A major challenge for companies consisting of multiple legal entities is unifying their financial information into a comprehensive view of their overall economic well-being. This requires more than simply adding up the balances from each of their individual subsidiaries. Compliance with rules such as GAAP (General Accepted Auditing Principles) or articles issued by the IFRS (International Financial Reporting Standards) necessitates accurate reporting, proper allocations, and transparency into company records. Managing this using spreadsheets or standalone ERPs such as Quickbooks can be very complex and highly error-prone.What to look for in a consolidation accounting system?
Consolidating your intercompany transactions for more than one subsidiary can be a clerical nightmare. As your company grows, the amount of information generated from each entity continues to grow exponentially, making consolidation a necessity. A system that allows for master records sharing and filtering ensures that your company is set up for future scalability without sacrificing data integrity or security. The ideal consolidation accounting solution should also address any need for managing multiple functional currencies or accounting infrastructures within each transaction to enable your company's growth regardless of where or how you're doing business.
Consolidation accounting challenges
Consolidating data into one system of records allows for consistent financial statements. Using a low-functionality system or Excel spreadsheets, can hamper your ability to scale and result in many errors due to manual processes and having to navigate multiple different systems.
Any initial ERP setup may also result in issues when trying to match all the different financial records across your different entities. This could lead to additional IT and accounting resources being necessary, external consulting, and countless overhead hours. Nevertheless, there is a quick return on this investment thanks to the system's improved efficiency and streamlined processes.
Using an ERP vs. spreadsheets
A sustainable solution is better for the future of any company. Consolidating your accounting in a scalable way will save you from financial headaches down the line. Spreadsheets cannot support a complex process such as financial consolidation due to the sheer amount of data. Large workbooks and different local copies become difficult to maintain and lack a proper audit trail for reporting purposes. An ERP system such as Microsoft Dynamics is much more robust, but the flexibility and capability of a dedicated solution for managing multiple entities is unmatched.
Simplify your consolidated accounting
Multi-Entity Management (MEM) from Binary Stream processes transactions from different corporate entities in a single instance within your Microsoft Dynamics ERP. When using a centralized instance, intercompany transactions are easier to handle, and master records such as customers, vendors, items, or any others are shareable across all your entities while adding a extra layer of security to control each user's access to each entity, report, and record. As a result, MEM streamlines multi-entity transactions, immensely improves financial reporting time and accuracy, ensures data integrity, and reduces operational costs.
To learn more about MEM, contact us or speak to your trusted ERP provider.