Financial Consolidations for Manufacturing & Distribution companies using Sage X3

This article will discuss the best options you have for financial reporting and consolidation solutions for your Sage X3 data management and analytical tasks.

There are plenty of Sage X3 users who are responsible for consolidating their parent company information from one or more manufacturing or distribution subsidiaries.  Combining financial data from more than one entity, at times with multiple currencies, can be a challenge if you don’t have a modern financial consolidation solution to supplement Sage X3 and any other ERP systems that your subsidiaries might use.  Data is only growing in size and significance to corporate decision-making, which is why more executives are seeking the best software to enable their business end users to aggregate information into a unified set of financial reports.  In this article, we’ll focus on your technology options for today’s intuitive, business user friendly financial consolidations with Sage X3.  If your manufacturing or distribution organization is rapidly growing, a high-powered reporting and consolidation software can simplify your Sage X3 implementation and give you more flexibility and power in your reporting process.

Financial consolidations bring together subsidiary transactional general ledger data into a unified set of financial reports for a parent organization.  These statements typically include Profit & Loss, Balance Sheet, and Cash Flow reports, made up of subsidiary information that demonstrates the overall health of the parent company.  Consolidations can include currency conversion for multiple money types, transactional eliminations between subsidiaries, and any additional adjustments that need to be completed manually without modern technology.  There are a plethora of reasons a manufacturing or distribution company might be shopping for a modern software solution, but let’s zoom in on two key motivations.

The two common reasons your finance team might be shopping for an automated consolidation tool both have to do with product age.  Some are hoping to move away from more mature solutions, like manual Excel spreadsheets that are too simplistic to meet modern business demands.  Others are hoping to ditch older tools because of their unnecessary complexity and difficulty for business end users to manage, like Cognos or Hyperion.

Regardless of your industry, Sage X3 users that are performing financial consolidations for multi-national companies typically perform common tasks.  Some have to regularly convert currencies and manually adjust month-end consolidations so they can meet domestic and global regulations, such as the International Financial Reporting Standards (IFRS) to Generally Accepted Accounting Principles adjustments (GAAP), typically referred to as IFRS to GAAP.  Some have deep analytics requiring sub-ledger data and need a tool that is positioned within a comprehensive suite of Business Intelligence (BI) modules, fully integrated with solutions for ad-hoc reportingdashboardsbudgeting, and data storage.  Let’s discuss how to pinpoint the best solution for your manufacturing or distribution company.

I’ve written about how you can integrate your data before, but you’re able to consolidate your data by utilizing the native reporting function in Sage X3 for real-time analyses.  This option is less flexible when it comes to report design, lacking consolidation feature depth and a potential slowdown when pulling data, depending on the size of the query and whether they’re done simultaneously, but this is all because financial consolidations are not the primary purpose of an accounting system.  Most independent software vendor (ISV) consolidation solutions provide you the choice to pull data from a high performance BI data store, but this option requires an investment of your money (for the product) and time (to replicate your GL information from Sage X3 to an OLAP cube or a data warehouse).

Manufacturing or distribution companies with fewer subsidiaries, less complicated or no requisite currency conversions, and/or without the need to do more substantial, simultaneous data pulls might be okay with Sage X3’s built-in roll-up abilities.  You could also probably depend on X3 if you aren’t going to pull data from other sources for your analyses, perform complex, automated eliminations, or other adjustments that are beyond what Sage X3 offers.  That said, BI data stores typically upgrade financial consolidations by including GL data from X3, so this option might be the most impactful for parent companies with more complex aggregations.

You can set up routine replications of your data to a Cloud or on-premises OLAP cube or data warehouse – or push a button for one-time moves.  Sage X3 information typically replicates through a pre-built integration that connects to the X3 database, which fills the BI data store.  Consolidations are performed with a higher performance due to the power and stability that a data warehouse or OLAP cube offers.  Organizations with more robust adjustment, currency conversions, larger or simultaneous queries, and/or just a larger amount of company data to consolidate will benefit from BI data stores, but regardless, you should pinpoint which of today’s consolidation features you require to meet your specific consolidation goals.

Currency conversions and consolidation adjustments. Currency conversions are simple: multiple money types get converted into one currency for the set of financial reports.  Consolidation adjustments enable finance departments to meet domestic and global accounting standards, update inventory evaluation, and/or temporarily correct incomplete subsidiary data, in addition to other tasks.  The adjustments assist in statutory statement submissions.

Intercompany eliminations.  Subsidiaries might exchange their goods and/or services amongst each other, which cancels out for the parent organization.  In function, intercompany eliminations strike the transactions from the balance sheet and the P&L, reallocating the goods or services, which you can do with Sage X3 or a BI data store.  Some BI tools even provide configurable Excel input forms that you can utilize to manually and easily adjust or eliminate intercompany transactions.

Allocations, reconciliations, and modeling organizational changes.  Some companies utilize allocations to associate specific expenses and/or revenue to particular departments, divisions, and/or subsidiaries.  Sage X3 can allocate, but some data stores can also perform custom-designed allocation tasks of various levels of complexity within the cube or data warehouse platform.  If you go the BI data store route, plenty of organizations tend to have either the subsidiary team or the parent company reconcile the data to ensure accuracy, which can be done with Sage X3, BI front-end tools, or in the OLAP cube or data warehouse.  Finally, some tools allow you to model acquisitions, divestments, and/or reorganizations by duplicating and tweaking infinite company trees or hierarchies.  This enables you to see the effect that specific activity would have on the portfolio.

Shopping for a financial consolidation tool, whether for a manufacturing or distribution organization – or not, can be overwhelming and confusing, due to the complex nature of the task.  Solver, Inc. is happy to answer questions and generally review BI360’s easy-to-use, Excel- and web-powered consolidation tool for Sage X3 with both real-time or data warehouse integrated analysis, comprehensive reporting, budgeting, dashboards and collaboration as a way to accelerate company performance management for manufacturing and distribution companies.

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