What’s Better? Financial Consolidation Software versus Spreadsheets

Despite new or changing regulatory requirements, increasing business complexity, shorter deadlines, and smaller teams, the need to produce accurate, reliable reports that comply with new standards and regulations still stands.

Are you currently managing your financial consolidation in a spreadsheet? For faster, more efficient financial consolidation, there’s a better way.

What is financial consolidation software?

Financial consolidation software automates the process for creating consolidated financial statements and reports.

With financial consolidation software, you can automate:

• Multi-currency translations, sub consolidation and scenario-based consolidation
• Complex ownership structures
• Data import and validation before and after consolidation
• Auditor reporting
• Localized and regulatory reporting formats such as GAAP and IFRS
• Controls from your entity submissions
• Intercompany eliminations and adjustments
• The monitoring of workflows, status, validation results, and exception reports

This is a recipe for fast, efficient financial consolidation. And the biggest benefit of all—financial consolidation software helps you get ahead of the game. You won’t have to wait until the 12th month to start – everything you need to start preparing is there in month 10 or 11, so you can see the data and make decisions that impact your business trajectory.

Why use financial consolidation software?

Financial consolidation software provides efficiency and accuracy for controllers and accounting leaders. Financial consolidation and reporting software removes complexity by automating key processes, like multi-currency translations and sub-consolidations and verifying multi-GAAP and IFRS compliance.

And a faster close and reporting process offers you a competitive advantage in the market, so you can respond more quickly to the needs of your business and report financial results more accurately and efficiently to various stakeholders, such as shareholders, auditors, and regulators.

Consolidation software provides accurate information for verification, like:

• Account mapping for new or changed accounts
• Transaction level debit and credit balancing
• Account reconciliation and transaction matching
• Intercompany eliminations
• A validation report at the consolidation level
• Reconciliation of group and 3rd party reserves (also called statement of changes in equity)
• Full audit trail by company, journal, or flow

Now that we’ve established what financial consolidation software is and why you should use it, let’s look at the differences between financial consolidation software and spreadsheets.   

Difference between financial consolidation software and spreadsheets

Consolidation is an important process. So, what are the benefits of consolidation software?

Benefits of financial consolidation software

Financial consolidation software offers better data integrity, quality reporting, and faster information with less effort and more strategic decisions.

Let’s look at the benefits of financial consolidation software in more detail.

Data integrity

When you bring your consolidation data into financial consolidation software, you have better quality data and a reliable source of information from one system. Bringing all of your data together into the consolidation software also reduces manual effort for consolidation and reporting. Unnecessary entries are replaced by one single entry and more accurate data.

Single source of truth

Your financial consolidations are based on the same data and the same methodology when you use a consolidation software solution. This means that your financial indicators are consistent, and the information is available in one place to adjust and create financial statements. This means less validation, less intercompany transactions, and all of your information in a single source of truth.

Streamlined collaboration and faster close

Financial consolidation software simplifies the process for adjusting internal information and gathering teams. The result is a more unified team that ensures annual tasks are balanced and activity peaks can be avoided to make time for value-add work that drives your business performance.

Decreased audit time

Financial consolidation software streamlines report generation, adheres to compliance standards, and has built-in data governance that instills trust by auditors compared to that of offline spreadsheets which are prone to errors and human-led data integrity issues. Collaboration and workflow management features offer efficient communication among auditors and stakeholders. Overall, it enables auditors to focus on higher-value tasks, leading to a more efficient and effective audit process with reduced time requirements.

It’s not consolidation software or spreadsheets, they can be better together

Finance leaders use spreadsheets every day for different requirements or tasks, but a spreadsheet isn’t a significant replacement for a consolidation or reporting solution. And it’s not a case of software or spreadsheets. Spreadsheets still have a time and place but shouldn’t be the single source of truth for financial consolidations.

Financial consolidation software will change the way you do consolidations and reporting. Automating controls, reconciliation, currency conversions, and eliminations and adjustments will give you back the time for pulling insights from your data that add strategic value to your business.

Want to learn more about using a financial performance platform for financial consolidations, like Prophix, and what that’s like versus Excel? Learn more here.