As the size of businesses expands, they tend to become more complex entities with a range of subsidiaries, branches, and legal forms of existence. A business may start with one headquarters, only to acquire a distributor in another area or develop an entirely separate manufacturing branch. Although expansion is always an exciting process. It raises serious questions regarding the ability of the finance department to manage the finances of the whole business. The information spreads across different databases and currencies. Solve this problem by using the Consolidation in Microsoft Dynamics 365 Business Central.
Dealing with the “Spreadsheet Maze”
Prior to introducing an ERP system, most companies must resort to traditional methods to integrate their financial figures. In such instances, trial balances are normally exported to Excel from multiple sources. Also it gets adjusted for the differences in currencies before being combined into one document.
As an option, this method may work fine for very small companies. However, it is fraught with the danger of version control problems, wrong formulas, lack of security, etc. Moreover, this process takes much longer, and by the time information integrates, it is already out-of-date. This situation, causing executives to make decisions based on an outdated picture of things.
Business Central Consolidation Process
The following process simplifies the whole procedure by letting you combine all your subsidiaries’ data into one consolidated company regardless of the chart of account, fiscal year, or currency used by each individual subsidiary.
There are two key approaches to consolidations in Business Central:
Internal Consolidation: If all of your subsidiaries use Business Central, then this will allow you to automate the importing of subsidiary databases into the consolidated company.
External Import: In the case of subsidiaries that may be using other ERPs or legacy systems, Business Central lets you import information through XML or Excel ports.
Critical Characteristics of Correct Reporting
What truly sets the Consolidations module apart is its ability to address complexities involved in accounting both internationally and domestically:
Foreign Exchange: When dealing with foreign companies, exchanging them into a reporting currency (USD, EUR, and other) becomes an annoying issue. Business Central deals with this automatically by translating subsidiaries according to the pre-determined exchange rates.
Mapping of Charts of Accounts: In many cases, subsidiaries will have charts of accounts, which differ significantly from those of other subsidiaries and the parent company. Thus, when consolidating subsidiary companies, some accounts need to be mapped to a uniform set of accounts. Business central software makes it possible, and “Marketing expense,” which was originally designated as “Account 6000,” becomes “Account 8050,” etc.
Intercompany Elimination: Without a doubt, the most important characteristic of consolidation is the elimination of internal operations. Since the revenues that arise from them are, strictly speaking, fictitious. This operation can be performed easily with Business Central; the software automatically generates eliminations regarding inter-company payables, receivables, and revenues.
The Strategic Advantage
Using proper consolidation in Business Central elevates the function of finance from being purely tactical to something strategic. With the automation of the tedious task of aggregating data and translating currencies, finance executives can close their books more efficiently.
But most importantly, it gives you a “single version of the truth.” There will no longer be confusion on which Excel sheet is correct because you’ll have access to live and consolidated dashboards. Perhaps even through Power BI, to examine the profitability of the company, break it down to specific regions, and see trends that won’t be evident with fragmented data.
In today’s dynamic business environment, visibility is power. Get it with the help of Business Central’s consolidation capabilities.
