In a recent conversation, the Chief Accounting Officer of India’s largest private enterprise mentioned that a good financial consolidation software would be of great service to the accounting community. His statement implying indirectly that in his many years of managing accounting for an extraordinarily large and complex organization, he has still not come across a suitable enterprise platform for consolidation.
It is but natural to assume that organizations would rid themselves of long days of manual financial consolidation and labor-intensive management and statutory reporting. The practice of being strapped to one’s chair and spending long hours into these activities must be shunned. Instead, quality time should be spent on analysis and decision making.
Before you dive into avail the perks of a financial consolidation software, it is crucial to know what to expect from the software. While there are many choices, one must exercise prudence in selecting the one that furthers your company’s needs and objectives.
A plethora of external and internal factors ranging from rigorous reporting requirements to the volume of information that needs to be consolidated play a significant role in influencing your choice of software. So how do you prioritize your needs to extract the most out of your investment?
Below are 5 aspects that you should consider before investing in a financial consolidation software:
1. End-user owned and maintained
One of the key reasons why the adoption of Financial consolidation software has failed in many organizations, as cited by most CFOs and Financial controllers is the need for heavy reliance on consultants to maintain the solution deployed since it requires specialized IT skills. The proposition of heavy customization due to the absence of readily packaged solutions brings added risks during important upgrades. Not to mention that availing the services of such external consultants on a regular basis makes the process less pocket-friendly and less easy for the end-user. So, instead of placing faith in third-party services, it becomes easier if the solution is owned and maintained by the finance users themselves.
2. Inclusive of all processes
A software is considered ideal if it spans across the depth and breadth required for consolidation in your business. The solution must accommodate built-in modules that cover every aspect of a financial close such as data integration, financial consolidation, analytics, reconciliation, and many more. The job does not end with consolidating financial numbers. The trick is in generating print-ready financial statements including non-trial balance schedules and other notes to accounts. Similarly, the consolidated data should seamlessly flow into dashboards, KPIs, trends, variance analysis, drill-down, etc.
3. Flexible and Change Sensitive
The financial close process is dynamic in nature as it is influenced by surrounding factors. The truth is that it is not possible to foresee all the ways in which your business will evolve as it can be subject to business restructuring and strategy shifts. Additionally, analysis using new reporting elements, new metrics, dimensions, and hierarchy changes, cost allocation rules occur on an ad-hoc basis. Thus, it is preferred if the software can take account of such changes and allows for easy modification by the business users, from the front-end to make the business more productive.
4. Process Automation
The manual effort often involves human errors and delays in the process which can impact business decision making as well as introduce compliance risks. A new development in this area is the usage of AI to automate the process of extracting the balances and mapping them and uploading them for consolidation for accounting analysis. The automation of financial close and consolidation can speed up or even eliminate manual effort and enhance accuracy.
5. Performance of end objectives
The purpose of using a financial consolidation software is to be able to quickly respond to any changes, internal or regulatory in a fast, agile, and collaborative manner. The solution should help elevate transparency and improve reporting turnaround times. Its ready to use capabilities should help your business to achieve maximum efficiency with minimum delays. Overall, a good consolidation software will improve your team productivity, lower your financial reporting costs, improve decision making, and eliminate compliance risks.
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