What Technology Companies Should Look for in Consolidation Software
In recent years, larger technology companies like yours have increasingly focused on consolidation as a strategy to grow revenues by diversifying business reach. The difficulty with this form of growth is that, without effective consolidation software for your business, your reach can quickly exceed your vision.
By this, we mean that having multiple subsidiaries will complicate your vision and, therefore, cloud your insight into true business performance. Fortunately, the consolidation functionality found in Corporate Performance Management (CPM) tools can provide you with the insight you need for your consolidations – but you need to choose the right one.
5 Things to Look for When Choosing Financial Consolidation Software
All Corporate Performance Management (CPM) tools and financial report writers can aggregate information and data across departments and accounts. However, only a few CPMs are advanced enough to provide true consolidation capabilities.
Of course, you expect your CPM tools to consolidate financials across subsidiaries and divisions and to produce high-quality corporate reports. Other important features to look for when deciding on a CPM consolidation tool include:
1. Manual intercompany elimination entries with comments and audit trail
Keeping your financials in order across companies requires in-depth, accurate insight into all transactions and the ability to make adjustments when needed. Comments and audit trail features help place adjustments in context for better understanding.
Check out the Intercompany Elimination Input Form for more information.
2. Automatic intercompany eliminations
While manual adjustments (the previous bullet) are critically important, you do not want to have to do all the work manually all the time. As a tech leader, you understand the value of automation, and you have the right to demand that your financial consolidation and reporting software perform this crucial, time-saving task for you.
3. Currency conversion
Whether your enterprise is dealing with U.S. dollars, the British pound, euros, or rupees (or anything else), you will want to ensure you can clearly understand profitability differences between various international subsidiaries. You can do this only by comparing apples to apples with clear currency conversion.
Check out the Profit & Loss Report with Exchange Rate Analysis and Profit & Loss Report with Currency Analysis for more information.
4. Roll-up of balances from subsidiaries with different Chart of Accounts
Since each of your subsidiaries has its own different Chart of Accounts, it can be difficult for your Finance team to gain an accurate, top-level view of all subsidiary performance at once. Balance roll-up gives you the ability to aggregate all financial information from your subsidiaries in one place.
Check out the Consolidating Profit & Loss Report for more information.
5. Ability to enter and track additional “topside” adjustments where needed
As the parent company, your Finance team requires the freedom to make adjustments and entries into each of your subsidiaries on an as-needed basis. Without a true consolidation software solution, making adjustments takes extra communication steps that waste your time.
See How a CPM Tool Can Become Key Consolidation Software for Technology Companies
Using the information above will give your tech company an advantage when looking for the most effective CPM tools for your needs. You can boost your advantage even more with the video below, which walks you through how consolidation software capabilities work in real life.
Check out the video to see Solver, one of the leading Corporate Performance Management tools, in action.
Solver gives you access to hundreds of financial planning templates and reports, plus our extensive template glossary and experienced staff who are always happy to share their expertise. Solver is committed to helping you with all your planning and reporting needs, so you can proceed confidently into your business’s financial future.
February 25, 2021