In this article, modern financial consolidation solutions for Microsoft Dynamics AX customers will take center stage, with an in-depth look at primary features and functionalities.

There is a population of Microsoft Dynamics AX users out there who are responsible for parent company financials consolidations of multiple subsidiaries.  Bringing together organizational data from a number of legal business units, especially if there are different currencies involved, can be challenging without a powerful financial reporting writing and consolidations tool.  As data grows in size and importance to decision-making for roadmap planning, executives are looking for a business user friendly solution for the routine task of consolidating information into a singular set of financial reports.  If you are responsible for aggregating subsidiary data with Dynamics AX, this article will discuss the options you have that will bring together ease of use, modernity, and power.

Let’s start with the definition.  Financial consolidation refers to combining and reconciling transactional and operational data into unified financial reports for the parent company.  These reports combine subsidiary data that make up the parent company’s overall financial health in a straightforward statement.  Consolidations often involve eliminations of inter-company transactions, currency conversions if diverse currencies are involved, and any added adjustments that have to be performed manually in Dynamics AX or directly within the financial consolidation solution in order to achieve a complete picture of the parent company.  This is a great time to look at today’s consolidation software for multiple reasons, but two might stand out for a lot of companies.
Two basic reasons to shop for an automated, modern consolidation tool involve age.  Some companies are ready to get rid of older consolidation software that is too simple for modern business needs, like FRx, Management Reporter or Prophix.  Others would like to retire their older tools are that are too complex for business end users to manage, like Hyperion or Cognos.  There are also Dynamics AX customers that implemented the native consolidation module that came with AX 2012 – and simply found it to be too cumbersome or not able to meet their needs.
Recently, I spoke with a controller who relies on Dynamics AX to oversee multiple subsidiaries around the globe for a multi-national parent corporation.  This controller is charged with meeting domestic and global standards, in addition to currency conversions, like the International Financial Reporting Standards (IFRS) to Generally Accepted Accounting Principles adjustments (GAAP), commonly referred to as IFRS to GAAP.  Some consolidation tools provide flexible sub-ledger analyses and are part of a comprehensive Business Intelligence (BI) suite, completely integrated with other solutions like ad-hoc reportingbudgeting, forecasting, modelingdata visualizations, and BI data storage.  Let’s drill down into what financial consolidations look like for Dynamics AX customers, including what you should know when considering solutions to best meet your company needs.
This blog has covered data integration methods before, but it is your call whether you pull data live from AX with a potentially slower real-time analysis, depending how many users are querying data from the AX server – OR you can rely on the higher performance integration that a BI data store offers, but it will involve regular replication of your data to an online analytical processing (OLAP) cube or a data warehouse.
Companies with less subsidiaries to consolidate, with little or no currency conversions necessary, and/or without the concern of a sluggish AX server due to substantial and sometimes simultaneous data queries would probably do very well with a live integration.  Furthermore, if you don’t plan to bring in other data sources, don’t need to post elimination entries or other adjustments beyond what AX offers, you can just stick with Dynamics.  On the other hand, plenty of OLAP cubes and data warehouses host consolidations by bringing GL information directly from AX, so this is a helpful alternative for organizations with different demands.  Sometimes, subsidiaries running other ERP systems are acquired and even if there is a future plan to move them over to AX, they need to be consolidated from the time they are acquired, and this is possible with the most specialized consolidation solutions.
Replicating your data to an OLAP cube or a commercial data warehouse is easy with scheduled, regular refreshes, or you can manually push a button.  AX data will replicate, typically with Microsoft SQL Server Integration Services (SSIS), to the BI data store, and consolidations can be performed at a higher performance because of the stability of an OLAP cube or a data warehouse.  If you have more complex currency conversions to perform, have concerns about the sluggishness of the AX server with your regular data queries, and/or if the amount of data you need to consolidate is substantial, a BI data store will serve you the best.  You’ll additionally want to evaluate which of today’s consolidation functionalities are requisite for your particular business demands.
Intercompany eliminations.  Here and there, one subsidiary might buy or sell goods or services to another subsidiary, which means both line items cancel each other out for both entities.  Intercompany eliminations cancel out and remove these exchanges from the P&L and balance sheet, and this can be performed within Dynamics AX or a BI data store, via the tool you implement.  Some BI software even come equipped with fully configurable Excel or web input forms that you can use to manually adjust or eliminate transactions in business user friendly ways.
Currency conversions and consolidation adjustments. Currency conversion enables international companies to consolidate their transactional data into unified financial statements in a single currency through this function.  Consolidation adjustments, including IFRS to GAAP, help professionals meet national and international accounting rules, update inventory, or temporarily correct incomplete subsidiary information, amongst others.  These are simple functions that assist you when completing statutory statements.  And there are more user-driven elements.
Allocations, reconciliations, and modeling organizational changes. Some organizations opt to allocate particular expenses or revenues to a department, a division, and/or a specific subsidiary.  You can perform these allocations within AX, before loading data to a BI solutions, or within some data warehouses and OLAP cubes, you can design allocation processes of various complexity levels.  Should you decide that the BI data store option is best for your needs, plenty of organizations prefer to have subsidiary or parent company staff reconcile the information to ensure accuracy, which can be completed with AX, a BI front-end software, or in the BI data store.  And finally, some data sources allow you to perform some modelling by replicating and alternating however many company trees or hierarchies necessary to see the impact of acquisitions, divestments, and/or reorganizations.  You can visualize the effect of particular changes on the parent company portfolio with this functionality.
There are plenty of aspects to consider when shopping around, due to the complexity of consolidations.  Solver, Inc. is happy to answer questions and generally review BI360’s easy-to-use, Excel-powered consolidation tool for Microsoft Dynamics AX with both real-time or data warehouse integrated analysis, comprehensive reporting and collaboration as a way to accelerate company performance management.

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