This article will discuss your options for the best financial consolidations solution to expand your Microsoft Dynamics AX experience as a retail company.

There is a population of retail Microsoft Dynamics AX users who are overseeing the financials for a parent organization’s multiple subsidiaries.  Aggregating operational and transactional data from multiple entities, sometimes with more than one currency, can be challenging without one of today’s financial consolidations solutions.  As the amount and importance of data steadily grows, corporate decision-makers can’t avoid needing a solution that can help consolidate information into a singular set of financial reports.  If you are using Dynamics AX as a retail company, this article will hopefully help you familiarize yourself with options for an easy-to-use, dynamic consolidation software.

First of all, “financial consolidations” refers to the aggregation of organizational financials from distinct subsidiaries into one complete set of financial statements.  These reports combine information in ways that reconcile diverse currencies, any eliminations for inter-company transactions between subsidiaries, and any additional adjustments, whether manual or via a modern, powerful BI tool, to comprehend the overall health of the parent company.  A couple of the top reasons executives are shopping for a financial consolidations solution both involve age.
Don’t get me wrong – there are plenty of reasons to be looking for the best of today’s automated consolidations tool, but arguably, the top two are about product maturity.  Some execs are hoping to upgrade from older tools that are too complicated, like Hyperion or Cognos/TM1, which involve the IT team or a technical product expert to manage the tool.  Another company might want to get rid of a tool that is too simplistic for today’s business demands, like FRx/Management Reporter or Excel.

I recently got the chance to chat with a retail executive who uses Dynamics AX and an independent software vendor (ISV) consolidations solution to manage a number of subsidiaries around the globe.  In his position, he routinely meets standards specific to each country as well as currency conversions, like International Financial Reporting Standards to Generally Accepted Accounting Principles (IFRS TO GAAP) adjustments, with the dynamic flexibility of his consolidations tool.  And he reports beyond the General Ledger with a tool that is part of a comprehensive, fully integrated Business Intelligence (BI) suite of tools, like ad-hoc reporting, budgeting, forecasting, modeling, dashboards, and data warehousing.  This article will focus on financial consolidations as part of your Dynamics AX processes, with a specific look at how to find the right solution for your retail team.

You can run live from Dynamics AX for real-time retail analytics and/or query data from an online analytical processing (OLAP) cube or a data warehouse for your consolidations.  If you are aggregating and reconciling fewer entities, with simpler or no requisite currency conversions, or if a sluggish Dynamics AX server isn’t a problem for you due to larger or sometimes simultaneous data queries, then consolidating live from the AX database delivers real-time analytics.  If you don’t plan on including information from other data sources, don’t need to enter eliminations or adjustments beyond the AX functionality offerings, Dynamics would likely be sufficient.  On the other hand, plenty of BI data stores perform consolidations, so your team might benefit more from implementing a data store that loads GL data from AX.

Replicating company information from Dynamics AX to an OLAP cube or a data warehouse is an easy manual push or something you can schedule if it’s a regular process.  Typically via Microsoft SQL Server Integration Services (SSIS), data replicates to a data store, and financial consolidations are performed at a high performance due to the streamlined and dynamic organization a data store delivers in comparison to a complicated accounting database like AX.  If you routinely have more advanced currency conversions, are nervous about the AX server slowing down, or have a significant amount of information to aggregate, your team will probably require a data store of some type.  You should also consider which consolidation solution features and functions are important to achieving your particular tasks.

Intercompany eliminations.  From time to time, one of your stores or locations might buy or sell goods to/from another entity, which cancels out the line items regarding the expense or revenue for either subsidiary.  Intercompany eliminations are exactly as they sound: they eliminate these transactions, so they don’t show up on the P&L and/or the balance sheet as false line items, but instead as an intercompany reallocation, which can be performed within Dynamics AX or a BI data store.  Some BI solutions provide fully configurable forms that can be utilized to manually and simply input adjustments and eliminations.

Currency conversions and consolidation adjustments. Just like intercompany eliminations, the term gives it away: currency conversions allow international retail parent organizations to consolidate their transactional information into one report with a singular currency.  Consolidation adjustments refer to correcting subsidiary data, making any adjustments to a consolidation, and/or performing the requisite IFRS to GAAP adjustments to meet national and international accounting rules with modern software functionality to submit statutory reports.

Reconciliation, allocations, and modeling organizational changes.  If you are going with a data store, a lot of retail companies like to have either parent company or subsidiary staff reconcile the input information to ensure that every detail is accurate, which can be done within Dynamics AX, in the data store, or with a BI front-end tool.  Maybe your retail organization allocates expenses or revenue sources to a department, division, and/or a particular subsidiary.  These allocations can be configured within AX, during your replication process, or you can even sometimes create allocation reports of different complexity levels within a data store.  And finally, if you’d like to consider the impact of acquisitions, new store openings, international reorganizations, or divestitures, some data warehouses allow you to model potential roll-ups by copying and changing any number of company trees or hierarchies.  This functionality enables you to forecast how particular variables can change the portfolio consolidation.

Financial consolidations can be challenging and complicated, so even though the list of feature and functionality offerings might seem long and overwhelming, it’s important to do your research in order to make the best investment for your retail team’s specific analytical objectives.  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 for retail companies.