Complex company structures are a headache for finance departments.
Whilst operationally, we want to gain efficiency by removing silos and duplication of effort. For a finance department, working across multiple statutory entities is, at the very least problematic. With the fear of hidden costs in unreconciled intercompany balances. The pain of endless recharging of costs, and the fingers crossed, don't ask to many questions approach to consolidation, we ask ourselves, surely there's a better way.
Thankfully, this statutory and operational conflict is no longer a foregone conclusion with some forward thinking finance systems addressing this issue with hierarchal configuration.
OK, I get it, hierarchal configeration sound pretty dull. As a consequence it gets little marketing exposure and is often overlooked. The benefits however, are a game changer for multi-entity organisations.
Whilst retaining the integrity of statutory reporting, with hierarchical configerration you can;
Instantly consolidate in real-time
Drill down from consolidation to individual transactions
Apply reporting dimensions (e.g. an account codes or cost centres) to some or all statutory entities in the group
Apply the same customer/supplier record to some or all statutory entities in the group
Post journals across multiple entities with auto-balances intercompany transactions.
How much time does your finance department spend explaining the movements in consolidated numbers? Reconciling inter-company balances? Creating and maintaining the same customer, supplier and reporting dimensions in multiple entities. If you don't know, find out because I guarantee, if you've got lots of entities, forget the fancy marketing gimmicks, hierarchy is a game-changer.
Peter Hucker is a Chartered Accountant, CA and member of the Institute of Chartered Accountants Scotland.
As a Consultant, specialising in finance systems, Peter helps his clients unlock the benefits of modern cloud technology by increasing efficiency and providing enhanced oversight to their organisation.