Financial Consolidations for Acumatica

In this article, top financial consolidation tools will be in the spotlight, zooming in on features and functionalities that can help Acumatica users manage parent company financials.

There are plenty of Acumatica users who are responsible for management of a parent company’s financial portfolio for multiple subsidiaries.  Combining more than one entity’s financial information, sometimes with diverse currencies, can be tedious without a modern financial consolidation solution.  Because data continues to grow in size and significance for decision-making, more and more executive teams are shopping for the right software that enables business end users to aggregate data into a singular set of financial statements.  In this article, I’ll focus on your solution options for Acumatica customers who are charged with financial consolidations, with a look at the options you have for a dynamic, business user friendly, and powerful solution.

Defining the term.  Financial consolidations refer to the bringing together of subsidiary transactional data to produce a unified set of financial reports for a parent organization.  These statements consist of subsidiary information and directly illustrate the parent company’s overall financial health.  Financial consolidations typically entail currency conversions with distinct monies, eliminations to deal with inter-company transactions between subsidiary companies, and any additional adjustments that need to be made manually without today’s consolidation tools.  There are several reasons to shop around for a modern consolidation tool, but two stand out for most CFOs looking for something new.

Your finance team could be looking at modern, automated consolidation solutions for plenty of reasons.  Some might want to move on from older tools that are too simplistic for modern business demands, like manual Excel spreadsheet consolidations.  Others are eager to get rid of older software that is too complicated for business end user management, like Cognos or Hyperion.

Lately, I had the opportunity to talk with a Controller and Acumatica user who manages the financials for a multi-national parent corporation.  She routinely works with her department to convert currencies and meet national and international standards, such as the International Financial Reporting Standards (IFRS) to Generally Accepted Accounting Principles adjustments (GAAP), usually known as IFRS to GAAP.  Some consolidation tools provide in-depth analytics with sub-ledgers and are positioned within a complete suite of Business Intelligence (BI) solutions, fully integrated with other tools like ad-hoc reportingbudgeting and forecastingdashboards, and data warehousing.  Let’s move into a discussion of what you need to know before starting to shop around for the best consolidations solution to upgrade your Acumatica experience.

I’ve written about your data integration routes on this blog, but you can consolidate your financials utilizing the native consolidation functionality within Acumatica if you want to achieve real-time analytics, but flexibility in report design and deeper consolidation features are lacking, in addition to sometimes slower data queries, based on how many are querying data simultaneously – and the amount of information.  Most independent software vendor (ISV) consolidation tools provide you the choice to pull your data with higher performance from a BI data store, but you will then have to replicate your GL information from Acumatica to a data warehouse or an online analytical process (OLAP) cube.

Companies with less subsidiary entities to aggregate, with easier or no currency conversions required, and/or without having to simultaneously pulling substantial data sets would likely be okay with just the built-in consolidation function within Acumatica.  If you aren’t planning to pull in additional data sources for your analyses, don’t have to produce any advanced eliminations or other adjustments that Acumatica can perform, you could probably just use Acumatica’s functionality.  However, several BI data stores do improve consolidations by pulling GL data directly from Acumatica and potentially other ERP systems that may exist in some subsidiaries, so that choice could be helpful for parent organizations who have more and/or complicated demands.

Replicating data to a Cloud or on-site data warehouse or OLAP cube can be configured for regular refreshes or you can manually move data over to the BI data store.  Acumatica data will replicate, typically through a pre-built integration linking to the Acumatica API platform that in turn will populate the warehouse or cube, and consolidations are performed at a higher performance level due to the stability and power of a BI data store.  Companies can benefit from BI data stores by achieving more complicated adjustments and conversions, larger and/or simultaneous data queries, with a significant amount of company information to aggregate.  You should be considering which of today’s consolidation functions are necessary to meet your organization’s particular financial objectives.

Intercompany eliminations.  From time to time, a subsidiary might buy or sell services or inventory from another subsidiary, resulting in cancelled line items.  Intercompany eliminations remove these transactions from the P&L and balance sheet since this is a re-allocation of resources, which you can do with Acumatica or a BI data store with your implemented software.  Some BI offerings even provide customizable Excel input forms that you can utilize to manually eliminate or adjust inter-organizational transactions in easy ways.

Currency conversions and consolidation adjustments. Converting currencies is pretty straightforward – this functionality translates multiple monies into one currency for a singular set of reports.  Consolidation adjustments enable accountants to follow national and international accounting regulations, update inventory, and/or temporarily fix incomplete subsidiary data, in addition to other functions.  In other words, these adjustments help your finance team in processing statutory statement submissions.  But there’s more to consider in terms of consumer-driven features and functions.

Allocations, reconciliations, and modeling organizational changes.  Some companies choose to allocate specific revenues or expenses to select departments, divisions, and/or subsidiaries.  These allocations can be done with Acumatica, or there some BI data stores that invite you to create allocation processes of various levels of complexity with their data warehouse or OLAP cube.  If you elect to employ a BI data store, several companies like to have either subsidiary or parent company personnel reconcile data to ensure accuracy, which can be done within Acumatica, BI front-end tools, or in a BI data store.  Finally, some data sources enable you to model acquisitions, divestments, and/or reorganizations by copying and changing infinite company hierarchies or trees that you need.  You can see the impact of these alterations on the portfolio with this function.

You have a lot to consider when looking for the right tool, due to the complex nature of consolidations.  Solver, Inc. is happy to answer questions and generally review BI360’s easy-to-use, Excel-powered consolidation tool for Acumatica with both real-time or data warehouse integrated analysis, comprehensive reporting and collaboration as a way to accelerate company performance management.

Leave a Reply