Financial Consolidations for Professional Services with Acumatica

This article will cover the financial consolidation process, specifically features and functionalities of modern tools for Professional Services organizations using Acumatica.

There’s a population of Professional Services organizations who are using Acumatica to manage a parent company financial portfolio for a number of subsidiaries.  Aggregation of multiple entities’ financial data, at times with different currencies, can be challenging without modern consolidation software.  Since data continues to become bigger in size and meaning for decision-making, more executives are looking for the right solution to empower business end users to consolidate information in a unified set of financial statements.  This article will discuss your options for easy-to-use, powerful financial consolidations with Acumatica, specifically for Professional Services organizations who need a modern software solution.

First, a definition.  Financial consolidation refers to combining subsidiary general ledger transactional information to create a singular set of financial statements for a parent company.  These reports are comprised of subsidiary data and straightforwardly demonstrate the parent organization’s overall financial health.  Financial consolidation can involve currency conversions for diverse monies, eliminations for inter-company transactions between the subsidiary entities, and any other adjustments that have to be done manually without a modern tool.  There are plenty of reasons to seek a third party consolidation software, but two are common for most CFOs looking for an upgrade.

The finance department could be looking at modern, automated consolidation tools for two main reasons, both dealing with product age.  Some might want to upgrade from older software that is too simple to meet today’s business demands, like homegrown Excel spreadsheet consolidation processes.  Others are anxious to get rid of older tools are that are too complex for management by the business end users, like Hyperion or Cognos.

I recently got the chance to discuss financial consolidations with an Acumatica user who is the Controller for her international Professional Services parent organization.  She regularly works with her team to convert currency while following national and international regulations, like the International Financial Reporting Standards (IFRS) to Generally Accepted Accounting Principles adjustments (GAAP), typically referred to as IFRS to GAAP.  Some consolidation solutions deliver in-depth analytics with sub-ledger analyses, as part of a comprehensive suite of Business Intelligence (BI) tools, completely integrated with other modules like ad-hoc reportingfinancial planningdata visualizations, and data warehousing.  Let’s shift into a conversation about what you should know before beginning the shopping process for the right consolidation software to expand your Acumatica processes.

This blog has covered data integration options before: you can aggregate your financial information using Acumatica’s native consolidation function for real-time analytics, but it does lack in terms of deeper consolidation features and general flexibility in report design, as well as more sluggish data queries, depending on the number of users that are pulling sometimes large amounts of information simultaneously.  Most independent software vendor (ISV) consolidation solutions offer you the option to query data at a higher performance using a BI data store, but it requires that you replicate your GL data from Acumatica to an online analytical process (OLAP) cube or a data warehouse.

Organizations with fewer subsidiary entities to consolidate, with simpler or no requisite currency conversions, and/or without needing to simultaneously query significant sets of data would probably do just fine with the native consolidation functionality Acumatica offers.  If you don’t plan on pulling in any other data sources for analytics, don’t need to perform any advanced eliminations or other adjustments that Acumatica can do, you could just utilize the native ERP functionality.  There are plenty of BI data stores that upgrade the consolidation process by pulling GL data right from Acumatica and sometimes, other ERP systems that might exist in some subsidiaries, so that decision could be helpful for Professional Services companies who have a lot of potentially complicated needs.

Replication of information to a Cloud or on-site OLAP cube or data warehouse can be set up for routine refreshes, or you can “manually” push information over to the BI data store with the push of a button.  Acumatica data will replicate usually via a pre-built integration connecting the Acumatica API platform that then populates the cube or warehouse, and financial consolidation is achieved at a higher performance because of the power and stability of a BI data store.  Professional Services organizations can really excel with a BI data store with more complex adjustment and conversion demands, bigger and/or simultaneous data pulls, with a substantial amount of company data to consolidate.  You’ll want to make sure and consider which modern consolidation functionality is needed to meet your company’s specific financial, analytical goals.

Intercompany eliminations.  Every once in a while, one subsidiary might exchange services or goods with another subsidiary in the same organization, which results in cancelled line items.  Intercompany eliminations cancel these transactions out of the P&L and Balance Sheet because this is more accurately a re-allocation of resources, which can be achieved with Acumatica or a BI data store with consolidation tool.  Some BI tools even offer configurable Excel input forms that you can use to manually and simply adjust or eliminate intercompany transactions.

Currency conversions and consolidation adjustments. Currency conversions are exactly what they sound like: a process of translating multiple money types into one currency for a unified set of reports.  Consolidation adjustments allow accountants to meet national and international accounting rules, keep inventory up to date, and/or temporarily correct incomplete subsidiary information, as well as other functions.  Essentially, these adjustments aid the finance team in processing statutory statement submissions.

Allocations, reconciliations, and modeling organizational changes.  Some organizations elect to allocate particular revenues or expenses to specific departments, divisions, and/or entities.  These allocations can be performed with Acumatica, but there are also some BI data stores that invite you to design allocation procedures of varying levels of complexity with an OLAP cube or a data warehouse.  If you choose to implement a BI data store, several companies prefer to have either the parent company or the subsidiary staff reconcile data to ensure everything is accurate, which can be accomplished within Acumatica, BI front-end tools, or in a BI data store.  Finally, some data sources allow you to model acquisitions, divestitures, and/or reorganizations by copying and altering infinite company trees or hierarchies you need, so you can see the effect these alterations can have on the portfolio.

Professional Services organizations of a healthy size can really benefit from a modern financial consolidation solution.  Obviously, you have a lot to think about when shopping for the right software, due to the complexity of consolidations, but 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 for Professional Services agencies.

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