The webinar “Automating Financial Consolidation and Reporting” from January 10, 2013, was presented by Tom Kelly from T-Edwards, Inc. In this Proformative webinar, Kelly talks about consolidation, the challenges of consolidation, and how the cloud can help your company jump-start the process.
The Challenges for Global Businesses
Many companies have a wide base of customers and employees spread around the globe. This is one of the things that makes it challenging to consolidate your financials as a global business. Other challenges include complex currency translation and revaluation which goes hand in hand with selling your products and services all over the world.
To make things more difficult, global companies have to comply with local tax regulations, whether it’s sales tax in the United States or value-added tax (VAT) in Europe. The large number of transactions further increases the need for an audit trail. Last but not least, most companies have only limited IT staff at each location to deal with the complexity of the systems.
Local and Global Change
To make everything even more complicated, there is a great degree of local and global change. There are new revenue recognition models, local sales taxes are constantly changing, other regulations change, and companies go through mergers and acquisitions.
The ever-changing global environment leads to a great need for business visibility. Your company needs to be able to see the real-time data that provides you with both the overall picture and the details at any given moment.
Multiple Systems Strain Finance Resources
When companies are operating in different countries throughout the world, they may use different systems to keep up with local and global reporting requirements for each country, each region, and their worldwide headquarters. The disadvantages of breaking up the financial records on so many different levels should be immediately obvious. Here is what it means for your global business:
- It takes a long time to incorporate financial results from subsidiaries.
- Subsidiary’s financials are not visible.
- Lack of confidence in the financial data for each subsidiary and the company overall.
- The process is error-prone, inefficient, and time-consuming.
- There is no 360-degree view of corporate performance because the records are separate.
The Importance of Using a Global Cloud ERP
To make accounting easier and more efficient, many businesses are moving to a global cloud enterprise resource planning (ERP) model. In a global cloud ERP model, financials, ecommerce, and customer relationship management (CRP) can all be accessed via the same source.
The Secret for an Efficient Consolidation Process
Consolidating your finances is a huge step for a global company. But it has to be done right in order to work efficiently. There are some things that your company should take into considering when moving to a global cloud ERP for performing bookkeeping, accounting, and taxes. Your cloud business management should include the following features:
- Real-time financial consolidation
- Multidimensional reporting, including worldwide, regional, and country
- Country-specific financial and regulatory compliance
- Single chart of accounts or custom per subsidiary
- Intercompany journal entries posted from a single screen
- Automate cumulative translation adjustments
- Automate period end revaluation
- Simplified accounting close processes
- Complete audit trail
Advantages of Global Cloud ERP over Global On-Premise Solution
Some companies are still using spreadsheets and similar tools to provide global financial reporting that includes details on each subsidiary. But there are many advantages to consolidating your finances via the cloud instead:
- It doesn’t require subsidiary IT resources.
- You can get access to data in real time.
- You can consolidate finances in real time.
- Local tax and regulatory compliance is automatic.
- You can customize information for each subsidiary.
You can transform your finance performance by using cloud global business management. Your company can stay abreast of the latest accounting changes and achieve real-time consolidation. Results for each subsidiary will be visible in real-time which enables your company you to take action. All of this can be done without growing your local IT resources. The budget you previously allocated to IT can be moved from maintenance to innovation, helping your company stay ahead of its competitors.
Consolidating Your Financial Reporting
As this webinar shows, moving to the Cloud is not a requirement for you to consolidate your company’s financial reporting, but it’s the best way to get it done. The ability to access your financial information in real time is necessary when you’re operating in a global economy. Fortunately, it’s also more cost-effective to use Cloud-reporting services because you don’t have to spend a lot of money on hiring and training local IT personnel for each of your subsidiaries.
It may be time for your company to make the switch to keep up with the changing economy. Are you using the Cloud for financial reporting?