Financial consolidation is a critical aspect of financial management, as it involves combining financial data from different sources, such as subsidiaries or departments, to create a comprehensive picture of an organization’s financial position.
However, manually consolidating financial data can be time-consuming, error-prone, and resource-intensive. This is where financial consolidation solutions come into play.
In fact, according to a study by EY, companies that successfully implemented financial consolidation solutions saw a 43% improvement in their financial close process.
So, how can you choose the right financial consolidation solution for your business?
Consider the Cost and ROI of the Solution
When selecting a financial consolidation solution, it’s essential to weigh the cost against the potential return on investment. Choose a solution that provides clear benefits and a reasonable price point that can save your business time and money in the long run.
Other factors to consider include implementation time, support and training, and ongoing maintenance or subscription costs. The right solution can significantly impact decision-making within the organization, providing a clear and accurate view of financial data for informed business decisions.
Integration with existing financial systems is vital, as it automates the consolidation process, saves time, minimizes errors, and ensures accuracy. Robust reporting capabilities can also provide insights into financial performance, identifying areas of strength and weakness for data-driven decision-making.
To choose the best financial consolidation solution for your business, evaluate your needs and requirements, including data sources, frequency and timeline of consolidation, level of detail needed, and stakeholders. Research available options, consider your budget, and try and test different solutions to ensure they meet your requirements and expectations.
How to Choose the Right Financial Solution
A. Company size and complexity
It’s essential to select a solution that can handle the size and complexity of your business operations. Larger businesses typically generate a vast amount of financial data, and managing and consolidating it can be challenging. Therefore, it’s crucial to choose a solution that can accommodate large amounts of data and effectively consolidate it.
In contrast, smaller businesses with less complex financial data may require less robust solutions. Such businesses may opt for a simple solution that can meet their basic financial consolidation needs without incurring unnecessary expenses. By considering the size and complexity of your business, you can choose a financial consolidation solution that aligns with your needs and budget.
B. IT infrastructure
Choosing a financial consolidation solution that is compatible with your current IT infrastructure is essential to avoid any compatibility issues that may arise. It’s essential to understand the types of systems you currently have in place and whether the solution you are considering will integrate with them. This can include various software applications, databases, operating systems, and hardware. You must determine whether your IT infrastructure is compatible with the chosen solution to prevent any potential problems
C. Budget
When considering budget, it’s important to look beyond the initial costs of the solution and consider the long-term costs as well. Some solutions may have a higher upfront cost, but offer greater efficiency and cost savings in the long run. Additionally, it’s important to consider any ongoing maintenance and support costs associated with the solution. While cost should not be the only determining factor, it should be a key consideration in the decision-making process. Choosing a solution that fits within your budget and offers value for money can help ensure that you get the most out of your investment in the long run.
D. Future growth plans
As a business grows and evolves, its financial needs and requirements also change, it’s crucial to consider future growth plans
Corporate performance management (CPM) is a powerful tool that enables businesses to do just that by providing them with real-time insights into their financial and operational data.
According to a report by Gartner, the global market for CPM software is expected to grow to $5.6 billion by 2024, reflecting the growing demand for data-driven insights among businesses of all sizes and industries.
A system that may work well for your business now may not be adequate in the future. Therefore, it’s important to select a solution that can scale your business and accommodate future growth.
