How to Financially Consolidate Different Legal Entities

June 20, 2023

One of the intricacies of group finance is the need to translate multiple sets of subsidiary accounts into a common consolidated view; therefore, successfully creating legal business consolidation structures is currently a must in strategic financial planning. This, in turn, underlines the importance of finding solutions to automate the financial consolidation process and produce a single consolidated financial statement

1 Efficient consolidation

Financial consolidation involves combining information from multiple legal entities under the umbrella of a parent company, so that it is all treated as though it comes from a single source. Moreover, it is a crucial step in the monthly closing task of any multi-entity organization. Hence, companies are increasingly aware that efficiency involves finding a practical and economic solution to speed up the consolidation process that not only provides reliable reports but can collect data from different operating systems, as well as accelerating statutory consolidation.

2 Alignment with local and international consolidation standards

Multi-entity business consolidation involves controlling the activity of subsidiaries that operate in different jurisdictions. International financial reporting standards are a way of ensuring that financial statements are consistent, easily comparable and transparent, so that companies and stakeholders can make informed economic decisions. Simplify local and group consolidation processes by seeking a solution with functional capacities to: 

  • Support both IFRS and local regulations.
  • Enable adherence to complex accounting standards.
  • Meet the requirements of the capital and financial markets.
  • Ensure reliability and transparency of financial reporting.

3 Intercompany reconciliation

With an increase in the number of subsidiaries, intercompany reconciliation is growing more challenging in terms of efficiency, accuracy, resources and risk management. The process is no longer reduced to data matching, but also requires the elimination of transactions that will not be part of the consolidated financial statements. How can you make intergroup reconciliation easier?

  • Accurately define subsidiary units and create a consolidation group.
  • Automate the process by implementing financial consolidation software.
  • Improve visibility and increase transparency by mainstreaming data to teams.

4 Finding a good software solution 

Investing in adequate consolidation software is the best way to keep control over the process. As well as providing high-quality insights for decision-making, it frees resources for the finance department to focus on higher-value tasks. How can a solution like Talentia CPM help?

  • High-speed data matching using both historical and daily activity.
  • Elimination of manual reporting and automatic consolidation of financial data from multiple entities, regardless of their location.
  • Advanced analytics and insights.
  • Real-time reporting, multi-standard management and statutory consolidation.
  • Multi-currency month-end revaluations.
  • Easy iXBRL reporting in compliance with new ESEF regulatory standards.

Complete audit trail.

If you are dealing with multiple legal entities and find yourself struggling with financial consolidation and close, you need an efficient solution. This is where Talentia CPM can help by providing you with powerful and reliable consolidation tools to enhance your corporate performance.