Financial Consolidation chart on laptop screen

Top 5 challenges accountants face with financial consolidation

It’s the time of year when many finance teams will be burning the midnight oil to complete their financial consolidation. The year-end process can be hectic, complex, and time-consuming and team members may be wondering when they will get their work-life balance back.

What is financial consolidation?

Financial consolidation is the process of combining financial data from multiple subsidiaries and entities within an organisation into a single set of financial statements for reporting purposes. 

The process is much more complex than simply adding a few things together.   

The big challenge with financial consolidation

The big challenge of the consolidation process lies in the fact that an organisation may span multiple divisions, subsidiaries, locations, currencies, accounting and taxation structures, reporting and compliance structures, and disparate and changing regulatory requirements.

Finance teams are under big pressure to meet strict deadlines, report quickly on data, and meet the regulatory compliance standards.  The sheer volume of information that needs to be collated and submitted can mean the risk of mistakes is high and misinterpretation, particularly when frequent adjustments are being made.  

It shouldn’t be a big surprise that traditional spreadsheets and standalone accounting systems are not really up to the job.

The top five challenges accountants face when consolidating group accounts

  1. Outdated methods of collating data lead to inaccuracies and are inefficient

    Many accountants are accustomed to using Excel for reporting, but problems can easily arise.  In small companies it may be straight-forward but in larger organisations things can quickly start to get tricky and numbers can easily be missed or misinterpreted.

    With multiple spreadsheets from various business units, you’re likely to have multiple versions of numbers meaning things can easily get missed or data entered incorrectly.  Using spreadsheets is also very labour intensive and by their very nature and the speed at which emails move around the business, the data can be out of date by the time you have finished completing the reports.

  2. Security risk

    With the use of spreadsheets for financial consolidation comes the security risk of data manipulation and fraud. It is easy to change or manipulate data and tracking the source of manipulation can be really difficult.

  3. Ever-changing regulations

    It goes without saying that accounts must be prepared according to the correct financial standards and with reporting guidelines, statutory requirements, and compliance regulations continually changing, keeping up to date with changes can be a challenge. 

  4. Cross-border consolidations are tricky

    As different countries use different accounting standards, the accounts of each entity in their respective country need to be compiled as per that country’s specific reporting standards.

    This can present a major headache when it comes to group consolidation accounting for foreign subsidiaries, as the financial information across entities and countries needs to be remediated in the parent company’s consolidated financial statement.

    When it comes to applying foreign exchange rates and converting to the reporting currency, without adequate software, things can start to get time-consuming and can lead to inaccuracies as the exchange rates fluctuate.

  5. Inability to respond to change

    Organisations are dynamic as are the external conditions in which they operate.  You only have to think about the current market – rising energy costs, rising raw material prices, weak GBP and inflation.  If you compound this with changes in your organisation such as any M&A activity or reorganisations, financial analysis can become really difficult.  If you’re using Excel these challenges are compounded.

How financial planning software can ease the pain of financial consolidation

All these challenges can be readily overcome with the right software which should be delivered in a way that works for your business. 

The right solution will mean you save time and can spend that time on high value tasks, you will reduce or eliminate any mistakes and the whole financial consolidation process will become quicker, easier and be more accurate.

Not only that, but the right software will also integrate data for companies with complex, multi-entity business structures to present valuable insights that drive growth and give you real-time visibility into your company’s financial health and results bringing long-term benefits.

No more looming dread over year end.

If you’re looking for a better way and to make improvements to your financial reporting processes, please get in touch with us. Contact

You can find out more about our solutions here.

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