When decision-makers are asked about their expectations from the finance function, the consistent response is a desire for insights that aid in making informed decisions. However, the main challenge lies in the finance function's inability to produce these insights quickly and reliably enough to influence decision-making. This holds true for insights obtained from both internal and external reporting. To expedite the delivery of insights, we must overcome various challenges, particularly in the financial consolidation process. Fortunately, the financial consolidation process does not rely on internal management allocations. Nonetheless, the accuracy of the numbers is crucial, as they are utilized for external market reporting, executive management team reports, and board presentations. In order to tackle this challenge, the finance function must implement strategies that ensure the timely and accurate generation of insights.

Manual Processes and Diverse Data Sources

The primary challenge facing the consolidation team during their consolidation process is the elevated risk of errors and other issues stemming from manual processes and diverse data sources. To address this, an extensive quality assurance process is implemented to mitigate the risks. However, this inevitably prolongs the duration of the consolidation process and results in unnecessary hours spent on verifying the accuracy of the data. The typical day of a manual consolidation process entails teams engaging in various manual activities such as performing variance analysis, conducting intercompany reconciliations, preparing review schedules, handling currency translation, gathering comments from entities on variances, and generating reports for presentation and discussion. This manual approach is common among consolidation teams globally and can prove to be time-consuming and prone to errors.

For many users, Excel (or a similar spreadsheet software) serves as their primary system. This involves creating financial models with numerous assumptions and calculation sheets that can be difficult for others to understand, posing a significant risk if key personnel were to leave the organization. The manual nature of this process results in a heightened need for quality assurance. The consolidation team must meticulously review the work of other finance teams, leading to a repetitive cycle of work and rework. Furthermore, the challenges associated with master data management, such as managing legal entity structures and chart of accounts, as well as implementing new accounting standards, can present significant obstacles when Excel is the primary tool being used.

Enhancing Financial Consolidation to Achieve Optimal Performance

Working with financial consolidation poses common challenges that many are familiar with. The need for quicker insights, accuracy, and minimizing errors is evident. The most effective solution to overcome these obstacles is implementing a proper consolidation system, which offers a host of advantages:

• Automated procedures for all consolidation steps and group structures
• Simultaneous presentation of accounting standards
• Handling of foreign and group currencies
• Display of all group schedules and the consolidated cash flow statement
• Multi-currency conversion and translation capabilities
• Simplified maintenance of structures, chart of accounts, and master data
• Seamless data integration within a single data model

By utilizing a consolidation system, organizations can streamline their financial reporting processes and enhance efficiency in managing complex financial data.This solution effectively addresses the key issues identified in our survey. By implementing automated procedures and integrating all necessary data sources within your organization, it streamlines processes and reduces manual work. Additionally, it enables seamless integration with other reporting tools essential for both internal and external reporting purposes. Furthermore, the system includes built-in validations to minimize the need for extensive quality assurance efforts, ensuring accurate and reliable data submissions. Although it may transfer some responsibilities from the consolidation team to individual entities, it ultimately empowers them to deliver higher-quality work. Another advantage of this potentially cloud-based system is that it facilitates direct access to data for auditors and other stakeholders, eliminating the need for cumbersome printed materials. This not only improves efficiency but also enhances transparency and accessibility for all involved parties.

There is strong evidence supporting the advantages of implementing a systems-driven consolidation process, as it quickly pays for itself through decreased workloads and the diminished need for manual verification. Furthermore, adopting this approach also helps mitigate the risks related to external reporting consolidation, ultimately preventing potential significant adverse effects.

Glimpse into the Automated Consolidation Process

Consider the scenario where you have made the decision to implement a consolidation system. How would the financial consolidation process be transformed?

At an entity level, the consolidation system seamlessly integrates with various data sources, including local ERP systems, streamlining the initial steps of the process. Validation checks are now in place to identify issues and address root causes efficiently.

At a group level, financial numbers are expedited, facilitating intercompany reconciliation early in the month. Automated translations and consolidations free up time for in-depth analysis and review of entity reports. Reporting schedules are established and populated automatically for effortless review.

At a management level, consolidated results are promptly delivered, offering timely insights into group performance for informed decision-making. Enhanced quality standards further elevate management processes.

Enhancing the financial consolidation process not only accelerates the process and facilitates quicker insights but also boosts team engagement by aligning their focus on more meaningful tasks. The advantages of refining your consolidation process are considerable and provide a favorable return on investment. Consider the true cost of maintaining the current process in terms of labor hours, error risk, miscommunication, and misinformation to key stakeholders. Are you prepared to sustain the status quo?

Nirmalya Enterprise Platform can assist in automating the consolidation process

Nirmalya Enterprise Platform offers a comprehensive solution for various industries such as manufacturing, retail & distribution, building material, food & beverage, construction & engineering,finance & banking and many more. Embedded with advanced AI-enabled financial management and analytics features, this platform transforms accounting practices and auditing processes with its innovative Record to Report features. Utilizing AI and ML technologies, Nirmalya Enterprise Platform significantly reduces the duration of financial close processes, thanks to its no-code platform that automates tasks and minimizes manual efforts. By minimizing errors in automated journal entries, this platform greatly enhances audit accuracy, making it an essential tool for businesses looking to streamline their financial operations.

Enhance the speed and efficiency of your financial planning using the Nirmalya Enterprise Platform integrated with CPM. By leveraging predictive planning and real-time insights, you can improve collaboration within your team, leading to enhanced foresight for your financial future and the adaptability to respond to changing market dynamics. Utilize our powerful data analytics functionality to dissect your costs and revenues intelligently, facilitating effective money management and prudent budget allocation. Armed with all the necessary data, you can make informed strategic decisions that maximize your profitability. Ultimately, the goal is to optimize the performance of your finances. In specific terms, the platform provides the following benefits:

• Increase the efficiency of account reconciliation and financial close by implementing automated processes, resulting in reduced errors and enhanced accuracy.
• Enhance your organization's overall performance by integrating financial management functions into a unified platform, thereby ensuring efficiency, accuracy, collaboration, and strategic value.
• Consolidate financial and operational data from various aspects of your business, improving both data accuracy and accessibility.
• Leverage financial and operational data to establish connections between budgeting, forecasting, and reporting procedures, enabling informed, strategic decisions.
• Analyze your budget, forecasts, and actual outcomes in parallel, fostering a comprehensive understanding of their impact on your business performance.
• Streamline planning execution through the automation of forecast processes, leading to smoother operations and superior outcomes.
• Eliminate manual efforts involved in gathering, reconciling, verifying, and analyzing financial data by replacing spreadsheets and specialized platforms with a more efficient and comprehensive solution.
• Achieve standardization, enhancement of speed, and centralized management of the complete close process. This can be accomplished by employing month-end close tasks, supported by hierarchical task lists and role-based workflows.
• Furnish organizations with real-time dashboards, flexible reporting options, and robust data visualization features to analyze their financial and operational data effectively and derive insights to drive data-led decision making.

Improve your financial decision-making through the utilization of corporate performance management. Integrate Harmonized Planning, Budget Management, and Future Predictions for strategic planning and forecasting purposes. With Nirmalya's CPM platform for Finance, companies can enhance the efficiency and transparency of their financial processes. By consolidating all financial data onto a centralized platform, Nirmalya enables access to a single source of truth and offers solutions for consolidation, financial planning, and reporting. This ultimately allows for optimization of financial processes and establishes a solid foundation for data-driven decision-making. Contact us today to learn more about how enterprises are harnessing the benefits of Nirmalya Enterprise Platform.