Do you have a Xero tech stack for your consolidated group? Handling multiple Xero files for the group in itself is not for the faint-hearted and requires discipline, organisation and diligence. To keep on top of the administration of the interaction between companies and financial reporting, we have come up with a suggested tech stack for Xero that we think would help the CFO in command. We asked ourselves:
- What are the tools you need to operate a consolidated group of companies with Xero?
- What will help the group CFO manage the needs of the individual entities and the group itself?
Here are our suggestions we’ve gathered from talking to our customers, some with just a few companies, some with 50 and more. There are a few things to know before you start your read:
- To make life easy, all the tools integrate seamlessly with Xero.
- We start with day-to-day tools for record management, then move to apps that help with end-of-month processes.
Xero Tech Stack: Record Management
This is an area that traditionally consumes a lot of data entry time and attracts human errors easily. It makes sense to automate some of these tasks and come out of it with a better set of processes.
Handle Complex Purchasing and Accounts Payable
The more entities in your group, the more likely your purchasing and AP functions will be complex. The Xero marketplace has many tools to manage this functionality, but Lightyear is the choice for those who need:
- Advanced purchase order approval processes
- Import of line detail on invoices
- Integration with inventory systems
- Multi-currency purchase order management
What stands out about Lightyear:
- This company is not a start-up. The founders of Lightyear have been around the Xero ecosystem for a while, so they really understand how to bring value to Xero users. It also means they are likely to still be here tomorrow.
- This app will serve you along the purchasing lifecycle from creation of purchase order, approval to payment, and, finally the actual payment.
- Not many expense management systems have capability to split the scanned bills into line items. Lightyear does.
Bill Payments
The requirements for us had to include ways of handling:
- Payment of bills
- Authorisation process
- Foreign currency payments
Airwallex is our choice here for its ability to easily handle transfers in any currency. It includes a multi-layered approval process that will please any auditor.
While payments was the starting point for Airwallex, it has expanded over the years to include:
- Both virtual and physical cards that give good control over payments
- Bill payment functionality to import purchases to Xero
- Expense management
- Incoming payments using eCommerce platforms
What stands out about Airwallex:
- A simple process for international transfers, even to some of the world’s hotspots
- The option to store funds in any currency or just one
- Robust permissions and approval steps for users in different roles
- A responsive support team at all times of the day
- It’s a product that’s evolving and improving
Bank Reconciliations across Consolidated Groups
For those at the detailed end of reconciling bank accounts, the Mayday’s BRAG browser extension gives you all the entities in one place. Far easier than constantly switching companies in Xero!
Mayday has 3 modules that you can attach to your Xero, we will cover the other two shortly and cover a final summary.
Xero Tech Stack: End-of-Month Tasking
For most businesses, closing off the month is easy when you are on a platform like Xero. But when you have multiple companies, not only does the time required multiply, but there is also the added complexity of interactions between companies. For this reason alone, you really want to automate some of these tasks and include some apps into your Xero Tech Stack.
Managing Inter-Company Charges
One of the challenges of managing a consolidated group of entities is keeping track of the transactions between them. There are always sales, purchases, and transfers from one entity to another. Using a clever Xero add on like Mayday will not only save time but keep your books aligned. So, here is the second Mayday module.
Mayday Recharger
Mayday Recharger makes the process of managing inter-company transactions simpler by setting rules for regular interactions.
You could, for example, process a management fee from each entity to head office based on a percentage of total revenue.
It will enter that as either a journal or a purchase in each subsidiary and post the corresponding transaction to the head office entity. Optionally, you can pay them through the relevant intercompany loan accounts.
This is the sort of thing that will save time and improve accuracy at each month end.
Mayday Balancer
The final and third instalment of the Mayday suite is the Mayday’s Balancer. It monitors your inter-company loan accounts, reviews discrepancies and can post adjustments where needed.
What stands out about Mayday:
- If you only have a couple of companies to consolidate, you may not see the value. But when you have 10 or 50 plus Xero entities, the time-saving is amazing.
- Viewing all your companies’ bank accounts in one place, gives some great visibility across the group.
Consolidated Financial Reporting
It would be remis of us not to include Calxa in the Xero tech stack for consolidated groups. Management reporting is essential for any business but even more critical for a large group. It’s important to know what’s working and what isn’t, how the entities compare and, sometimes, how departments compare across the group. Calxa is the tool to handle all of that for a group of any size as you can:
- Consolidate income statements, balance sheets and cashflow reports
- Produce management reports including budgets and KPIs across the group
- Manage currency differences according to accounting standards:
- Use automatic or custom rates for any of 190 currencies
- Set fixed rates for specific balance sheet accounts for the correct historical treatment
- Report on FX currency differences so you can understand them. There are no mysteries. This is accounting!
- Share dashboards and report bundles with teams both within the group and outside parties
What stands our about Calxa:
- Accuracy is integral to the app whether that is the direct Xero connection brining in the actuals or the handling foreign currency differences to accounting standards
- There are no limits to how many Xero files you can connect and report on
- The flexibility for group reporting is extensive and unmatched by other apps
What does your Xero Tech Stack look like?
Everyone’s needs are different so not all of these tools will be exactly what you need but, if you’re not satisfied with what you have and you’re looking for ideas, these are tried and tested in the consolidation space. Let us know what other tools you find useful in your quest.
You might find our Group Consolidation Checklist for End-of-Month useful.