If any industry were ever ready to step into the future, it is the Hospitality industry.
The financial consolidation process has long been an onerous drudgery of information assembly, validation, and reporting. The consolidation process is measured in mind-numbing months for many Hospitality accounting teams.
We've seen the difference only a few months can make. Today's business environment drives financial executives to shift their financial management solution to a system of intelligence rather than a system of record.
With consolidated financial statements desired and necessary for stakeholder and regulatory reporting needs, what are the challenges of aggregating the balances and transactional activity from the business units?
Multi-location and multi-entity organizations face many complexities such as decentralized payables, inter-entity transactions, multiple currencies, global consolidations, and more. This complexity causes challenges including:
- Maintaining and juggling numerous systems and processes
- Limited control of workflows
- Inefficient reporting through Excel, subject to errors
- Lack of visibility across entities
- Inability to scale and grow business
In a recent study by Financial Executives Research Foundation and Robert Half, only 22% of US companies use software to reconcile accounts, leaving a substantial number of businesses still relying on manual processes. Approaches to financial consolidation have advanced significantly in recent years. There is a better way to design and architect your consolidation process. But what does that look like?
The Next Generation of Consolidation:
The better way comes from leveraging leading cloud financial management systems. The characteristics of this type of configuration include four critical differences between other traditional, on-premise solutions.
1. Scalable Accounting Foundation Enables Automation
Companies that successfully navigated the past year often added virtual entities to their corporate structures. How did your accounting system adapt?
Working from home with staff in remote locations emphasized the importance of Cloud financial management systems. Security, touchless access to documents, and the ability to exchange documents among sites means business as usual can continue.
2. Being Nimble
The finance function must be nimble enough to keep up with the corporate strategy by establishing books and records that work together. A turnkey solution to get systems and processes up and running generates valuable information to support the myriad of decisions that happen in rapid succession.
Cloud financial management systems are ideal for pivoting on a dime. The chart of accounts is easily adapted to localize reporting, and to maximize revenues and profitability.
Because one ERP system forms the backbone of the organization's systems and processes, centralization of core finance functions, such as accounts receivable or accounts payable, represents an efficient opportunity to leverage one database of customers and vendors across the consolidated entity.
3. Managing the Consolidation Process
A cloud financial management system allows for consolidated information to be fully integrated at any point in time. All data of the subsidiaries are at the corporate accounting staff's fingertips, eliminating the need for copious emails and other forms of inquiry back and forth. The corporate accounting staff now has drill down transparency into the business unit's data to enhance their understanding of the financials as the results roll-up.
Best-in-class cloud financial management systems have collaboration and documentation tools built-in. Chat functions and the ability to save electronic notes enable staff to communicate easily with those working in the business units. Conversations can be directly documented and attached to the relevant accounts and reports putting supporting documentation in a permanent archive. No more cumbersome binders or file directories full of spreadsheet backups littering many servers!
Leading cloud financial management systems centralize the setup and management of inter-entity relationships making inter-corporate transactions between entities more transparent. Data is contained inside a single system, and elimination and consolidation entries can be automatically reconciled across multiple currencies. This mitigates the risk of missed postings of inter-company transactions on one side or the other.
4. Better Insights
Traditional consolidation processes often inhibit transparency, limit insight, and create a time lag between when business activities happen and when they get reported. A cloud financial management system, like Sage Intacct®, can help resolve these issues.
If you are operating a global business, foreign currency translation of transactions, balances, and operations is a common point of pain during the consolidation process. The ability to choose the reporting currency and pivot the dashboard view helps isolate foreign currency's impact on overall financial results.
Addressing the challenges of consolidation using a cloud financial management system can propel the finance function forward. The benefits of automating the consolidation process can be summarized as:
- Accelerated initiation and integration of new entities in any global jurisdiction with the corporate consolidation function
- Improved control and opportunities to centralize core processing functions
- Drill down insights from the consolidated perspective to the operating entity
- Greater coordination throughout the close process between those working in the business units and those in the corporate accounting group
- Real-time consolidation at any time without the need to wait for period ends
Never in history has the finance function been so data-rich yet time-poor. By leveraging a truly integrated cloud financial management system, the consolidation process becomes automated. More importantly, consolidation automation increases the quality of and trust in the close process. Senior finance executives can circulate timely information with confidence. Achieving such an accomplishment enhances the credibility of the finance function and opens the door to opportunities to add incremental value. Accounting staff performs higher valued work and spends less time with the manual assembly and reconciliation. As a senior financial executive in a Hospitality organization, ask yourself one question: Is my consolidation process a source of value creation or a barrier inhibiting more outstanding strategic contributions?
To learn more about how Sage Intacct can help you achieve your mission more efficiently, fill out the following information and DeRosa Mangold will be in touch.
DeRosa Mangold Consulting is a trusted team dedicated to partnering with you in a logical fashion to help you make the best decision for your company’s future growth. On average throughout multiple industries, startups to mid-sized organizations begin to see a return on investment in about 6 months. We will personally sit down with you and crunch the numbers, so you know when to expect your own ROI. We won’t tell anything but the truth so that you can make the best decision for your organization.
If you would like to take a quick look at the software, you can take part in one of the daily Coffee Break Demos we offer.