6 essential financial consolidation software features for your company

Dynamics GP Utilities

Published on: May 4, 2021

Digital transformation is one of the biggest challenges most companies face today. The complexity of that challenge only multiplies for those who need to consolidate data from multiple entities. The right software can enable companies with numerous entities to move faster, make better decisions and remain competitive in a constantly evolving environment.

To better understand how software can enable all this, you first need to get insight into the full range of its capabilities (which go far beyond consolidated financial statements). This blog breaks down the essential features you need to look for in financial consolidation software so that you can say goodbye to obsolete processes and systems while remaining compliant with global accounting standards.

1. Centralized environment for intercompany transaction processing

Intercompany transactions can become an incredible burden for companies with multiple entities and decentralized systems. Often it can take weeks and numerous steps involving the accounting team to process payments. The right financial consolidation software can fix this by providing a centralized environment that streamlines the processing of intercompany transactions so that you can complete the transaction in a single instance. The software should also include multiple entities within a single transaction while automatically utilizing this information in real-time reports that meet compliance requirements.

Look for the following functionality in your financial consolidation software features:

  • Automates intercompany transaction processing across multiple entities
  • Eliminates redundant tasks with centralized payables and receivables management
  • Grants complete insight into historical transactions with real-time reports

Centralizing systems | financial consolidation challenges

2. Financial consolidation software should exist in the cloud

One of the challenges companies face when it comes to financial consolidation is systems that operate from on-premise databases and servers, resulting in users needing to be at the location to input or access data. In today’s world, the inability to access essential reports and information from anywhere at any time is a hindrance to progress.

Cloud-based systems give you the ability to tap into a centralized database from any location. This is particularly useful for a parent company that wants to have complete insight into subsidiaries’ performances. By having each entity exist in a single database in the cloud, you can easily monitor progress and make better-informed decisions.

Another advantage of a cloud-based environment is that it eliminates the need for on-premise servers, which are often extremely expensive to maintain and upgrade.

3. Real-time consolidated reporting

Nobody looking for financial consolidation software needs reminding of the importance of consolidated reports and financial statements. However, it’s worth mentioning that it should be possible to access these in real-time.

One of the biggest challenges we see companies face is the time it takes to achieve month-end reports and consolidated financial statements. It can take weeks with the wrong software. In a world where companies often make critical financial decisions daily, time-sensitive consolidated reporting is vital. Your company needs real-time data that will give you actionable insights about performance.

Look for the following functionality in your financial consolidation software features:

  • Manages a single set of master records to ensure data integrity and accuracy
  • Reports across different organizations with real-time actionable information
  • Prepares audit-friendly reporting for a shorter period-end process

 Real-time consolidated reporting

Recommended reading: 8 financial consolidation best practices for companies  

4. Enables comprehensive compliance management

Failing to prove compliance with global accounting standards can result in costly penalties and even the loss of company licences. Your software must handle the complexities and demands of the regulations it needs to meet across all entities. The best financial consolidation software effectively manages data and reports to ensure all your financial information is easy to consolidate and audit.

Instead, look for software built in line with accounting standards like IFRS 10 and ASC 810 and use terms like “enables” or “assists”, which are more realistic and truthful. Double-check for this feature before you invest.

Essential reading for financial consolidation compliance:

5. Scalable security features to ensure the protection of all data

Automate transactions | financial consolidation guide

Financial consolidation requires the transfer of sensitive data across multiple entities. As a result, security is of the utmost importance when it comes to selecting your new software. The solution you choose must meet best practice guidelines for data protection and security to ensure there’s no risk of data breaches. It’s also vital that these features will scale and as you grow and keep your data safe even during periods of exponential growth.

Companies with multiple entities will also require the ability to modify access levels depending on roles and manage which entities can access certain sensitive information. For instance, the parent may want complete visibility of all subsidiaries, but the reverse of this may not be appropriate.

Look for the following functionality in your financial consolidation software features:

  • Utilizes robust security setup including SSL encryption, two-factor authentication, advanced firewalls and automated notifications for new sign-ins
  • Establishes a clear organizational structure with insight into each role’s access levels
  • Manages security roles centrally to avoid inconsistencies and errors

6. A customer service team and comprehensive training to enable smooth implementation

Although this is not a software feature per se, it’s something your company will need. Poor customer support and training can have long-term and costly ramifications such as essential features being unutilized, improper assigning of security roles, poor process integration, etc.

When it comes to reviewing your options, make sure you meet with the team supporting your investment. It will be essential that they offer comprehensive support and training and understand that you’re entering into a partnership. Regardless of your team’s competence, it’s key to have a helping hand on call for when they get confused or overwhelmed by a new system.

starboard group case study financial consolidation multi-company

 

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