As your business grows, so does the complexity of your monthly financial close and consolidation. What was once a simple task can quickly become complicated and time-consuming. That’s where financial consolidation software comes in. The right software can simplify consolidation, save time, reduce errors, and provide in-depth insights into your company's financial health.
This article examines the top financial consolidation software, helping you choose the best tool to conquer your accounting challenges.
What is Financial Consolidation Software?
Financial consolidation software automates and streamlines the process of aggregating financial data from various sources. It automatically considers different ownership structures and consolidation methodologies to provide an accurate overview of an entire group’s financial performance.
These solutions are preconfigured to apply accounting rules, perform currency conversions, and eliminate intercompany transactions, among many other operations required for unified financial reports.
When errors occur during consolidation, they are reflected in the periodic statements that guide a company’s growth plan and roadmap, which can greatly impact the organization’s reputation, decision-making, and ability to raise funds.
Key Features to Look For in Financial Consolidation Software
With so much at stake, it’s worth considering which consolidation product best suits your company’s needs. While every company's exact circumstances and dynamics may vary, some key aspects of financial consolidation software should be universal.
Accurate Data Collection and Integration
Any consolidation software should be able to automatically extract financial data from a wide range of sources, including ERP systems, spreadsheets, and databases. Robust data validation tools are essential to ensure the accuracy and consistency of the information before consolidation. Moreover, flexible mapping capabilities simplify the alignment of accounts and data structures from different systems, ensuring smooth integration.
Currency Conversion
Currency conversion is inevitable for multinational organizations. To comply with accounting standards, look for software that supports multiple currencies and offers a variety of translation methods (current rate, average rate, historical rate). Real-time updates of exchange rates ensure the most accurate financial picture.
Intercompany Eliminations
An effective software solution must identify and eliminate intercompany transactions between subsidiaries within the same organization. Such instances usually mean double counting a sum that entered the organization elsewhere in its operations. A flexible rules engine allows customization of elimination rules based on specific business requirements.
Reporting and Analytics
Comprehensive reporting is a key deliverable of financial consolidation. Your consolidation software should generate standard consolidated financial statements (income statement, balance sheet, and cash flow statement) in compliance with the accounting standards in the parent company’s jurisdiction. The best solutions facilitate the customization of reports in line with each company’s needs, while analytical tools, such as dashboards and visualizations, empower users to extract valuable insights from the consolidated data.
Compliance and Audit Trails
Ensuring compliance with accounting standards (GAAP, IFRS, etc.) and regulatory requirements is non-negotiable. A comprehensive audit trail that meticulously tracks all changes and transactions is essential for maintaining transparency, supporting audit procedures, and protecting the integrity of financial reporting.
Scalability and Configuration
Choose software that can scale alongside your organization's growth and adapt to changing business needs. Setting the software to align with your unique processes and requirements is invaluable for maximizing the value of your investment in these systems.
Cloud vs. On-Premise
The decision between cloud-based and on-premise deployment depends on your organization's preferences, which could reflect economic considerations, practical concerns, or both. Cloud-based solutions offer lower upfront costs, automatic updates, and accessibility from anywhere. In contrast, on-premise solutions provide greater control over data and customization potential but may require greater IT staff and resources investment.
Top Financial Consolidation Software in the Market
The market-leading consolidation solutions all meet the above criteria to varying degrees of efficacy, and each offers a variety of price points depending on the scale of deployment and the number of features required. Here’s a key selection, in no particular order:
Oracle Hyperion Financial Management (HFM)
Oracle HFM is designed for large enterprises and multinationals with intricate consolidation needs. Its strengths lie in its powerful multi-currency functionality, extensive reporting capabilities, and seamless integration with other Oracle EPM products. However, this comprehensive package has a high price tag and necessitates specialized IT knowledge for effective implementation.
SAP Group Reporting
SAP Group Reporting is designed for large enterprises and high-growth companies, offering seamless integration with the SAP S/4HANA ecosystem. Product highlights include real-time data processing, compliance support for multiple accounting standards, and advanced analytics. However, it has limited customization possibilities when used outside the SAP ecosystem, high implementation and maintenance costs, and significant training and IT resources consumption.
OneStream XF
OneStream XF is a unified platform for Corporate Performance Management (CPM), encompassing consolidation, planning, budgeting, and forecasting. This comprehensive approach is ideal for mid-sized to large enterprises seeking a holistic solution. While it offers many customization options, the implementation process can be relatively lengthy.
Longview
Longview prioritizes ease of use, strong data integration capabilities, and flexible reporting, making it suitable for mid-sized to large enterprises across various industries. Its user-friendly interface and dashboards are a major attraction, but its customization options may be somewhat limited compared to competitors.
BlackLine
BlackLine focuses on automating the financial close process, encompassing reconciliation tools and close management features. It integrates well with legacy enterprise systems, which promotes consistency across your financial data. However, it may not be the best fit for companies seeking top-tier planning and budgeting functionality, and its mobile device option lags behind the desktop version in terms of usability.
CCH Tagetik
CCH Tagetik offers exceptional flexibility and customization options, strong modeling capabilities, and integrated budgeting & planning features. It's suitable for mid-sized to large enterprises that depend largely on Excel to compile their data. While its adaptability is a significant asset, the software's complexity during setup and later adjustments may challenge some users. It also has a reputation for slow performance when scaling up.
Planful
Planful targets mid-sized businesses seeking a cloud-based solution emphasizing planning and budgeting. Its user-friendly interface, affordability, and strong planning features suit this business category well. However, some users must trade up for a more powerful solution when consolidations become more complex.
Fluence Technologies
Fluence Technologies provides the best overall financial close and consolidation software solution. Our cloud-native platform offers a perfect blend of cutting-edge technology and user-friendly design, catering especially well to mid-sized and large enterprises. The platform’s intuitive interface makes it easy to adopt and implement, and its powerful automation capabilities streamline financial close processes, significantly reducing manual work and potential errors.
Fluence doesn't just stop at the basics; it provides a comprehensive suite of financial close functionalities, from consolidation to reporting, in a single, cohesive platform. Its cloud-native architecture guarantees scalability, security, and continuous updates while offering the flexibility to adapt to specific business needs without extensive customization.
Choosing the Right Consolidation Tool for Your Business
We have seen that even when the available products are equally popular or affordable, they may vary in several ways. It’s up to each company to assess the product features that best meet their particular needs.
When determining which software is best for your business, consider the following:
- Size and Complexity: Choose software appropriate for your organization's size and the complexity of your consolidation needs.
- Compatibility: Ensure seamless integration with your existing financial systems, such as ERP.
- Specific Requirements: Identify your organization's must-have features, such as multi-currency accuracy, intercompany eliminations, customizable reports, etc.
- Price: Determine your budget and compare the pricing models of different vendors. Each vendor adjusts its rates depending on the number of users, frequency of use, granularity required, and other variables.
- Ease of Use: Evaluate the user interface and consider the training required for your team.
- Customer Support: Choose a provider with reliable customer support and a good reputation
Can’t You Just Use Excel?
While Excel can be used for basic consolidation, it's not ideal for complex scenarios. You'll need to collect data by hand, create consolidation worksheets, manually apply currency conversions and elimination formulas, and create reports. This process is time-consuming and prone to errors. Financial consolidation software automates these tasks, making the process more efficient and accurate.
While moving away from Excel is a good start, simply choosing a standalone financial consolidation solution may not be enough. Many companies find combining these tools with complementary software beneficial to further improve their functionality and effectiveness.
Which Tools Complement Financial Consolidation Software?
The capabilities of financial consolidation software are significantly amplified when integrated with Enterprise Resource Planning (ERP) systems, such as SAP, Oracle, or Microsoft Dynamics, which provide the primary data sources for consolidation. Seamless integration with these systems ensures smooth data flow, reducing manual intervention and the risk of errors.
Another common pairing is with ETL (Extract, Transform, Load) tools, which prove invaluable when dealing with multiple data sources or complex data structures. These tools facilitate the extraction of data from relevant silos, its transformation into a standardized format, and seamless loading into the consolidation software.
And once your financial data is consolidated, its full potential can be unlocked. Business Intelligence (BI) and Analytics tools can help team members visualize data through interactive dashboards and generate custom reports that greatly assist decision-making.
For public companies, disclosure management software simplifies the preparation of financial statements and regulatory filings, ensuring compliance with disclosure requirements.
Your Ticket to Agile Consolidation
As businesses expand and become more globalized, their financial consolidation processes become more complex, triggering a need for more advanced solutions and greater dependence on automation.
More and more companies are turning to specialist software to eradicate inefficiencies and prepare for future growth. The good news is that consolidation solutions are available for all verticals and company types.
If your organization depends on financial consolidation to generate data-driven corporate strategies and aims to remain agile in today’s dynamic commercial landscape, contact Fluence for a demo of its top-grade consolidation system.
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