In accounting, financial consolidation generally refers to the process of bringing together the financial information from across all of the segments or subsidiaries of a company or group of companies. This is essential for large multi-national organisations and businesses which have many international branches, or for groups of companies which have a range of subsidiaries. Pulling together data from various entities allows accountants and finance managers to produce reports which can be used to give an accurate and holistic view of a multi-entity group’s finances. Consolidation can be a complicated process, which requires a high degree of accuracy and care to unravel the inevitable complexities of large companies and groups of companies operating in various markets, currencies and jurisdictions.
The financial consolidation process can be done in a variety of ways, with more hands-on manual work by accountancy teams, or using accounting software, which have varying levels of capacity and automation. The most advanced software can complete virtually all of the necessary steps in just a few clicks.
The process of financial consolidation generally involves completing the following steps.
In the past, multi-entity financial consolidation was often done using large numbers of manually-produced spreadsheets. But this method had many pitfalls and significant potential for human error, and is the source of much frustration for accountants.
The best tool to use for financial consolidation is an effective cloud-based financial management software package. Choosing a more complex and multi-functional package, rather than a basic cloud accounting program, is often the best choice for financial consolidation. A more advanced platform allows for automatic consolidation, smart reports which automatically draw in data from a wider range of sources, and better cross-currency accounting features.
AccountsIQ financial management software has a high level of capability in all of these areas, with many opportunities to customise its features in order to deal with larger and more complex companies and organisations. In just a few clicks, you can automatically consolidate financial data from across large multi-national and multi-entity groups, businesses and organisations, and produce accurate and highly customisable reports.