Multicompany financial consolidation challenges, such as navigating complex regulations and intercompany transactions, can overwhelm businesses with subsidiaries.
For companies operating across multiple regions, the process of combining financial data into a single, accurate report is often riddled with obstacles like differing accounting standards, currency conversions, and manual eliminations of intercompany transactions.
These challenges not only slow down the financial close process but also increase the risk of errors and compliance issues.
Below we take a look at some of the key challenges companies with subsidiaries face:
Key Challenges in Multicompany Financial Consolidation
Regulatory Compliance Across Multiple Jurisdictions
Every country has its own financial reporting standards, tax regulations, and compliance requirements. Companies operating across different regions must ensure that each subsidiary adheres to local regulations while also consolidating reports under a single global framework, such as IFRS or GAAP. Managing these complexities manually can increase the risk of non-compliance, penalties, and delays in financial reporting.
Currency Exchange and Fluctuations
Multinational companies deal with multiple currencies, making financial consolidation more complex. Exchange rate fluctuations can impact financial statements, and reconciling transactions across different currencies without an automated system can lead to discrepancies.
Intercompany Transactions and Eliminations
Intercompany transactions between subsidiaries must be accurately recorded and eliminated during consolidation to avoid double counting. Manual reconciliation is time-consuming and prone to errors, especially when dealing with high transaction volumes across multiple entities.
Data Silos and Disparate Systems
Many companies use different accounting software for each subsidiary, leading to data silos and inconsistencies in financial reporting. Without an integrated system, finance teams must manually extract, standardise, and consolidate data, which slows down the financial close process.
Lack of Real-Time Visibility
Without centralised reporting, finance leaders lack real-time insights into the financial health of the entire organisation. This makes it difficult to make strategic decisions, identify risks, and optimise financial performance across subsidiaries.
How Oracle NetSuite Solves These Challenges
NetSuite’s multi-company financial consolidation feature simplifies these complexities by providing a unified platform to manage all your subsidiaries. Here’s how:
Automated Compliance & Reporting
NetSuite supports multiple accounting standards, automating compliance with IFRS, GAAP, and local regulations.
Real-Time Currency Management
The system automatically handles currency conversions, exchange rate fluctuations, and financial consolidation in multiple currencies.
Seamless Intercompany Eliminations
NetSuite automates intercompany transaction tracking and eliminations, ensuring accurate consolidated financial statements.
Unified Financial Data
A single cloud-based platform eliminates data silos, providing real-time, consolidated financial reporting across all subsidiaries.
Faster Financial Close
Automation reduces manual tasks, allowing finance teams to close books faster and generate reports with greater accuracy.
In a Nutshell
For businesses with multiple subsidiaries, multicompany financial consolidation challenges can slow growth, increase compliance risks, and complicate financial reporting.
A robust cloud ERP like Oracle NetSuite simplifies consolidation by automating compliance, intercompany eliminations, and currency management—helping finance teams close books faster and make data-driven decisions.
