The Critical Role of Financial Consolidation Software in Simplifying Group Reporting and Ensuring Accuracy

Disparate systems and manual report preparation will hold you back from your core responsibility as a financial leader. Group reporting comes with several challenges like creation and computation of different reports, elimination of inter-company transactions to do variance analysis, consolidating all at one place, and preparing a stack of all the consolidated financial statements. Well, the advancement of technology offers you the opportunity to transform your finance operations by adopting financial consolidation software and automating repetitive financial reporting processes.

Financial Acceleration in Changing Times

According to a recent study by Gartner, 79% of CFOs rank leading finance transformation efforts as a top priority. Undoubtedly, manual report-making takes up a huge chunk of productive hours for the finance department resulting in less time for the CFOs to do the actual work such as forecasting and analysis based on the real numbers in the reports. These numbers bring out the true picture of the current and past financial occurrences, as everything that is accounted for matters.

Group Reporting and its challenges: A panoramic view

Last-minute adjustments, multiple reports, a high volume of information, overstretched reporting teams across boundaries, and whatnot will be any accountant’s nightmare for getting a breakthrough for the consolidated financial statements.

Group consolidation allows businesses to gain effective insights into the key performance areas and derive valuations to make strategic decisions. The finance leaders of the future are heavily converging to the sophisticated tools to make them future-ready. But before we dig into that, let’s explore the common hurdles that are faced during group reporting processes.

1. Complexity in matching intercompany transactions and lack of centralized visibility

Intercompany transactions and eliminations are often challenged due to a lack of synchronization between consolidation units. Discrepancies arise due to timings, variable reporting schedules, and lack of uniform accounting systems. The pre-requisite for the smooth elimination of these transactions is by using two-sided elimination and the source data has to be converted into group currency.

If the data is not perfectly aligned and converted it can result in the elimination of important data resulting in inaccurate financial reports and misguided decisions. In the absence of centralized visibility organizations struggle to track balances resulting in missed transactions, errors, and inefficiencies in intercompany reconciliation.

“According to Gartner, at least 25 per cent of new core financial application deployments in large enterprises will be cloud software-as-a-service.”

2. Static data and lack of dynamic reporting methods

Poor data quality, multiple spreadsheets from EPMs, ERPs, and other systems, lagged delivery of accurate and timely reports, and lopsided focus on historical data hamper CFOs from assessing the business performance.

Organizations struggle to achieve a single source of truth due to multiple reports and duplicate outdated versions. Static reports are more suitable from a historical analysis point of view but to withstand the changing face of business, dynamic financial reporting provides an opportunity to stay updated with real-time insights.

3. Multiple group currencies and roll-ups

Let’s assume your operations are based out of the US and you have a subsidiary in Germany. While consolidation of financial statements the German subsidiary’s statements have to be translated into US dollars to get a full picture of the statements. This becomes more challenging when entities trade in multiple currencies, hold various bank accounts in different currencies, or when subsidiaries use a different base currency than the parent company.

With old legacy systems in place, the consolidation reporting head has to wait for every company data to be consolidated leading to higher running costs. Better financial reporting software is the need of the hour to enable the roll-up of all financials into one combined view in one currency.

Capitalizing on the Power of Consolidated Financial Reporting Structures with ResultLane

The rapid transformation of the financial ecosystem and the rising interest in cloud systems have brought finance leaders to the new vertical of the finance function. Consolidated financial statements help bridge the gap between external and internal reporting enabling us to dive deeper than just the tip of the iceberg of financial reporting automation. Let’s dig in more to understand how ResultLane can help.

– Streamlined intercompany eliminations and time savings

Financial consolidation when done with automated systems achieves streamlined intercompany eliminations resulting in time efficiency. ResultLane’s Financial reporting software unifies disparate data across multiple business units, streamlines workflows and enhances the accuracy of the statements. By using software for intercompany eliminations, companies ensure compliance with regulatory standards, which adds a layer of credibility to their consolidated financial statements. This not only strengthens your control over financial data but also enables data-driven decision-making, empowering leadership to act quickly and confidently.

– A single source of truth

Though traditional ERP systems offer robust and integrated capabilities, consolidated financial reporting systems provide a one-stop mechanism for dealing with the challenges of group reporting. ResultLane with its smart financing platform, allows you to automate various views including group, company, and segment, along with variance analysis at the group level. This enables you to view it as a “single source of truth”. Additionally, you can also reduce your waiting time by getting instant consolidation with just one click and access insights from both business and finance angles for a well-rounded view.

“About 45 per cent of CFOs say they have already made investments in finance and accounting analytics”

– Fast-track your reporting

ResultLane allows users to create consolidated reports and streamlines the process of consolidating data from entities operating in multiple currencies. It can automatically handle currency conversions and multi-entity roll-ups, making it easier to consolidate financials quickly and accurately without manual intervention. This rectifies any inconsistencies or errors arising out of reconciliation processes.

Let’s drive the results you want: A road ahead

Financial reporting plays a crucial role and paired with consolidation software, it helps your organization establish a unified view of data, drives your business strategically, and provides valuable insights with sub-optimal report design.

With ResultLane, your smart finance platform, you can instil intelligence at every step of the financial reporting process. Book a demo to see how our AI solutions can streamline your compliance with consolidated financial statements.