The financial consolidation process can turn into a laborious mess of assembling, validating and reporting information. More often than not, this takes weeks or even months for corporate accounting groups to resolve. Nowadays, financial management solutions are switching from systems of record to systems of intelligence in order to access updated, accurate and consolidated financial reporting. When a single parent company consolidates its related entities, the reader has a combined view of all financial statements under the parent company’s control.
Consolidations can be complicated by:
- Organic and geographic business growth
- Fluctuating accounting rules
- Increasing intercommunication between entities within a control group
The best way to manage consolidations is to use cloud financial management systems. Here are the four key differences between this arrangement and the traditional solution.
1. Automation is Seamless
Traditional finance and accounting systems aren’t equipped to handle the systems and processes for new physical and virtual entities. With a cloud financial solution, you can seamlessly add new business units without any additional investments in hardware, software or configuration.
2. Supporting Faster Growth
As companies expand with mergers and acquisitions, they need to align their finances with the rest of the company to keep up with the corporate strategy. All of the systems have to be updated to support the number of decisions occurring at the beginning of the new entity. Cloud financial management systems are built to handle growth and can quickly adjust the new entity’s accounts.
3. Managing the Consolidation Process
Traditional consolidations rely on emails and back-and-forth communication between the company’s accountants and those in the various business units in order to prepare the necessary information for the consolidation. With a cloud financial management system, you can integrate consolidation information at any time.
4. Gain Better Insight
Traditional consolidation processes create a gap between the originating data and the data used to perform the consolidation, which can ultimately prevent transparency and limit insight. A cloud financial management system eliminates the gaps between the consolidation and the data. Real-time consolidated financial information can become available to decision-makers at the push of a button.
Take charge of your financial consolidations and contact InCloud360 with any questions about how to begin the process.
The information from this post was retrieved from Sage Intacct’s whitepaper “Next Generation Financial Consolidations for Financial Services.”