Still using Excel to Consolidate?

8th Apr 2021
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If you are completing month end accounting processes in Excel to produce consolidated accounts, this process is likely to be inefficient and take too much time. It can also be error prone and may not even generate the reports you require. At AccountsIQ we hear these pain points all the time from prospective clients – and they can be easily solved.

If you have more than one entity then you will probably be required to report on and analyse consolidated accounts, and this is one of the core features of AccountsIQ's Cloud Accounting Software. No matter the size of your group, whether you are made up of active and holding companies, have partial ownership structures, or even consist of groups within groups, AccountsIQ can easily consolidate results and gives you a superior reporting capability. Being an SQL based system, with each entity having its own SQL database (unique to the Cloud Accounting software universe) means that we only charge for the number of entities on the system – so the cost is likely to be a lot less than other systems. Additionally, the SQL database architecture means that we can create a huge range of personalisation to each database and enables the users to create a system that suits their business structure and daily routine and offers superior reporting capabilities. 

Creating consolidated accounts

There are many key aspects to consolidating Company accounts; one is that they must take into account partial ownership, i.e. an ability to handle not just the minority holding, but also dates of purchase/sale or change of ownership.  In addition to minority interests, you may also have a subsidiary entity which is itself a Group Company with its own group of subsidiaries, some of whom, again may be partially owned.  This calls for multi-tier consolidations.  And then, there is also consolidating at the Company sub-structure level, for instance where the Companies have Divisions, or Branches, or Departments within each Company and which you want to see these results consolidated at the Group Company level.

You may well also have multi-currency trading whereby any single entity may operate in numerous currencies and have multiple bank accounts in different currencies.  In addition, some of these subsidiaries may well have a base currency that differs from that of the holding company. This creates further complication in revaluing P&L accounts using ‘average period rates’ and Balance Sheet accounts using ‘period end rates’, and further ensuring every subsidiary is using common (centrally imposed) daily exchange rates throughout the period.

By now your spreadsheet is bursting at the seams and becoming an unmanageable nightmare - and even if you can manage the complexity, it’s now very likely that it will be highly error prone, since the Excel formulae will have very little by way of checks and balances to ensure compliance back to all the original consolidation entities. Never mind the time consumed extracting the relevant information from the completed month end accounts and the consequent inefficiencies involved. However, if you have managed to complete the month/period end accounts (accurately) then all you need to do is close the month/period and produce the management reports, right?  Ah, but what about those last minute postings, adjustments and accruals?  All of which require yet require another re-run.  And then there’s the inevitable structural changes to be made every few months because of the Group’s growth and expansion. 

The good news is that a modestly priced solution which incorporates all of the foregoing features does exist. Using the AccountsIQ consolidation engine alongside its fully featured set of accounting applications ensures that the periodic consolidation process is simple, straightforward and accurate. 

In summary;

It also consolidates Budgets and Revised Budgets up to the Group level (and to any “Parent” Companies in a multi-tiered consolidation).   Reports can be produced using budgets, revised budgets, actuals and variances rolled up from subsidiary level with drill down capabilities.  There is also the ability to consolidate Sales and Purchasing data and report at group level, again with the ability to drill down to subsidiary level.  In addition,  inter-company transactions can be posted within the group, or adjustments made at group level to eliminate inter-company profits. Make life easier for yourself and your finance team, and get the accounts accurate – your accounts are the life blood of your business.

Example of consolidation functionality within AccountsIQ

Summary of AccountsIQ Consolidation software:

Consolidation of Multiple Subsidiaries (Incl. Sub Groups):

Engineered to manage the consolidation of a large number of subsidiaries’ datasets with ease. Also handles sub-groups where the consolidated entity itself becomes a subsidiary of a large group consolidation. Ideal for complex corporate structures. 

Manage Complex Ownership Arrangements:

Consolidation automatically recognise  Minority Interests liability if the ownership interest is greater than 50% but less than 100% and creates the relevant postings in the consolidation entity.

Handle Foreign Currency Consolidations with ease:

Subsidiaries can operate in their own base currency and results are translated into the base currency of the consolidation entity, based on stored exchange rates for each reporting period.  P&L accounts are correctly translated using average period rates and Balance Sheet accounts at period end rates.

Centrally Control Exchange Rates:

No need to waste time maintaining average and period end exchange rates in multiple subsidiaries. Central Currency Management enables you to maintain rates in one central table.  The updates automatically propagate to all related subsidiaries using triangulation of the group stored rates.

Report on actuals vs Budgets by BI Analysis structure at Group Level:

Budgets, revised budgets, actuals and variances are rolled up from subsidiary companies making it easier to view overall performance and trends across the group at any time, including BI Analysis coding as well as GL Chart of Accounts enabling group level BI reporting.

Simplify the posting of Intercompany Charges:

Raise intercompany Sales Invoices that automatically create Purchase Invoices in the receiving company. Purchase invoices remain “unposted” until approved and coded in the receiving company. Ensures that intercompany accounts remain balanced for elimination at group level, even if balances are in different currencies.

Month End Currency Revaluations:

Provide your team with the tools to simplify the revaluation of foreign currency bank, debtor and creditor accounts at subsidiary level based on centrally maintained exchange rates. Unrealised gains (losses) are automatically posted and base currency value of assets and liabilities adjusted prior to consolidation, facilitating elimination of intercompany balances at group level.

Group Sales & Purchase Analysis:

Consolidated Sales & Purchase Analysis to allow group-wide reporting and benchmarking where common products/services involved. 

Post Consolidation Adjustments:

Make adjustments at group level to eliminate inter-company profits etc. at group level without affecting the subsidiary figures.

About AccountsIQ

AccountsIQ is a SaaS Cloud based financial management platform for Group companies with consolidation, multi-currency accounting and enhanced business analytics requirements. The scalable solution enables the system to be used by any group company, from the smallest to the largest. The system is currently used by 4,000 companies across the globe. For more information please email [email protected] or visit our Group accounting software pages.

Further info

Some of the customers we have helped including Salamanca Group (merchant banking company) whose FD can now consolidate 80 entities in a few minutes after switching to AccountsIQ from Sage 50; and French Duncan who with AccountsIQ's more advanced accounting solution can now attract business from larger, multinational hotel groups. 

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Webinar: Consolidation, Multicurrency, Intercompany Recharging

Join our Live Webinar and see how you can save a huge amount of time managing your multi-company accounting like Apera Asset Management.

When: Thursday 29th April 2021

Register here