If your company is running on ERP, a smooth transition to GST will be the most important challenge that you could face in the coming quarter. With GST expected to roll-out as on 1st July 2017, the date act as a rigid constraint that you have to adhere to.
It is important to plan for the transition. The first step is to understand the implication of ERP and enumerate the key aspects that you should consider.
Here are a few of them.
1. Are you on the latest version? Every ERP Vendor has upgraded their applications to become compatible with GST. So the first step is to review with your ERP Vendor and ensure that you are on the correct version that is adaptable to GST. The information below may be dated. Please check up with the Product Vendor for the latest information.
2. Impact on Registration (Master Update 15 digit GST Registration Number), Returns (Monthly, Quarterly, Annual), Granularity (more details about type of invoices, HSN Codes), Payments, Refunds, Integration with GST Network (GSTN)
3. Impact on Transaction: How to handle Available Stock, Available input credit, Open Transactions like POs, SOs etc, How to handle partial receipts and partial shipments, how to handle Sales Agreements, purchase agreements, long term contracts, Blanket Purchase Orders, Blanket Sales Orders etc
4. Impact on Pricing
5. Impact on Special Transaction Cases: Sales Returns where Shipment made before GST and stocks returned after GST, Goods In Transit etc
6. How to prepare for the transition
- Impact analysis
- Version readiness
- Report readiness
- Data readiness (ensure correct and complete master data)
- Transactions assessment and fitment to GST
7. 10 Changes required in ERP
- Ensure that the transactions process comply with GST. Some process might need detailed review. These include Interstate Stock Transfer, Outsourcing / Subcontracting etc. In addition, month end process will need to be reviewed to ensure accurate calculation and returns submission
- Ensure that Chart of accounts are updated with the required account codes and setups
- Ensure that RICE / CEMLI (Reports, Interfaces, Conversions and Extensions / Configuration, Extension, Modification, Localization, and Integration) components are properly updated
- Ensure that master data (Organization, Item, Vendor, Customer, Price List) etc are correctly and completely updated
- Reduce the number of Open Transactions / Documents (Open PO, Open SO, WIP etc) by closing / Cancelling them
- Complete partial transactions like Partial receipt (Receive in full or cancel) and Partial Shipments (Ship fully or cancel), Partial Production Orders (Complete the same, no WIP)
- Revalue Stocks if required
- Migrate existing tax credit from VAT and CENVAT and transfer them to correct accounts as per GST Law.
- Test the standard reports available in your ERP application
- Integrate with the GSTN