Group consolidation reporting, also referred to as multi-company consolidation, can be a time-consuming task for any CFO (Chief Financial Officer). Often, it involves a plethora of spreadsheets with multiple interconnecting worksheets. The effort you need to keep this environment balanced and reconciled is agony for many. It can fall over just by overriding one formula. And, sometimes, you may not even notice the error until months down the track.

The desired outcome is the ability to see several business activities wrapped up into a combined financial statement. This gives a view across all companies and can be used to track the overall performance.

Often, there are times when your business needs to go beyond its initial structure and end up with more than one entity. You could have several reasons you want to separate these activities from your original company:

  • Entering a business venture where you only have partial ownership.
  • Setting up a new business in another country that trades under different tax legislation and a different currency.
  • Growing a branch network where each branch is responsible for their own business. Maybe each trades under different state/region laws.

 

Who Needs Group Consolidation Reporting?

It is not always big business that needs group consolidations. There are many scenarios where a group consolidation would be beneficial like:

  • Owning a small business that comprises a company and a family trust
  • Being the CFO of a multi-national with global reach
  • Managing a multi-branch group of companies
  • Creating a franchise group that needs to report on the whole group or separate regions.

Whatever the circumstances, it is important to be able to consolidate the different parts of your empire and view it as a whole.

 

 

What Are Group Consolidations?

The purpose of Group Consolidation is to give you that birds-eye view of the group.

It needs to be a complete 360-degree perspective.

You will want to look forward with cash flow forecasts and balance sheet forecast. You will need to look back to compare actuals to budgets and measure performance with KPIs. Sometimes you will want summary information and charts to get a quick view of what is happening. At other times,  you will need to dive into the detail.

 

 

Calxa’s Group Consolidation Reporting

Calxa’s consolidated group reporting gives you all of this. It works the same, whether you are working with 2 entities or 200. Once set up, you can automate the extraction of core data from your accounting systems and the delivery of reports to your stakeholders.

 

Consolidation By Accounting System

Many groups have a uniform accounting system used by every company. This is  often paired with a standard chart of accounts. While that can simplify things, it is not essential when reporting with Calxa. Whether you are using Xero, QuickBooks or MYOB, Calxa will connect to any of them and bring the data together.

Differences in the charts of accounts can be easily managed with Calxa’s Account Trees. Create a common Account Tree structure with the headers and running totals you need for your reporting and then copy it across all the organisations. If the chart of accounts is identical it will automatically allocate detail accounts to the same header. If there are accounts with a different format (or name and number) you simply drag them to the right header.

Once the data has been brought into Calxa from your accounting system, there are only minor differences in behaviour between them. If you do not have a supported accounting system, soon (June 2020) you will be able to create the organisation manually in Calxa and import actuals from Excel

 

Multi-Currency Consolidation

When dealing with entities in different countries using different currencies, it is important to get the accounting aspects of multi-currency reporting correct.

Calxa imports rates for 30+ currencies so you do not have to manually enter historical rates.

However, where your rates vary, you have the flexibility of amending them. Whether your individual companies use 1, 2 or 10 different currencies, Calxa will give you the ability to manage rates for both period movements and closing balances.

 

Multi Currency Consolidation

Regardless of the base currency of each organisation, you have the option of reporting in any currency. For example, you could have one company in Canadian Dollars (CAD), one in Brazilian Real (BRL) and one in Australian Dollars (AUD) and then report on any of those currencies or something completely different such as US Dollars (USD).

 

Organisation Group for Consolidations

 

Partial Ownership In A Group Consolidation

If you do not own every entity in the consolidation group outright, there are times when you only want to report on your interest in the group. You can do this simply in Calxa by setting the ownership rate for each entity within an organisation group. And you can have one organisation group showing the total group interests and another showing just the partial ownership.

 

Eliminating Inter-Company Accounts

It is important to exclude inter-company transactions when consolidating your group accounts so that you get a true view of the group results. Calxa offers 2 methods of doing this, depending on how your accounts are structured.

 

Eliminating Entire Accounts

If you split up inter-company transactions into separate accounts (a separate account for inter-company sales and cost of sales, for example), you can use Account Trees to remove those accounts from your consolidated reports. Simply create a new Header set to Summary Only and drag the accounts to be eliminated onto that Header. For more details have a look at our 7 uses for Advanced Account Trees.

 

Partial Eliminations

Where you need to partially eliminate accounts, the steps are different. You process the elimination entries in a separate organisation and include that in the consolidated group. This is much as you would do with a manual, paper-based elimination journal. The other organisation could use the same accounting system as your main companies or (coming soon in June 2020) you could create an organisation manually within Calxa and enter the elimination amounts for budgets and actuals in that.

Whichever method you choose, you will be able to easily identify the elimination entries in your consolidated reports and ensure they balance.

 

Reporting On Consolidated Groups

All Calxa’s report templates – except where it does not make sense – support multi-company consolidation. Here we will highlight some key reports that make for good management reporting. Our blog Top Reports for Multi-Company Consolidations will show you some further examples of what you can achieve with Calxa.

 

Consolidated 3-Way Forecast

A full 3-way forecast or 3 Statement Model is an essential part of the management of any sizable group. Combining the cashflow and balance sheet forecasts with a profit & loss forecast gives the 360-degree view of the future of the business. In Calxa you can generate these reports for your consolidated group for up to 10 years ahead.

Depending on your audience, you will sometimes want a chart to represent this information, sometimes a summarised report and sometimes all the gory detail. A good reporting tool should always give you this choice.

 

Comparing the Entities in a Group

It is not always enough to just add up the individual entities to get your group consolidation reports. There are times when you need to compare and contrast. You want to see them side by side to show what is similar and what is different. Calxa has report templates built-in ready for you to view the Profit & Loss statements or the Balance Sheets with one column for each entity. You can choose to include every entity in the group or just a subset of them. For example, you could show just one region.

 

 

Summarising the Entities in a Consolidated Group

Good, flexible reporting is about viewing the same information in different ways. People in different parts of the group have different perspectives. For board members and senior managers, summary information is especially important. They need the right amount of information to be able to make decisions and to account for their responsibilities. What they do not want, is to drown in detail.

For this reason, Calxa includes a summary report showing just one line per organisation. It includes budgets and actuals for the selected month and year to date. From this the reader can easily see which companies are on target and where there might be problems. Identifying this information quickly enables them to focus their energies on the important problems.

 

 

Learn About Group Consolidation Reporting

If you want to try consolidated reporting and you are new to Calxa, use this Group Consolidations – A Calxa Guide to get started.