Financial Consolidation and Reporting is a tough battle to win for many financial controllers. Many CFOs succumb to the pressure of purchasing the most expensive solution in the market in the hopes that it will give them the most return of investment but many nowadays know this is not always the case. We have listed down the top 5 most common mistakes made by CFOs when purchasing a financial consolidation system.
- Adjusting your process to fit the system
There are many issues that keep the Financial Controllers up all night and one of them is the problem of Consolidation. In an attempt to address the myriad of problems they face, they purchase the most expensive Consolidation tool in the market. The problem is not so much about purchasing the expensive tool itself, the problem lies in the fact that once the implementation of the chosen technology begins, the limitations of the technology are exposed and in a desperate attempt to make the roll-out successful they adjust their processes to great lengths to accommodate the tool.It is important to understand that if a company’s current process or methods for financial consolidation are inefficient, the technology cannot fix it. At best, it will only automate the inefficient processes in place. So before beginning implementation, the processes must be looked into.
- Being infected with bad data
One of the things that Controllers learn the hard way is the fact that technology does not cure bad data. Controllers must understand that this is one of the core problems that need to be addressed beforehand. It is important to ensure that the people who input the data in the system understand how the system works or what the underlying data means so they do not end up making critical mistakes.
- Failure to plan the kind of system for new entities
During trying times for many companies, mergers and acquisitions is the only way to survive. The problem with M&A´s is that the controllers are faced with the problem of technology as they try to combine different accounting departments and reporting protocols into one entity. It is important to note that this problem does not surface during the planning phase but at a much later phase when the problem of incompatible solutions is made more complex by the fact that the reporting changes need to be made immediately if the new entity is going to know how it is doing financially. Failure to plan the technology for the new entity/entities can compromise the deal and makes improving consolidation more complicated.
- Purchasing a solution that is not globally dynamic
The globalization trend poses its own challenges as controllers are met with multiple ERP systems and different general ledger requirements. To make matters worse, there is also the complication brought about by currency problems and varying international accounting rules such as US GAAP rules, international GAAP rules, statutory accounting rules, and many more. The problem here is that most of the old and established consolidation systems out in the market today are not able to address varying languages, multicurrency setup, and complex ownership structures. This must be one of the most important criteria to look for in a new consolidation system.
- Choosing a solution that cannot handle false debits
Selling to one of your divisions and then reconciling it for sales purposes strongly affects plans for improving financial consolidation. Even a scenario when money is borrowed from another part of the company to pay for another purchase in another part of the company makes things even more complex not to mention complex ownership structures. Many old consolidations systems are unable to address this. When looking for a new consolidation system, CFOs must look into the ability of the tool to handle intracompany eliminations and intracompany automation to truly improve the way consolidation is done.
If you are looking for a robust and modern consolidation system that is able to handle multi-GAAP, Intracompany eliminations and automation, Currency automation, minority interest, complex ownership, and many more, contact us at [email protected] to see the newest and most capable consolidation system out in the market today called pcLegal or see a free and exclusive demo online with Consolidations expert Herve Capo.
DSPanel offers cutting edge technology platform for business analytics, planning, and visualization. DSPanel designs, builds, and operates with the end users in mind. Performance Canvas was created by DSPanel to answer the unarticulated needs of the market not addressed by previous available solutions. With Performance Canvas, information is transformed into valuable business insights for the business executives to utilize in their decision-making process. DSPanel currently has over 2500 organizations deploying their solutions.