What cloud accounting and consolidation options are there?
What cloud accounting and consolidation options are there for Finance Directors of a mid-size company with a number of subsidiaries looking to move to a better accounting system?
1. Consolidation out-of-the-box or not?
There are essentially two options to choose from when considering software for consolidation. Firstly, and probably the easiest option is to select a cloud accounting solution that offers consolidation functionality right out-of-the-box. The second option is to buy a separate consolidation module and bolt it on to your chosen cloud accounting software. The disadvantages of this second approach are potentially: additional software costs, integration difficulties and associated costs, additional training needs and of course the time and effort required in dealing with a second software supplier. Also, and what is often forgotten, is the fact that each solution will continually upgrade and develop their product and this creates the risk of upgrade-induced incompatibility in the future.
Other issues to consider around consolidation as part of your accounting solution are:
- The capability to handle multiple currencies (see 2 below),
- The consolidation of part-owned entities or entities with complex ownership structures.
- Consolidation of other data such as Business Intelligence data in addition to just consolidating financial data.
2. Multiple currencies
As a larger organisation, you may well be managing overseas subsidiaries or dealing with overseas suppliers or customers. For some smaller cloud systems this may well present challenges, particularly when it comes to multicurrency consolidation. Some cloud accounting solutions however now offer functions to manage these scenarios very well. You need to check if the solution allows subsidiaries to operate and report in their own currency and that you can then convert to your base currency for consolidation. You also need to check how the system handles inter-company transactions in multiple currencies as well as the treatment of currency gains and losses. If you experience challenges with international accounting, do read our article for the ICAEW on overcoming international accounting challenges.
3. Scalability for future-proofing
One of the key advantages offered by the SaaS model for cloud accounting is that upgrades happen automatically and you don’t have to worry about installing new versions on-premise. Under normal circumstances therefore, you can work away on your chosen cloud solution as long as your business needs don’t change too much.
What happens however, when your Management Team decides they want to purchase an overseas competitor? Or they want to enter three new markets? Or add two new distribution depots? The question to ask yourself is how easy is it for my accounting software to scale with my business. Can new entities, sales outlets, warehouses, and so on be added easily?
Also as a growing business, you might be adding significant volumes of transactions every year. Will your cloud accounting software be able to manage the higher volume of transactions or how soon will it be before it starts to creak?
4. Stock management
Again, as a mid-size company, you could be managing multiple warehouses in multiple locations, each with multiple sub-locations and stock-bins. Many cloud accounting solutions do not provide stock management functions or provide only very basic functionality.
Remember also that you could need your solution to manage stock and prices in multiple currencies. A fully integrated stock management feature should integrate fully with sales and purchase order processing and the General Ledger.
5. Business intelligence out-of-the-box or not?
Business Intelligence and analysis is rapidly becoming a critical management tool to help improve business performance or in some case ensure business survival. The key tasks supported by BI tools are the creation of key performance Indicators (some of which may be nonﬁnancial) and their presentation and reporting to management for consistent visibility and focus.
However, with management of remote entities or locations the challenge of maintaining visibility of key performance indicators increases. This challenge is further complicated by the need to compare and benchmark performance across entities or outlets. This becomes an impossible task without some form of central control of key performance indicators to ensure consistency across the organisation.
Much like the consolidation feature there are two options: Purchase a separate Business Intelligence solution with the same cost, training and upgrade disadvantages. Or purchase an accounting solution that includes business intelligence functions. Some cloud accounting solutions provide excellent business intelligence as part of their solution but struggle when it comes to consolidation of business intelligence data for a group- wide picture of performance.
Webinar - Demo of AccountsIQ: powerful cloud accounting for groups, 16th July, 11am BST
Thinking of changing accounting software? This Webinar gives you a high-level look at AccountsIQ, award-winning financial management software designed to meet the needs of businesses with multiple subsidiaries. Combines Accounting, Consolidation and Business Intelligence, all in one unique, powerful solution.
Webinar - Implementing a New Finance System, 17th Sept, 11am BST
At this current time, many finance leaders are considering changing their accounting software to a cloud solution. In this webinar we share our advice to ensure the transition is a big success, having helped thousands of customers make the switch from older technology and legacy systems.
AccountsIQ's award-winning financial management and consolidation software simplifies how finance functions capture, process and report the results of multiple location businesses.
Built for the cloud, AccountsIQ is ideal for dynamic businesses that are growing locally or internationally, via subsidiaries, acquisition or through a franchising model, enabling anytime-anywhere processing, while allowing easy central control and consolidated reporting of results. Its unique consolidation engine, along with its ability to integrate with other applications, makes it easy to scale.
How we help our customers
Read our Salamanca Group case study for insight into how we have saved their Group FD, a huge amount of time each month with consolidation and reporting of their 80 entities.
Read our Hibernia REIT case study and discover how with our high-performance software we have simplified their group accounting, giving back at least a day a week to their staff which allows them to spend more time on the more “value-add” aspects of the Finance function, analysing and presenting information on which the senior management team can make more informed decisions.
Read our Arix Bioscience case study and see how we have helped simplify their multi-currency consolidation and reporting and created efficiencies with the introduction of a paperless finance function. They can create new entities very quickly and have completely streamlined processes.
Find out more about the core features of AccountsIQ's award-winning financial management software.
Call us on 0203 598 7350 for a chat about your needs or Request a Demo. We'd love to hear from you.