Financial Consolidations for SAP Business One

This article will discuss and explore the key features and functionalities of modern financial consolidations tools for SAP Business One users.

If you are one of the many SAP Business One (SAP B1) users managing the transactional and operational information for more than one subsidiary as part of a parent company, then you know the financial consolidation process can be tedious, depending on the tool you are using.  Logistically, it can be a nightmare without an ultra-modern, powerful financial reporting and consolidations solution.  This article will focus on your options for an easy-to-use, robust financial consolidation tool to streamline your SAP B1 experience.

Let’s start by defining the term.  Financial consolidation is a term that refers to the aggregation of financial information from distinct subsidiary companies into one cohesive set of financial statements.  These reports combine data together in ways that reconcile diverse currencies, eliminate transactions between subsidiary companies, and additionally adjust anything to make sense of the parent company financial health.  Today, business leaders are shopping for a tool that simplifies the consolidation process for a couple of reasons.

Executives might be seeking a third party consolidation solution for several reasons.  You might be wanting to get away from a tool that is too simple for today’s business needs, like Microsoft’s Excel or low end consolidation tools.  You also might be looking to avoid technically complex or legacy tools, like Hyperion or Cognos/TM1.  Regardless, you need a tool to handle the complex nature of consolidations.

Talking to a SAP B1 customer the other day, I learned that his role involved routinely working with SAP B1 and an independent software vendor (ISV) consolidation tool to process financials from subsidiaries all over the globe.  He regularly has to meet regulations that are particular to certain countries, with related currency conversions, including International Financial Reporting Standards to Generally Accepted Accounting Principles (IFRS to GAAP) adjustments – and it is only possible because of a powerful consolidations solution.  Some consolidations tools also allow you to perform sub-ledger reporting, sort out consolidations that include companies with different year ends, and are part of a fully integrated Business Intelligence (BI) suite of tools, including dashboards, budgeting, forecasting, modeling, ad-hoc reporting, and data warehousing.  You will want to evaluate both your specific and bigger picture needs from a consolidations tool before you invest in one of today’s third party solutions.

As a foundation, you will want to consider whether it is important for your team to run live from SAP B1 for real-time analytics or if you want to query data from an online analytical processing (OLAP) cube or a data warehouse for a higher performance experience.  If you are working with fewer companies to consolidate and reconcile, with simpler or no currency conversions required, or if you are not worried about slowing down the SAP B1 server with simultaneous and/or substantial data queries, then integrating live from SAP B1 would deliver a valuable real-time analysis.  If you aren’t expecting to grab data from other sources, and do not have eliminations or additional adjustments to perform beyond what SAP B1 offers, you could benefit from relying on SAP B1 exclusively.  On the other hand, there are plenty of BI data stores that host consolidations with the stability that provides a higher performance when loading General Ledger (GL) data from B1.

Getting your data from SAP B1 or other data sources into an OLAP cube or a data warehouse simply requires you to push a button or to schedule routine replications.  Data will duplicate from B1 to a data store, and the consolidation can be completed at a high performance level because of the streamlined and organized structure that a data store offers, compared to an intricate accounting system like B1.  If you regularly need to perform more difficult currency conversions, are skeptical about the potential sluggishness of B1, or have substantial data to aggregate, you will probably require a data store.  You should think about which features and functionalities are going to best help you meet your goals.

Let’s discuss intercompany eliminations first.  From time to time, one company will buy or sell supplies or merchandise to another company under the parent company umbrella, which cancels out the items in a consolidated financial statement, in terms of expenses or revenue for either subsidiary.  Intercompany eliminations remove the transaction, so they do not double-count items in the consolidated P&L or the balance sheet, but instead show as reallocation of resources within the parent company, which can be performed within a BI data store or SAP B1.  Some BI solutions provide fully customizable Excel forms that can be utilized to manually (and simply) input certain elimination transactions.

Other important functions include consolidation adjustments and currency conversions.  In terms of consolidation adjustments, if you need to correct subsidiary data, adjusting a consolidation, or performing IFRS to GAAP adjustments to meet domestic and global accounting regulations, modern solutions are built to aid you in these processes, depending on how you submit statutory reports.  Currency conversions allow accounting teams to consolidate international parent companies’ transactional data into one set of reports with a single currency.  And there are more features to consider.

Reconciliation, allocations, and modeling organizational changes are some additional elements to financial consolidations that you should know.  If you rely on a data store, lots of companies prefer to let the parent company or subsidiary staff reconcile the input information to ensure that everything is accurate, which can be performed within SAP B1, the BI front-end solution, or in a BI data store.  As for allocations, some corporations allocate expenses or revenue to particular divisions or even a specific subsidiary.  You can perform these allocations in B1, during replications, or you can sometimes craft allocation reports of different complexities within a data store.  Finally, if you would like to see what acquisitions, internal reorganizations, or divestitures would look like for the financial health of the parent company, some BI data stores enable you to do what-if modeling of potential roll-ups by duplicating and changing an infinite amount of company trees or hierarchies.  Utilizing this functionality, you can forecast how specific moves could affect a subsidiary’s portfolio.

Financial consolidations can be difficult and complex at times, so exploring your options for features and functionalities is imperative if you would like to select the right consolidations tool for your business needs.  Solver, Inc. is happy to answer questions and generally review BI360’s easy-to-use, Excel-powered consolidation tool for SAP Business One with both real-time or data warehouse integrated analysis, comprehensive reporting and collaboration as a way to accelerate company performance management.

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