Financial consolidation is the centerpiece of large organizations’ financial reporting efforts. It’s a task few would consider fun — but if you’re a large enterprise with multiple subsidiaries (especially international ones), it can be a downright nightmare. You know the scenario: sprawling data sets scattered across multiple different entities, saved in different formats, using different software and processes, with different sets of financial regulations to follow.
The good news? With the right tools and approach, no data set is too large or too complex to work with. In this article, you’ll learn:
- Where the complexity in large-scale consolidation comes from
- How IBM Cognos Controller can simplify the process
- Best practices to maximize efficiency in financial consolidation
Let’s dive in.
Data complexity is the ultimate barrier to accurate financial consolidation
Financial consolidation is challenging for many reasons, but the biggest one for large enterprises is managing the complexity of the financial data itself. This complexity stems from a multitude of factors:
- Different data sources: The first layer of complexity comes from the sheer number of different data sources within an organization. This data is collected from different subsidiaries and source systems. For each entity you have to factor in income statements, balance sheets, expense reports, cash flow, and more.
- Different data formats: Another hurdle is differences in data formatting – often distinct from entity to entity. From spreadsheets to databases and any number of different kinds of accounting software, each format requires specific handling and integration methods. Making sure data is formatted the same is a task with high potential for mistakes.
- Different accounting standards: For international organizations, the need to comply with various accounting standards adds yet another layer of complexity. Each country has its own nuanced regulations and requirements, so it’s essential to adapt and align financial data properly to avoid costly mistakes.
- Intercompany transactions: Intercompany transactions are a notorious pitfall in financial closes and consolidation. These transactions, where services, goods, and money are exchanged between entities within the same organization, must be meticulously tracked and eliminated from financial statements.
IBM Cognos Controller: bring order to the chaos
When it comes to the maze that is financial consolidation, IBM Cognos Controller is like having a GPS that guides you through it all. It unifies all the disparate dots above into a single, intuitive dashboard — all with little to no involvement of your IT department.
- Integrates and standardizes financial data: When your data is scattered across multiple different systems, subsidiaries, or formats – this software pulls it all together, making sure it’s all uniform and compliant with relevant accounting standards. This significantly reduces the margin of error and increases the accuracy and reliability of your financial reporting.
- Automates intercompany elimination: IBM Cognos automates the elimination of these transactions, ensuring your financial reports are spot-on.
- Streamlines workflow: It’s not just about crunching numbers; it’s about making your team’s life easier. The software lays out a clear workflow, so you know who’s doing what and when. It means less confusion, more accountability, and a smoother approach to your most daunting financial tasks.
- 360-degree visibility: IBM Cognos Controller’s real-time monitoring lets you keep an eye on the consolidation process as it happens: track progress, identify bottlenecks, and make timely adjustments as necessary.
- Version control and financial history: Keep a detailed history of your financials, which are key for financial compliance and audits.
Maximizing efficiency in financial consolidation
At the end of the day, a tool is only as good as the systems it’s used in. Here are some best practices to improve your financial consolidation process overall and get the most out of whatever tool you choose to use.
- Set the stage with data standardization
Standardization is the first step in any large-scale data challenge. Establishing and sticking to data standards across your organization ensures everything fits together seamlessly when it comes time to consolidate.
- Empower your team through training
Investing in training for your finance team is crucial. It ensures they’re not just using tools properly, but also understanding the big picture of data quality and consistency.
- Continuously Refine Your Process
The financial world is constantly evolving. Your processes should, too. Regularly reviewing and tweaking your consolidation process, automating what you can, and staying on top of finance trends in your industry will go a long way in improving your reporting.
The takeaway: accurate financial consolidation is a function of the right tool – used right
By combining the power of IBM Cognos Controller with these best practices, you’re setting your organization up for a streamlined, efficient consolidation process – no matter how large or spread out your data. With the right software, systems, and training, financial consolidation is just another box to tick off the to-do.
If you’re curious to see how to put this tool to work for your enterprise, reach out and talk to one of our implementation specialists.