoft. Microsoft is in the software sales company. Their core business is to sell software. Not service, not hardware, not internet content, not social media, not whatever. Yes, we all can see they’re trying to diversify, but at the end of the day, their business is to sell software. Period.

It’s not a secret that Microsoft loves partners that can sell and sell and sell. Since Microsoft channel reps are evaluated by how their region performs, channel reps throws all of their support and time into partners that sells. As an investor, I love this strategy. More sale means more revenue and hopefully fatter profit. By exceeding these arbituary numbers set by Wall Street, stocks shoot up. Wall Street loves growth. When I receive the annual reports from Microsoft, I always turn to the revenue and the profit section. I look at how much revenue growth this year as compared to the previous year, and the year before that. I look at the earnings per share, I look at what the cost of doing businesses. In short, I want to see growth and more GROWTH! In the world of Wall Street, public companies are evaluated by the quarter. If the quarter sucked, the company will get hammered and executives get fired…

As such, it’s not a surprise that Microsoft wants more partners to sell all of their product suites. And more and more hardware dealers and bulk software retailers find out about Microsoft Dynamics NAV (Navision), studies the manual, pass the required tests, and acquire the competency to sell Navision (among other softwares). In a push to sell more software, my suspection is that even larger solution centers, to be more aligned with Microsoft strategy have shifted their focus software-sales centric.

As a business owner working with Microsoft Dynamics NAV. I’m deeply concerned by this practice. As we all know, selling and implementating Microsoft Dynamics NAV is different than selling and implementing Microsoft Office or setting up a network using Windows 2003 Server or implementing Exchange Server with Sharepoint. Without proper skillset or the resource, the implementation of ERP usually fails. Once the software implementation fails, customers blame the software, the vendor, and ultimately, Microsoft. 

These bad implemenations creates a deep distrust in Microsoft; confirming their belief that Microsoft is an Evil Empire and all of Microsoft products suck. Pretty soon, word of mouth spreads (business executives and managers have powerful friends) and before you know it, more and more people have the mental imprint that Microsoft sucks because their friend of a friend got screwed. For the record, Microsoft products does NOT suck. Microsoft Dynamics does NOT suck.

Most of these companies either bite the bullet and live with a software that they can’t really use and hates Microsoft for the rest of their lives, or they call around for other solution centers to come help them out.

We have quite a number of situations where companies called us help asking us to help them with a failed implementation. In one instance, the owner of a company that bought NAV over a year ago expressed to me that he absolutely hated Microsoft and his lack of due dilligence in selecting the right vendor and the software. He couldn’t believe that his original vendor got to be a Gold Certified Partner. He was so upset that he wanted to sue the solution center and Microsoft.

To make a long story short, I accepted the task and decided to let the chips fall where they may be. Fortunately, we were able to help them out quite nicely and the owners and the employees became a fan of NAV. Not only did they became our reference and paid their bills in full and on time, but they also agreed to go back on the enhancement program with Microsoft and bought additional NAV sessions. In the end, by making the customer happy, they ended up doing more business with Microsoft.

When I started the company, I promised myself that we would be a service company, not a software sales company. What we did for this company took time. It takes time to ask the company to believe in us, then to believe in NAV, then to believe in Microsoft. Trust is the hardest thing to build once it has been broken. Unfortunately, the time Microsoft spends working with this customer doesn’t translate into revenue quickly.

As a business owner who believes in Microsoft, I want Microsoft to reward partners that can do the job correctly, not reward partners that can only sell. As an investor, I want Microsoft to spend the time and effort supporting people that can generate revenue quickly. So I can see an increase every quarter and meet Wall Street expectations.

How would you recommend balancing being a service company and being an investor?

Etiquette for Contractors Dealing with Solution Centers and Vice Versa

Just thought I post some etiquette for Solution Centers (NSC) and contractors when dealing with each other.

For Contractors:
1. There’s no such thing as job security when you’re a contractor. If you want security, find a full time position at a NSC.
2. Do not set your rates based on how much the NSC charges their customers. Figure out a market rate for your skillset and make it fixed.
3. Contractors are used only for the short term. If you want long term, find a full time position at a NSC.
4. Learning time is not billable. Companies hire your skillset to produce, not to learn. If you want to be paid for learning, find a full time position at a NSC.
5. You have the right to say no to a project. But say no before a single minute is charged.
6. Make a conscience effort to not steal your client’s customers. The end users will decide on their own, but do not push it.
7. Do not make a promise to deliver you cannot keep. Sometimes, a lot of people are waiting on you to finish before they can continue.
8. Make doing business easy with you. NSCs do not need you if you give them more headaches than they already have.
9. The NSC has the right to shop around for whatever reason, you’re a vendor and this is a business transaction. Don’t take it personal.
For NSCs:
1. Pay your contractors on time. You hired them to produce, if they’ve done so, pay them. Don’t play games.
2. Sometimes, trial and error is needed to get to a solution. If the contractor bills you for it, pay; because you will need to do the same if you were doing the project yourself.
3. Murky project scope will get murky results. If you cannot properly define the project, no contractor in the world will be able to clarify it for you. And pay the large bill your contractor will surely bill you because you didn’t do your job.
4. If you rely on the contractor to take care of your customer, you WILL lose the customer. Guarenteed.
5. Contractors you hire have their own priorities, so plan accordingly. If you want the contractor’s dedication, offer them a full time position.
6. Contractors are used to address specific needs. They’re not there to organize an implementation for you.

Did I miss anything? Any additions to both sides are welcome.

Entering Beginning Inventory Balance

When moving from a legacy system into Dynamics NAV (Navision), one of the areas you want to try and avoid is messing with the inventory G/L accounts. Most systems are usually pretty good with open A/R and A/P accounts, they can be transferred using the “posting back to the same account” technique that most implementers do. The beginning A/R and A/P G/L accounts would be based on your entry on the General Journal. This is assuming that the A/R and A/P aging reports matches the G/L.

Inventory valuation is one of the areas where we find the most discripencies based on what is entered on the Item Journal  from the physical count and the inventory valuation report from the legacy system. Depending on your requirements, sometimes it doesn’t make sense to go through line by line on the item journal to see where the differences are.

A rule of thumb I always go by is to let Navision determine what the inventory value should be in the G/L based on the positive adjustments posted from the Item Journal.

To accomplish this, do the following:

Suppose you have the following G/L accounts:
11000 – Inventory
58850 – Inventory Adjustment

When posting a positive adjustment in the Item journal, it will post a debit to Inventory and credit to Inventory Adjustment.

When you’re ready to enter your beginning G/L balance, enter the G/L balance for Inventory to account 58850. This way, the difference between the inventory G/L balance from the legacy system and Navision will be reflected on account 58850.

If you do not want to reflect the adjustment in the current period due to financial reporting reasons, you can adjust the difference into an asset account. We usually recommend create a separate account (i.e. 11100 – Inventory Suspense) to store this difference until you can depreciate it.

By not posting any general journal entries to the inventory accounts, you’ve ensured that inventory valuation reports will ALWAYS match G/L, making everyone happy in the process.