Rapala, with help of ZenTreasury, tackles IFRS 16 standard which has been a pain for publicly traded companies.
The International Financial Reporting Standard 16, issued in January, has caused many a headache to publicly traded companies with leases. A Finnish startup called ZenTreasury has solved the problem with a system so easy to use that even the world’s largest manufacturer of fishing lures, Rapala VMC, has taken a liking to it.
Fishermen and -women around the world swear by Rapala’s catches, knives, tools and other fishing tackle. The international publicly traded company sells its products in 140 different countries and has international subsidiaries and leasing contracts in 50 different countries. After the issue of IFRS 16 in January 2019, Rapala was forced to bring all these contracts to its balance sheet in its accounting.
”For us the most critical factor in choosing a system was control over multiple currencies. Rapala has a relatively limited amount of leases, but we have subsidiaries and contracts in a many different countries and currencies. For many of the system providers who submitted bids to us, working with several different currency rates proved problematic and cumbersome. We loved ZenTreasury’s solution at first sight, as it is light, flexible and easy to use. The simplicity of adopting the system was a very positive surprise, and the system training provided by ZenTreasury to controllers in different countries has been a breeze”, says the Rapala Group Financial Controller, Joni Virtanen.
According to Ville Ojanen, CFO and COO of ZenTreasury, support for multiple currencies and user control were already features of their system. Thus for IFRS 16 all they needed was a new module that could respond to clients’ new reporting needs.
”It was actually very easy for me to create a new module for IFRS 16 on top of the SaaS platform created by Lars Nevalainen, the founder and CEO of ZenTreasury”, Ojanen elaborates.
The Shared Language of Accounting
Virtanen lists cost effectiveness and dexterity as the advantages of the Finnish startup. The fact that the language used at the sales meeting was the shared one of accounting was also pleasing to him as a professional of finance.
”We almost finished each other’s sentences, which really helped to build trust. Another contributing factor was the fact that anything discussed at ZenTreasury was immediately solved and dealt with. Using multiple currencies wasn’t considered a problem at all. They have impressive know-how in their field and easy to contact, should any issue need a quick solution”, says Virtanen.
Adopting IFRS 16 has caused a bit of an earthquake, as accounting has had to start using a new and different way of reporting. For investors, on the other hand, IFRS 16 makes following business more transparent, as organizations must now bring all their leases onto the balance sheet. The standard is applicable to all companies reporting under IFRS with leases over a year in length and valued at over $5,000.
According to Ojanen, ZenTreasury allows even larger public companies to manage their leasing portfolio with ease from a single location and simultaneously create all the necessary accounting entries required by IFRS 16. Accounting can be taken care of with ready-made reports. All reports can be exported to calculation tables or alternatively entries can be transferred to the company’s accounting systems through a user interface. Both adopting the system and input of entries are efficient and stress-free.
”Adopting a company the size of Rapala took us about two hours. I haven’t heard of anyone else accomplishing a similar feat”, Ojanen remarks.