What is Financial Consolidation and Close?
Financial consolidation in large businesses means generating one financial picture of the organization by combining data from each of the parts. Done manually, it can be tedious and time-consuming.
According to Finance’s definition of consolidation, there may be varied accounting structures from multiple subsidiaries or separate legal entities from several countries, complicating the task.
The process often includes importing data from different systems, mapping multiple general ledgers to a single chart of accounts, normalizing the consolidated data, which may include multiple currencies, and producing consolidated financial statements and related reports.
The Financial Consolidation and Close Dilemma
All your numbers work together. Yet, Budgeting and Forecasting inputs derived from period-end numbers often must wait until the close is completed.
There is constant pressure to get the numbers out before the data gets stale because…
- You can’t understand where you’re headed without knowing where you’ve been.
- Taking time to consolidate and close holds up and degrades other processes.
- Manual processes are tedious and time-consuming. For example, spending weeks to resolve journal entries and errors is frustrating and inefficient.