How consolidation software empowers strategic financial decision-making

Nearly 40% of CFOs do not completely trust their organisation's financial data according to analysts. Consolidation is a particular area where doubts can creep in - and that is why tackling consolidation is central to the Agicap solution for managing and forecasting cashflow.

Based on automated banking and ERP integrations, consolidation means combining the cash inflows and outflows of an organisation into a single, centralised view. This central overview presents two powerful benefits:

• CFOs can present their CEOs with tailored internal reports (like cashflow forecasts and variance analyses) for effective decision-making.
• Finance teams can use this aggregated data as the basis for external financial reporting to IFRS and GAAP standards.

There are two types of consolidation: i) general cash consolidation and ii) cash consolidation across the multiple entities of a single Group structure. Versatile software like Agicap handles both.

Capabilities of the best financial consolidation software

What do you expect from your CFO? The Board and CEO of any organisation will always expect the CFO to manage finances (and especially financial risk) effectively. That's day-to-day. On the strategic level, what Boards really want is accurate information they can act upon. And that's the trump card that only CFOs with top consolidation software can play:

• It all starts with centralised and automated cash management across multiple bank accounts and group entities ...
• With this efficient basis in place, real-time cash visibility is available ...
• With everyone knowing where the company is financially right now, accurate cash flow forecasting and scenario planning is possible across multiple time horizons ...
• And only with this forecasting feature can CEOs and Boards tackle decision-making on the grand financial scale of future debts, investments and financing.

Accurate financial forecasting & business planning at group level

Boards can only plan effectively at Group level if they have financial information consolidated at Group level too. Practically this means that key metrics from the balance sheet of each group subsidiary is accounted for on one dashboard. With Excel, this consolidation of entities is complex, prone to human error and takes forever; watch this video to see how easy it is, by contrast, with Agicap.

Consolidation is the lynchpin for powerful cashflow management at global entity level; with forecasting software like Agicap that is specifically designed to offer convenience in this area, features allow you to:

• Transition effortlessly from Group to entity view.
• See just one consolidated figure for your overall cashflow position - as well as supporting metrics shown graphically.
• Use just one click to update the Group view with real-time cash information from subsidiary entities - with all currency issues reconciled.
• Forecast cash arrivals (and departures!) for each entity - and perform any necessary balancing operations in the big picture with the help of balance tables and alerts.

Compare & optimise: multi-entity performance analysis

A Group overview is critical. But strong consolidation software also allows you to zoom in, inspect and analyse finances at entity level:

• View simple graphics to compare the performance of each entity: analyse key income and expenditure items.
• Identify growth opportunities.
• Anticipate any budgetary deviations.

Mobile-first visibility for busy finance leaders

Cash consolidation software is only helpful to companies if user-friendliness is a key consideration. Hence packages like Agicap offer a mobile app, so CFOs and other leaders can keep an eye on cashflow on the go. What makes Agicap stand out in this area is that group consolidation is a key app capability:

• Monitor key metrics: current balance, big inflows and outflows expected, outstanding receivables - and more.
• Choose what aspects of Group and entity to focus on, with fully-customisable dashboards for each.
• Export your reports and share them easily with internal and external stakeholders.

Consolidation vs. financial statement reporting software

Cash consolidation software and financial reporting software are closely-related. The difference is internal vs. external:

• Cash consolidation software like Agicap handles internal aggregation and presentation.
• Software for consolidation of financial statements focuses on external presentation.

Smart companies get the two software types working together. Software like Agicap oversees the assembly and organisation of real-time cash data into customisable dashboards suitable for CEO and Board viewing - and financial statement reporting software can then use this data to prepare financial statements for external consumption aligned with strict accounting standards like IFRS or GAAP.

How Agicap clients get it easier

Many Agicap clients have benefitted from our powerful consolidation features:

• Enterpryze - a provider of business management software - saved themselves 20-40hrs a week by using Agicap to consolidate 15 bank accounts across 8 legal entities.
• Hospitality incubator White Rabbit Projects used Agicap to integrate accounts payable data from 13 separate legal entities into one group forecast.
• Multinational group Wyz used Agicap to simplify control over subsidiaries.

Conclusion

Let's not forget about the pain points of the consolidation process. Without top consolidation software like Agicap, finance teams must contend with:

• Inefficiency: hidden liquidity risks, costly overdraft fees and complex cash pooling across group subsidiaries.
• Poor forecasting: Manual, error-prone cash forecasting processes.
• Less time: manual, complex reconciliation and reporting across different systems.

And, as CFO Kieran Kanavagh of Agicap client Enterpryze observes, an ERP may tackle these issues, but ERPs don't provide the cash forecasting that Boards and CEOs demand: "SAP or any ERP-system provides all the ingredients for cash flow management. It doesn’t cook the meal."

FAQs

What is consolidation software?

Although there are many variations, consolidation software typically aims to provide a single, unified view of financial data grabbed from separate sources; with these sources being potentially different bank accounts, subsidiaries or even company departments. Agicap, for example, specialises in consolidating cash so companies can see their unified cash position.

What is an example of consolidation?

Agicap client White Rabbit Projects had the bank accounts of 13 separate legal entities to consolidate. Consolidation (by hand) meant integrating these 13 separate streams of data to reach a forecast for group cash outflows. Agicap consolidation software achieved this automatically.

What are the three types of consolidation?

Experts sometimes view consolidation as having three applications: i) cash consolidation across bank accounts/subsidiaries for liquidity oversight ii) statement consolidation for a unified set of financial reports and iii) operational consolidation of sales, procurement and inventory data for more efficient decision-making.

What is a consolidated accounting system?

A consolidated accounting system is a software package that gathers and merges the financial data of multiple entities (like subsidiaries, divisions or branches) into one unified set of accounts for the parent company.