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A business needs to study a range of performance indicators to stay healthy. Consolidation reports are growing in popularity since they help businesses operate more efficiently.
The Right Time to Consolidate for a Business
There's always a turning point for a businesses to purge their current financial practices in order to move forward. This is especially the case when a parent business has several subsidiaries. So the right time to consolidate is when:
The business wants to study their performance from a streamlined report.
It wants to convince stakeholders of its investment potential.
There's a need to fine tune a budgeting strategy.
The business is launching a new acquisition strategy.
The business is preparing for an external audit or IPO.
Financial close is defined as the time when all project and financing contracts have been signed and all of their stated requirements have been accomplished. Funds can be released to launch a project once this happens. The biggest challenge facing corporate reporting organizations is handling rapidly changing reporting requirements and meeting the demand to deliver this information in a faster turnaround time! Consolidation narrows the time and cost gap of financial close and reporting cycles.
Benefits of Consolidation
The main goal of any business is to see how certain decisions will impact its overall function. When a business decides to consolidate, they can experience many benefits in the short and long term. For example, a parent business may notice that one of its subsidiary company's needs to improve its sales performance. A consolidation report will either influence the parent business to improve its subsidiary's operations or terminate their relationship. Other benefits of consolidation include:
Real-time data of business gains, losses,and present and future spending in a simplified manner.
Clear presentation of top-level activity and bottom line encourages potential for investors and stockholders to invest in a business.
Valuable insights to improve lagging performance rates.
More time spent for strategic planning.
Consolidation helps operation managers interpret reports faster.
Reading a stack of reports is time-consuming and wastes resources. It's also makes assessing the level of financial success more difficult among various subsidiaries. Arranging business reports that places a focus on key elements minimizes confusion and engages the reader.
Readers know exactly what to look for and can keep track of data when white space, color coding, bullets, charts, and graphs are used. Charts and graphs are very helpful at tying together time periods, percentages, as well as like or opposite values.
Hurdles of Consolidation
Consolidating financial functions requires more than just tallying up figures. It can become more complex when a business expands globally or when it has to compile information from several ERP or GL systems. Financial reports that reflect converted currency transactions is another big hurdle to clear. A business can easily become overwhelmed analyzing operations in multiple regions, multiple countries, and multiple departments. There are a range of issues that might need to be addressed such as:
Internal management reporting
External board reporting
Regulatory filings and reporting
Financial Consolidation Reporting Using Cloud Software
A number of businesses have benefited from automation and control cloud applications. Three key things can be accomplished using cloud software applications
It manages and streamlines the complex process of financial close, financial consolidation, and financial reporting.
It creates minimal effort and less paperwork when assessing a parent company’s financial health.
It removes transactions made between subsidiaries and the parent company to give a more concise insight of business performance.
Successful organizations are highly dependent on timely and accurate reporting to its stakeholders and regulatory agencies. They must always consider how their financial health will be impacted by the delivery of financial, non-financial and regulatory information on a daily, monthly, and yearly basis. Consolidation is a useful reference tool that enhances communication. Readers of consolidated reports can translate key data faster and thus be more accountable when executing future budget plans and explaining their results.