Achieving integrated financial consolidation doesn’t always have to be a tedious and exhausting process if you have the best digital tools to optimize and gather all the information generated within the companies. In this blog, we will mention the best practices to achieve perfect consolidation in no time.
What is integrated financial consolidation?
Integrated financial consolidation is an accounting and financial process through which all financial statements of a company, as well as its subsidiaries or affiliates, are combined and added together. During this extensive and lengthy process, the goal is to efficiently manage and consolidate the data coming from the entire business group.
To achieve this, the aim is to eliminate inter-entity transactions within groups to avoid issues such as revenue duplication. This allows investors, analysts, and other stakeholders to obtain a clear and accurate picture of the financial health of the entire company.
This consolidation is essential to better understand the ownership structure and the financial performance of the company, facilitating strategic decision-making and risk evaluation at the group level, not just for the subsidiaries.
5 Practices to achieve integrated financial consolidation
Determine the level of unification you need
Before diving into the top 5 methods for achieving financial consolidation, it’s important to clarify that not all financial consolidation processes are the same, as they depend heavily on the needs of each company.
However, there are three levels that can be very helpful in unifying all business needs. These levels are: harmonization, convergence, and full unification.
Link your processes with digital tools
It is very common to see teams trapped in the famous silos, working independently of anyone else, causing misinformation within the department. This happens because most organizations expect teams to work using spreadsheets.
This situation can lead to errors that directly affect results, as they often contain flaws, leading to significant consequences for the company.
A very effective way companies are integrating these data is through the use of digital tools such as software, which will improve the quality of financial data. Additionally, you will achieve better performance in Corporate Performance Management (CPM).
Evaluate your IT architecture
Once the software tool has been selected, it’s important to continually evaluate the available tools, processes, and meetings for the teams executing the consolidation. It is recommended to thoroughly research the software to improve the IT architecture, as well as to consider the volume of data that will need to be processed during the financial consolidation.
Involve the management team
Another option you can implement for better financial consolidation is to involve the management team at all times. This will allow for better structural decisions that affect managers and their respective teams in all subsidiaries.
Similarly, involving the management team helps obtain essential information about their own processes while guiding the overall consolidation efforts.
Establish a common framework
Finally, it’s very important to establish a common framework for all those involved. This will help accelerate the consolidation process by prioritizing an integration platform. This will prevent errors, inconsistencies, and conflicting work throughout the process.
Conclusión
With these 5 simple practices we’ve presented, you will achieve proper integrated financial consolidation. Always remember to have clear objectives for higher quality when implementing the practices, and don’t forget to choose a financial platform that helps streamline and optimize all your information.
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