More and more companies operate globally. Overseas subsidiaries open up new markets to satisfy the needs of local customers. These subsidiaries of course have to be consolidated and integrated into the consolidated financial statements of the parent. One of the biggest hurdles in this process – and a mammoth task for corporate accounting departments – is obtaining the data from their disparate financial statements. That’s because many corporate groups also operate a plethora of fragmented accounting systems used by their subsidiaries to post their data. Adding to this is the fact that all of the companies rely on Excel files, which have to be collected manually by the corporate accounting department – a highly time-consuming and error-prone exercise.

THE CHALLENGES OF A SPREADSHEET-BASED PROCESS

Before the data can be consolidated, it first needs to be collected, reconciliated, validated, and standardised. This is often a complex process in an age when many groups are operating at a global level. Groups very often lack the ability to directly access the financial accounting systems of foreign subsidiaries. Coupled with this, the subsidiaries often use different ERP systems and Business Intelligence tools, with the parent company not having the interfaces needed to access them. Adding to the complexity is the fact that the various stand-alone solutions often do not permit standardised indicators over the entire reporting process. That carries a heavy cost in terms of reliability and security. This is because data are then usually obtained using Excel files, but the manual compilation of these data is tedious and error-prone. More often than not, the data needs to be repeatedly clarified and corrected, leading to a lengthy and expensive process. Most corporate accounting departments can only dream of having a complete picture across the different reporting units and their progress in the data collection. In reality, everyone is busy with working out what the current processing status is and dealing with potential problems with the data collection process from the subsidiaries.

BRING ORDER TO YOUR DATA JUNGLE AND ESTABLISH A SOLID BASIS FOR GROUP CONSOLIDATION

Specialised software solutions represent the best option for efficiently handling complex intercompany accounting activities. They can be used to collect data electronically from multiple business locations and critically, they enable the Group to identify problems before they get as far as the critical upstream reconciliation process. These systems can enable you to reduce your reconciliation process from weeks to days with complete confidence in the reconciled figures.

FURTHER READING

WHITE PAPER: HOW TO IMPROVE INTERCOMPANY RECONCILIATION AND BRING ORDER TO THE DATA JUNGLE