The case for involving Finance in implementing a new equipment finance Contract Management System (“CMS”) should be readily apparent, but is your Finance team paying enough attention to the migration? Here are our top tips for what to look out for.

1. Your new contract management system has been selected, and the
project is underway to implement it.
Richmond Group takes a look at the key points your Finance team
should be considering, and shows how our LeaseValidator application
can help
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Equipment finance system migrations
Why the Finance team will be crucial to its success
Richmond Group

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PREPARATION DRESS REHEARSALS & CUTOVER POST-IMPLEMENTATION
Setup, configuration or customisation changes
Consider and document whether:
◼ Any posting rules will be amended and whether re-posting or GL mappings
will be necessary as a result
◼ Income recognition values will change as a result of the migration, whether
these will require accounting adjustments and whether internal &/or
external auditors should be engaged to review
◼ New control account reconciliation processes will need to be adopted and
how this will be handled at cutover
◼ Any change in process &/or process ownership should be adopted and how
to transition this
Finance reconciliation clean-up
Prior to cutover a concerted effort will be needed to resolve and clear any
existing GL to CMS reconciliation items, or consider whether more recent
items fall within the scope of cutover handling.
Resolving reconciliation items after go-live will be considerably more difficult
than doing so beforehand
Cutover validation work
Finance will need to be able to set up validation routines
(reconciliations, processes etc) to quickly validate that the
migration and cutover has succeeded.
Documentation: clear documented processes will need to
be in place to handle the reconciliation, matching and
clearance of the items above, and then execute them at
cutover.
In-flight transactions: efforts will need to be made to
minimise the impact of in-flight transactions by either
accelerating normal processing times or deferring items for
post-implementation processing. Examples are:
◼ Contract activations and terminations
◼ Invoices/billing raised in advance
◼ Banking transactions, such as direct debits, initiated in
advance
Confirm “unwinding” of cutover transactions
After go-live a number of items will need
attention including completing the cutover
reconciliations, ensuring that cutover items
have unwound correctly, and making any
accounts adjustments arising as a result of the
migration.
Additional support
Consider engaging software and project
teams to help the business, including Finance,
walk-through daily processes and the first
month-end close.
Introduction
The case for involving Finance in implementing a new Contract Management System (“CMS”) should be readily apparent. However CMS finance functionalities such as the following can be different in the
legacy and new system and so will have a significant impact on migration, cutover, and post-implementation phases:
TEST
Tips:
The impact on Finance of
implementing and migrating data for a
new CMS must not be
underestimated.
Consider seconding Finance staff to
the project or bringing onboard
specialist equipment finance
assistance.
◼ General ledger control account handling
◼ control accounts for items where the CMS is acting as a sub-ledger (e.g. for
arrears)
◼ transit accounts that trap timing differences for in-flight transactions &/or
processing error items,
◼ other accounts where the detail resides in the CMS.
The project time pressures that squeeze Finance teams
The migration design & build is dependent upon finalising the new system set
up & configuration.
Delays in the latter can squeeze the migration part of the project into
delivering the migration to reduced timescales.
Finance will inevitably be asked to help decide whether the
migration has been successful so that the new system can
go live.
Finance will need to have enough information to make this
confirmation and practised that they will have sufficient
time can make this assessment using dress rehearsals.
Key points for Finance teams
Technical balances
Agree how these will be validated and how to deal with
differences esp. income recognition balances (treatment will
usually depend on whether differences are due to a change of
accounting basis or not). See the next slide for guidance on
this
Test GL interfaces
Although strictly part of application testing, GL interface
testing will provide valuable input as to how Finance will deal
with the change from legacy to target processing at cutover.
GL information in the CMS
Some CMS’s allow for GL balances to be captured inside the
CMS itself. If this is to be adopted, consider how to load
“opening” (I.e. cutover date) balances into the CMS and test
this.
Apart from dealing with cutover-related items
and any accounts postings arising from the
migration, the first month-end after migration
is usually when any faults in system set-up,
configuration, migration or cutover will begin
to surface. Some processes are being run for
the first time adding to the pressure to Finance
teams
These can add to project squeeze on Finance:
◼ Migration design & build needs to be completed so that
migration test data can be provided to the application test
teams. Delays here can delay the overall project
◼ Initial attempts at full migration tests + failed application
tests using migration test data often result in the need for
re-build of the migration programs and project delay
◼ Accounts posting rules, date handling, and general ledger interface design
◼ Income recognition bases and handling even if intended to achieve the same result as the legacy system
◼ Period handling and closing
◼ Unapplied cash and suspense accounting

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Migration dress rehearsals
Migration dress rehearsals provide the opportunity to test finance reconciliations and validations and
also to update the cutover plan with realistic timings. Finance will normally be responsible for validating,
at a minimum:
◼ Arrears values
◼ Future rentals and instalments
◼ Technical balances such as the unearned income and expense balances. There will be differences.
Reconciling the technical balances
Significant finance effort is frequently given to validating the technical income recognition balances (e.g.
unearned interest). These are normally calculated balances rather than migrated values. Here are just
two examples (there are others) of how these can be validated:
1. The forecast values approach
In the months prior to go-live use the fact that future rentals and technical balances are known over a
contract’s life to predict the expected migration date balances, ideally for the legacy and for the new
system. Some of these contracts might terminate early, and so can be ignored. Reconciliation then
becomes an exercise in comparing predicted versus actual values, and this can be automated.
2. Richmond Group’s LeaseValidator application
This achieves the same outcome as (1) by using contract parameters to validate both the legacy and
target system values as well as predict the balances at forward dates
Contract parameters are used as
an input.
The application’s rules engine is
configured with product rules
(legacy and target) and outputs
both legacy and target expected
values which are then cf. actual
values

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Richmond Group migration services
This has been a necessarily brief, summarised look at the key things Finance teams should consider
when a new equipment finance contract management system is implemented.
Richmond supports equipment finance companies in their migration projects, including assistance
for finance teams using qualified lease finance professionals.
◼ Project and workstream management and staffing support for your team and project
◼ Data cleansing
◼ Finance reconciliation
◼ Migration documentation
◼ Cutover planning and execution
◼ Migration Quality Assurance services
◼ Richmond Groups’ LeaseValidator tool for validating lease schedules and income recognition
values
A selection of our customers

5. Contacts
www.richmondgrp.com
Richmond Group is a leading business transformation practice dedicated
exclusively to the equipment finance and leasing industry since 2000
Equipment finance and
leasing expertise
Deep understanding of
equipment finance
International
Delivering projects in Europe,
the Americas and Asia
Practical and pragmatic
Experienced,
knowledgeable, safe
David Pedreno
T: +44 7802 446137
E: dpedreno@richmondgrp.com
David Harmer
T:+41 78 808 01 99
E: dharmer@richmondgrp.com
Business
transformation
Systems
implementation
Data quality and
reporting
Richmond Consulting Group Ltd
22a St James Square, London SW1Y 4JH, United Kingdom