Future of Revenue Accounting (FoRA) Nick Coote/Terry Delaney

Transcription

1 (FoRA) Nick Coote/Terry Delaney

2 Financial Think Tank Made up of a group of CFOs, many from the Financial Committee, supported by external experts Recognises the poor financial performance of the industry Everyone in the value chain makes money except us, the airlines Focuses on steps that can be taken by IATA to help the industry improve its financial health One area was Back-office Standardisation Covers many financial processes, including revenue accounting and e-invoicing At the strategy paper review in September, the Financial Committee gave the strongest support to simplifying revenue accounting processes 2

3 The past of Revenue Accounting Why is airline revenue accounting special? Huge number of pieces of paper involved Special rules associated with handling them Impact: separate revenue accounting and finance departments developed Computerisation replicated manual processes Developed independently in Finance and Revenue accounting More divergence and duplication of infrastructure and cost Increasing system complexity adds to industry costs Need to maintain own systems or buy services from other providers Ticket data processing for revenue adds no value to the airline Value comes from information derived from the data processing

4 Revenue Accounting Today Much more automated, but still based on the same processes and practices from the 1980s and before ET became universal in 2008, but while it took out the paper it did not fundamentally change processing. In some cases it created new problems SIS was implemented in 2011 to simplify the billing and settlement process. This was a natural progression complementing e-ticketing In-built controls improved processes ERP systems are far more capable of handling more complex, high volume accounting NDC will enable a break from the past

5 Can we work without RA systems? Preliminary answer seems to be Yes Operating revenue accounting systems on top of finance systems adds at least USD500m pa to industry costs Advantages of existing ERP systems with industry-owned services: Minimises costs Simplifies processes Increases standardization and use of existing standards Reduces future investment needs for the industry Supports NDC by enabling simple, industry-wide implementation Most feedback to date endorses the approach and the opportunity for reductions in cost and complexity FinCom comment: This could be a game-changer

6 The foundations are in place The industry framework already exists SIS: Automatic flown coupon data processing (Auto- Billing), revenue recognition postings, incoming invoice and coupon data receipt AIA First & Final infrastructure: Prorated sales data storage Existing industry infrastructure that can support industry data processing needs centrally Accounting systems are capable Powerful modern ERP systems can handle additional outputs centrally Revenue accounting departments can be merged into Finance NDC contract-based sales will need ERP systems to support revenue recognition and billing Central architecture provides industry simplification

7 Step into tomorrow Part of the design of SIS was to look for non-linear change Auto-billing allows an airline to send a file of flown coupons to SIS for valuation, invoicing and settlement Management information fed back on a daily basis along with a weekly posting file Centralizes and automates outward billing process

8 Revenue Accounting Tomorrow We have now the necessary three building blocks AIA infrastructure for coupon valuation - infrastructure has been expanded to allow for other types of passenger billing (non-final) Central ticket data processing service State of the art powerful Financial ERP systems Connectivity provided by SIS Facilitates wider adoption of NDC 8

9 Central data processing Revenue Accounting of Tomorrow Sales data input HOT, CAT, ISR, own ET sales Single point upgrades Incorporating: Sales Data improvement Central cleansing of sales data Enriching the data from other data sources (e.g. schedules) Leading to: Coupon/Segment Value Determination Focus on quality of proration engines in the industry Filing coupon/segment values at time of fare filing Stored in a: Central ticket database For: Coupon matching And: Automated interline billing and settlement With a feed to corporate data warehouses 9

10 Local ERP update Revenue Accounting of Tomorrow General Ledger management Local policy application Interface with central ticket database Drill down to audit and reconcile G/L entries Customer account invoicing Credit card billing Miscellaneous/Non-transport billings Management information Tax/audit reports etc 10

11 Benefits Industry-owned service: Low cost of implementation infrastructure already exists Low cost of operation one central operation will cost a fraction of hundreds of local operations Service standards and quality managed by the industry Our ability to provide a complete industry solution as the next phase of AIA Services Cost reduction Automation Standardisation Opportunities arising from a single database No conflicts between the different copies currently held by airlines Single point of change to maintain compliance with NDC 11

12 Next Steps Completed full Auto-Billing test successfully Task Force established to research solutions to problem areas. Task Force composed of: Pilot airlines, ERP system providers, ACH, AIA and other supporting airlines Volunteers required! Speak to any of Nick, Terry, Adina, Bernard, Kirk or Gisele Task Force reports directly to Financial Committee Update early in 2014 Document Business Solution Design (BSD) Planned for April

13 Thank you for your Participation! Nicholas Coote Terry Delaney ISW2: Meeting and Name of Presentation 13