If your organisation is growing, it’s probably getting more complicated. What started as a single business or non-profit can turn into a web of connected entities.
That presents potential headaches for the person or team whose job it is to produce consolidated accounts. And it can seriously impede the running of the organisation if decision makers cannot see clear, up-to-date information when they need it. But if the right financial consolidation software is used across the organisation, it is possible to easily get a clear and current picture of the finances for each entity and the group as a whole.
What problems does Financial Consolidation Software solve?
Assembling a consolidated picture of an organisation’s finances can involve a host of complicated processes – but each of them can be simplified with the right financial consolidation software.
- Intercompany transactions. If Entity A in a group sells something to Entity B in the same group, a purchase order and a corresponding invoice need to be raised and the process needs to be tracked from both sides. It’s possible for a whole team of people to get embroiled in a process in which no money leaves the organisation.
But the right software can automate everything, with the funds leaving one balance sheet and showing up in another instantaneously.
- Group VAT. Adding up all the VAT due across a group of entities – and then submitting it in a single VAT return – has traditionally been a complex process. Software can now pull the data together from across the group and make all the adjustments on the individual balance sheets.
- Real-time group eliminations. It used to be that only the most expensive enterprise-level accounting software could strip from the accounts intercompany transactions such as sales, loan movements and cash transfers. Now it can be done easily by software, allowing the finance director to display or hide these eliminated transactions as required.
- Inter-company bulk payment runs. If one entity pays a supplier on behalf of a whole group, the right software can adjust all the subsidiary ledgers automatically, eliminating the need for a human to handle a whole set of transfers.
- Multi-company purchase invoices. If the same supplier provides goods or services to a whole group of entities, it will save a lot of work if its invoices can be input once and the costs shared correctly across the group by the software.
Examples of consolidation made easy
Sandra Tcheumeni Boschet, Head of Finance and Administration at the international non-profit Health Poverty Action, saw her organisation save at least six weeks on consolidating project balance sheets when it moved a group of entities to iplicit’s cloud accounting platform.
“We have to be able to see financial reporting by entity and for the entire group, at the touch of a button, with a high level of confidence that the information is always accurate and in real-time,” she says.
The organisation previously replied on multiple separate installations of QuickBooks and SunSystems. “Sometimes you would discover issues much later than would be ideal, because there wasn’t a single view that could be accessed centrally,” she says.
Sarah Smith, Group Operations Director at A-One Insurance, also moved a group of entities to iplicit. She says: “Real-time reporting has been business changing. We've been able to consolidate all the businesses at once so we can grab very realistic and up-to-date snapshots at a moment's notice. And most importantly, we know it's reliable. It has enabled the whole business and the management team to move forward.”
Saving time with Financial Consolidation Software
If you calculate how much staff time is being spent on consolidating your accounts, you might find the cost is higher than you knew. But the cost of making decisions based on faulty or out-of-date data could be still greater.
Find out more about how financial consolidation software allows you to streamline your finances.
And for a friendly chat about how we can help you solve your particular challenges with multi-entity accounting, consolidation and reporting, please get in touch with our team or watch our Consolidation Webinar to learn more.