Computer-based optimization system for financial performance management

• US 20030195780A1
• Filed: 12/13/2002
• Published: 10/16/2003
• Est. Priority Date: 12/13/2001
• Status: Abandoned Application

• Current Assignee: Thomson Reuters Enterprise Centre GmbH (The Woodbridge Co. Ltd.)
• Original Assignee: Liquid Engines, Inc. (The Woodbridge Co. Ltd.)
• Inventors: Arora, Arti, Lazear, Edward
• Application Number:
  US10/319,182
• Publication Number:
  US 20030195780A1
• Time in Patent Office: Days
• US Class Current: 705/35
• CPC Class Codes: G06Q 10/06 Resources, workflows, human or project management; Enterprise or organisation planning; Enterprise or organisation modelling
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: Y02P 90/90 Financial instruments for climate change mitigation, e.g. environmental taxes, subsidies or financing

Abstract

A system for analyzing and optimizing allocation of factors among different business entities. The analysis, or optimization, can be targeted to a specific business financials measurement, or metric. Many different types of factors can be considered regardless of their initial definition, description or form. For example, along with revenues, profit, inventory size, etc., human characteristics such as incentive and performance can be measured and optimized. A preferred embodiment of the invention concerns analyzing factor allocation to reduce overall taxes for a company with subsidiaries in regions with different tax laws. The system includes consideration of local, state, federal and international taxes, transfer pricing, tax credit limitations, inter-state allocations in unitary and non unitary environments, carry-overs, and others. The system preferably uses a versatile matching engine, described herein, to automate the analysis and optimization. The matching engine is capable of discrete and continuous attribute value weighting, and of performing substitution of attributes, or other variables.

Claims

1. A method for assigning a financial factor to one of a plurality of business entities, the method comprising

identifying a factor to be assigned;

indicating a metric to be optimized;

defining one or more rules to be used in a matching process;

using a computer system to perform a step of comparing degrees of optimization of the metric based on assignment of the factor to different ones of the plurality of business entities, wherein the one or more rules are used to derive the degrees of optimization; and

using the result of the comparing step to assign the financial factor to the one of a plurality of business entities.

2. The method of claim 1, wherein the factor includes cost.

3. The method of claim 1, wherein the factor includes revenue.

4. The method of claim 1, wherein the factor includes product shipping allocation.

5. The method of claim 1, wherein the factor includes sales allocation.

6. The method of claim 1, wherein the business entities are located in different geographic regions.

7. The method of claim 1, wherein the business entities are located in regions with different commercial laws.

8. The method of claim 1, wherein the metric includes growth.

9. The method of claim 1, wherein the metric includes profitability.

10. The method of claim 1, wherein the metric includes tax liability.

11. The method of claim 1, wherein the metric includes risk associated with changes to business allocations among a plurality of entities.

12. The method of claim 1, wherein the metric includes human incentives.

13. The method of claim 1, wherein the step of comparing degrees of optimization uses a matching engine as described herein.

14. The method of claim 1, wherein the step to create complete and stable planning models using only essential data elements.

15. A method for analyzing a business operation, the method comprising

using a computer system to provide projected tax liability when costs and revenue are allocated among a plurality of business entities, wherein the computer system executes a matching engine using weighting of attribute values.

16. The method of claim 15, wherein the computer system uses discrete weighting.

17. The method of claim 15, wherein the computer system uses continuous weighting.

18. The method of claim 15, wherein the computer system uses substitution of variables.

19. A method for analyzing a business operation, the method comprising

allocating one of cost or revenue among a plurality of business entities;

using a computer system to provide projected tax liability based on the allocations made in the step of allocating; and

using the computer system to provide incentive determination based on the allocations made in the step of allocating.

20. The method of claim 19 further comprising using the computer system to access a cost allocation module;

a transfer pricing module;

an income shifting module;

a capital investment module; and

a financing module.

21. The method of claim 19 further comprising the defining a base case having a first set of either cost or revenue allocations and performing a series of iterations to define a plurality of “

what if”

cases based on at least a second set of either cost or revenue allocations.

22. A method for analyzing a business operation, the method comprising

allocating one of cost or revenue among a plurality of business entities;

using a computer system to provide projected tax liability based on the allocations made in the step of allocating;

using the computer system to provide an risk assessment projection based on the allocations made in the step of allocating.

23. A method for optimizing taxes for a multi-jurisdiction entity, the method comprising:

defining a plurality of case, including at least one base case;

defining said entity in terms of at least one location, the number of subsidiary entities and the relationship between each such subsidiary entities;

using a computer system to perform an optimization process based on at least one model, said model having a plurality of rules for deriving tax implications of business operation, and the defined entity;

using the computer system to allocate financial metrics.

24. The method of claim 23 further comprising generating a report, said report including a comparison of the allocation of financial metrics for the base case and at least one other case based on a different allocation of financial metrics.

25. The method of claim 24 further comprising exporting the report to a data management application to enable a user to drill down to data supporting said report.

26. The method of claim 23 further comprising generating a “

what-if”

case using a wizard to reassign the financial metrics of a parent to a sub-entity.

27. A system for providing strategic business units, finance, treasury, and tax departments in a global company visibility on its forecasted cash flow, including forecasted revenues, forecasted expense and forecasted capital decisions, where said business units are located in a plurality of jurisdictions such that said cash flow is allocated to selected ones of said strategic business units in view of the tax laws for each jurisdiction and generally accepted accounting principles (GAAP), said system comprising:

Means for defining a plurality of scenario-based approaches that allows multi-year tax planning and analysis across said business units and for sharing the results between users; and

Means for disseminating said scenario-based approaches to each of said business units.

28. The system of claim 27 wherein said disseminating means further includes a server and a plurality of web-based browsers, coupled to said server, so that said defining means accepts factors from each of said strategic business units.

29. The system of claim 28 further comprising an optimizing function for splitting an entity into a plurality of entities in different jurisdictions to modify a selected one of said scenario-based approaches.

30. The system of claim 28 further comprising an optimizing function for combining a plurality of entities located in a plurality of entities in different jurisdictions to a common entity to modify a selected one of said scenario-based approaches.

31. The system of claim 28 further comprising an optimizing function for creating a new entity to modify a selected one of said scenario-based approaches.

32. The system of claim 28 further comprising an optimizing function to optimize the transfer pricing to modify a selected one of said scenario-based approaches.

33. The system of claim 28 further comprising an optimizing function for splitting an entity into a plurality of entities in different jurisdictions to modify a selected one of said scenario-based approaches.

34. The system of claim 28 further comprising a plurality of optimizing functions to modify a selected one of said scenario-based approaches.

35. The system of claim 28 further comprising:

An allocation engine;

An analysis engine; and

Means for defining the relationship between each of said strategic business units.