“Without analytical accounting, we have no accurate view of the matters we genuinely want insight into.”

The Value of Analytical Accounting for ML6

“Without analytical accounting, we have no accurate view of the matters we genuinely want insight into and the distinctions ML6 aims to make in specific expenses. For us, the analytical structure is crucial.”

The analytical approach to accounting proved to be a success for the Gent-based machine learning and artificial intelligence provider, ML6, during international expansion. With four legal entities in Belgium, the Netherlands, Germany, and the United Kingdom, CFO Fé Zenner sought to consistently apply the same accounting methodology.

“Two Additional Dimensions”

“At the foundation of our accounting, we added two additional dimensions. The first pertains to our departments or units, while the second dimension relates to our types of costs and how we categorize and view them.”

This way, the finance department can perform all the necessary analyses and gain insights into what they genuinely wish to see. “This is also in line with our budgeting process,” explains Zenner. “Our budgets are created, and each budget has a budget owner. This is the lead of the unit, also referred to as the unit coach. The budget owner is responsible for their budget.”

“Aligning Budgets with Actuals”

“Every expense is entirely allocated to a specific unit and a specific cost type. These are then booked in the invoicing through analytical accounting. This allows us to compare our budgets with the actuals in our reporting tool, for which we use BrightAnalytics.”

The internal P&L thus consists of these different units and cost types. “We can also pivot so that we can see the share of each unit in a specific cost type. This works particularly well for us. It’s a dynamic system because when there is a change in our internal structure, when a new unit is created, or a new cost type emerges, we have the flexibility to adapt our analytical structure or way of working.”

“Automated Insights per Unit and Cost Type”

Analytical accounting is considered a tremendous success, according to Zenner. “If we were to work solely based on the general ledger account, it would require a great deal of manual work to map all the actuals to compare them with our budget. Creating budgets per unit or cost type could certainly work, but it would be very time-intensive. With our analytical structure, we essentially obtain this automatically.”

Essential for ML6’s internationalisation was the establishment of the internal P&L based on analytical accounting. “This effectively translated our internal structure and way of working.”

“Using the Same Accounting Software to Avoid Differences”

Having four legal entities means having four different accounting methods. “That’s why analytical accounting is consistently applied to avoid having different reporting across countries. In each legal entity, we work with the same accounting software, namely Exact Online.”

“Initially, we used separate accounting software packages in each country, but we realized that this was far from ideal. Finally, in each country, there is also a local partner, an external accounting firm, that supports ML6.”