How To Choose The Right Financial Consolidation Software For Your Business
Accurate and comprehensive financial consolidation is vital for larger businesses. Executives need access to consolidated financial data to evaluate performance and inform strategic decisions. For investors, too, these statements are vital for assessing a company's health and prospects.
Additionally, of course, regulators insist on consolidated data to monitor compliance. Modern software can simplify the process a great deal, so how do you choose the best system for your business?
What Is Financial Consolidation Software?
Financial consolidation can be done with spreadsheets. However, for larger companies with numerous subsidiaries and segments, as well as potentially diverse sectors, this can be a time-consuming process with the ever-present risk of human error. Spreadsheet data is compromised by manual errors or corrupted by erroneous formulas or macros. What's more, it can be hard to produce insightful reports and usable data.
Financial consolidation and reporting software speeds up and secures the process by automating key tasks. Software reduces the need for laborious manual input and processing, avoiding errors and offering greater accuracy and completeness.
What Is The Best Consolidation Software For Your Business?
As a CFO, Financial Director, or Financial Controller, you may be tasked with choosing a financial consolidation application. There are many available, but it is important to weigh up their strengths and consider which is right for your business.
The following factors are significant…
1) Speed and Agility
The software you choose should provide a significant improvement on your existing process and require less manual input. It needs to be flexible enough to allow input from your established and projected data sources without extra work, and it should also have sufficient agility to produce compliant financial reports as required.
Your organisation may already employ a range of software solutions for financial and performance management. Your choice of consolidation software must therefore be able to integrate well with your existing EPM and ERM systems without requiring more fuss or workarounds.
A key purpose of your consolidation software is to save you time and effort. That means it should automate tasks that you might previously have had to do by hand with spreadsheets and hand-written reports. Your software needs to handle tasks like data input, verification, and currency conversion, intercompany eliminations etc, and provide reliable forecast data for reports.
4) Rich feature set
As well as basic consolidation functionality, it's worth assessing your software's value-added features. Drill-down details such as segment reporting can be invaluable, and extended coverage to incorporate consolidated budgets, forecasts and multiple scenarios are useful for strategic planning. A system that comes complete with in-built statutory reporting capability will take the slog and potential error out of reporting.
Your organisational and company structure is highly likely to change with time. So, a key feature of your consolidation software should be the ease of modelling company structure, subsidiaries, joint ventures etc. A good choice will be consolidation software that enables you to consolidate monthly both (i) historic results and structures, and also (ii) to plan scenarios with future structures, all in a single database.
Accurate and coherent consolidated financial data is not just ‘nice-to-have’. In today's business environment, avoidable human errors and operational inefficiencies can be costly, as is the wasted time and resource of using spreadsheets for consolidation. Effective financial consolidation software is indispensable for attracting investors and complying with regulators. It's also demanded by internal and external stakeholders, enabling insightful decision making, business performance and stability.
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