Today’s international and multi-entity organisations are facing more challenges in financial accounting and reporting than ever. The current market environment has caused many companies to become even more agile and to change their size, enter new markets and perform acquisitions even more often than before in order to remain competitive.

In such situation, account consolidation and reporting are becoming an integral part of business planning and effective management. Accurate account consolidation can improve finance departments efficiency in helping higher management with decision making in an increasingly competitive environment.

However, efficient account consolidation comes with significant challenges, and to help our readers improve their consolidation process we bring you 3 account consolidation best practices.

Intra-group transactions reconciliation

In each report financial professionals need to deal with intra-group transactions. These are tricky as the difference in balances can lead to a very wonky consolidation. Most of the organisations deal with this through emails and spreadsheets. Such an approach has many risks – anything from misunderstanding to changing figures, broken calculations and typos. This is a manual process that is inefficient and has usually low quality.

There are a few ways to go about it, firstly, the account consolidation and reporting process is more effective if the reconciliation is done by the accountants of subsidiaries themselves. Secondly, it is a good practise to automate and monitor the reconciliation process as such task done in a controlled environment can save up to 70 percent of time.

Data Collection

Companies using spreadsheets for their reporting process pose a huge risk to the integrity of their data. The use of Excel for reporting is so popular due to its familiar nature and you can change or edit everything. Some users have even become proficient in editing the macros, therefore automating their spreadsheets in order to save time on their regular tasks.

The main solution to avoid the risk of bad formulas and oddly rounded figures is to get reporting software. This is a great solution for businesses that want to unify their accounts and perform efficient and accurate consolidations. Such solution has a predefined data model that is saved in a database and each subsidiary can map their data with the model. Additionally, the solution decreases the time for data transformation of each subsidiary’s accountant.

Historic data

Easy reports for comparing historic data in account consolidation is often the least of the priority, and in fact, often gets completely forgotten. However, stakeholders need this data for decision-making processes, and they need to compare historical data with current results and potentially even look at the forecasts. Many will deal with this issue by flicking through numerous spreadsheets and combining the necessary information into another, you guessed it, spreadsheet. This is a very time-consuming and error-prone process.

A great practice to simplify this process is to generate a separate management-reporting file which includes key figures and summaries of all the files. That way it can be easily consumed by management. However, a better solution to this issue is to get a consolidation and reporting software that has been designed to handle such reporting automatically, like ProForecast.



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