Three essential steps to building an automated financial consolidation process

Back to News & Blog
3 essential steps to building an automated financial consolidation process

Three essential steps to building an automated financial consolidation process

Andy Carfax of LucaNet talks…

Closing the books and consolidating financial reports is an annual challenge for the finance team. But the fact is that many companies still rely on time-consuming and inefficient spreadsheet-based processes for financial consolidation.

So, what are the essential steps to take towards building a high-value automated financial consolidation process?

1. Review the time taken to close your books

Many organisations are finding that manual processes no longer suffice and can lead to serious delays and inaccuracies in the year-end financial close process. Those organisations who continue to use disparate, spreadsheet-based financial consolidation processes in particular, are experiencing more and more issues in trying to produce consistent, single-version-of-the-truth reports and also experience many challenges with their intercompany accounting requirements. Meanwhile, those using an automated financial consolidation process are often completing the entire close-to-disclose process in as little as 12 days or less. If you are taking in excess of 25 days to finalise your close process, it could be time to look at automating the process.

2. Can you easily identify exceptions with drill-through?

Many companies need to use multiple financial reporting solutions across various divisions. Often these systems may have been adopted via an acquisition process, meaning that finance teams then have to tweak the reports that come out of their ERP systems in order to complete the consolidation process. Manually adjusting reports from ERP solutions to close and consolidate the books in this way of course leads to further discrepancies in the close process and opens up a world of re-keying errors which can ultimately prove extremely damaging. Automating this step in the process eliminates the need for rekeying and manipulating data between systems and frees-up significant time savings to enable financial staff to devote to more value-added tasks.

Additionally, seamless connectivity between systems provides transparency at the group level into the details of the transactions behind the balances, providing stakeholders with the ability to drill down to the entry level to research large or unusual balances. With this being an important, but time-consuming part of the annual financial close process, it is almost an essential feature to automate. This challenge comes to a sharp focus in particular when one of the biggest challenges in consolidating the books is reconciling intercompany transactions. This critical function is often worked out via email and phone calls, causing delays and miscommunication and is typically one of the most inefficient and unsecure processes in the entire company. If anything goes awry in this step of the process, chaos ensues further down the line. The deeper it goes, the more difficult it is to identify the root cause of the problem.

2. The challenges of multi-currency and international reporting requirements

International organisations also often need to (for example) report under both IFRS and UK/US GAAP in different currencies. If the accounting team is not able to quickly set up the different organisational elements allowing them to report out under various accounting standards using an automated process, the finance team faces yet another frustrating and complex manual process to correct for this.

Reporting in local currency and the automating of importing of current exchange rates helps reduce errors and provide consistency. If exchange rates are copied into a spreadsheet incorrectly, the finance team has to spend a great deal of time tracking down the error. The complexity is magnified by the number of currencies and consolidation periods involved.


Companies have traditionally tried to handle much of the consolidation process with systems that have been around for decades — including spreadsheets and emails. In today’s competitive and fast-paced environment, the slow trickle of data needed for consolidation no longer suffices.

Print Friendly, PDF & Email

Share this post

Back to News & Blog