Plenty of Microsoft Dynamics SL customers are overseeing financial consolidations for a parent company of multiple subsidiaries. Aggregating company information from more than one legal business unit, particularly if there are diverse monies involved, can be difficult without a robust financial reporting and consolidations solution. Data continues to grow in amount and significance to decision-making for the future of the business, so it makes sense that executive teams are seeking an easy-to-use software for the regular responsibility of data consolidation into a unified set of financial statements. If it’s your responsibility to consolidate subsidiary information with Dynamics SL, this article will explore your options for easy-to-use, modern, and powerful solutions.
Let’s first define the term. Financial consolidation is a process of combining and making sense of operational and transactional information into a singular set of financial reports for the parent organization. These statements coalesce subsidiary data that comprises a parent company’s financial big picture in a direct report. Financial consolidation usually entails currency conversions when more than one currency is involved, inter-company transactional eliminations, and any other manual adjustments that have to be done in Dynamics SL or right within the financial consolidation tool, so that the whole picture of the parent company is available. There are a couple of reasons that are probably most common for people to be looking for the best consolidation software today.
The two main reasons to seek out a modern, automated consolidation solution have to do with age. Some organizations would like to leave their older consolidation tools behind because they are too complicated for end user management, like Cognos TM1 or Hyperion. Others are hoping to shed their more mature technology because they are too simplistic to meet today’s business demands, like FRx or Management Reporter.
I recently talked to a COO who depends on Dynamics SL to manage several subsidiaries around the world for an international parent organization. This COO is responsible for meeting national and international accounting rules, as well as currency conversions, like the International Financial Reporting Standards (IFRS) to Generally Accepted Accounting Principles adjustments (GAAP), typically known as IFRS to GAAP. Some consolidation solutions offer flexible sub-ledger analytics and are positioned within a complete suite of Business Intelligence (BI) tools, like ad-hoc report writing, financial planning, dashboards, and data management. Let’s talk about what you should be looking for in your financial consolidation solution search, specifically to improve your Dynamics SL experience.
I have written about your data integration options previously, but you will know best whether you need to query data directly from SL for a real-time analysis, which might take longer depending on the number of users who are pulling information, sometimes simultaneously – or you can go the BI data store route. BI data stores, like an online analytical processing (OLAP) cube or a data warehouse, is a higher performance option, but it does entail routine replication of your information to the repository.
Organizations with simpler consolidations, due to less subsidiaries, little or no currency conversions needed, and/or the issue of a slow SL server because of significant or simultaneous data queries, would probably be just fine with a live integration. Additionally, if you do not plan on pulling from other data sources, posting elimination entries or additional adjustments beyond what SL provides, you could just use Dynamics. However, plenty of data warehouses and OLAP cubes can perform consolidations by pulling your GL data right from SL, so this is a great option for companies with different needs. With the most specialized consolidation tools, you can consolidate newly acquired subsidiaries who are running other accounting systems from the time of acquisition, even if you don’t plan to move them over to SL until a later date.
Data replication to a commercial data warehouse or an OLAP cube is simple because you can schedule routine refreshes or simply click a button to manually push. SL information will replicate, usually via Microsoft SQL Server Integration Services (SSIS), to the BI data store, and aggregations can be done at a higher performance thanks to the stability an OLAP cube or a data warehouse offers. If you are planning to perform more complicated currency conversions, are worried about a slow SL server with routine data queries, and/or if you have a large data set to consolidate, a BI data store will likely be the best option for you. In addition, you’ll want to consider which consolidation features are needed for your specific business needs.
Eliminations for intercompany transactions. A subsidiary might buy or sell services or goods to another subsidiary, which means both line items will cancel out for both companies. Eliminations remove these intercompany transactions from the P&L and balance sheet, which can be performed within Dynamics SL or a BI data store, using the solution you deploy. Some BI tools even come with built-in, fully configurable Excel or web input forms that you can utilize to manually alter or cancel out transactions in simple ways.
Converting currencies and consolidation adjustments. Converting currencies allows multi-national corporations to aggregate their transactional data into one set of financial reports with one currency. IFRS to GAAP is an example of a consolidation adjustment and these help the finance team meet domestic and global accounting standards, update inventory, or temporarily fix incomplete subsidiary data, in addition to other tasks. These functionalities help you to complete statutory reports.
Allocating, reconciling, and organizational change modeling. Some companies choose to allocate specific expenditures or revenue to a department, a division, and/or a particular subsidiary. You can make these allocations within SL, prior to loading your data to a BI tool, or you can design allocation processes of varying levels of complexity within some OLAP cubes and data warehouses. If you choose to go the BI data store route, lots of companies like to have parent company or subsidiary staff reconcile the data to make sure it is accurate, which can be performed with SL, a BI front-end tool, or in a BI data store. Finally, some data sources invite you to model organizational changes by replicating and alternating however many needed hierarchies or company trees to illustrate the effect of acquisitions, divestments, and/or reorganizations. You can clearly see the impact of specific changes on the parent company portfolio with this feature.
There’s so much to evaluate when looking for the best consolidation solution for your team. Solver, Inc. is happy to answer questions and generally review BI360’s easy-to-use, Excel-powered consolidation tool for Microsoft Dynamics SL with both real-time or data warehouse integrated analysis, comprehensive reporting and collaboration as a way to accelerate company performance management.