How NetSuite ERP Streamlines Financial Consolidation for Multi-Entity Businesses

How NetSuite ERP Streamlines Financial Consolidation for Multi-Entity Businesses

Managing the financials of a multi-entity business can be an enormous challenge. With subsidiaries operating in different geographies, under varied regulatory requirements, and with multiple currencies and accounting standards, consolidating all that disparate financial data into a single set of reports is no easy feat. 

Attempting to handle multi-entity financial consolidation using disconnected systems and cumbersome manual processes is not only time-consuming and error-prone, but provides limited visibility into the overall business. Finance teams end up wasting countless hours on low-value data entry and troubleshooting tasks rather than proactively analyzing the business and providing strategic guidance.

This is where NetSuite ERP truly shines. As a unified, cloud-based platform built from the ground up to address the complex needs of multi-entity organizations, NetSuite provides a robust set of tools and capabilities to streamline and automate the financial consolidation process. Let’s take a deep dive into how NetSuite makes this possible.

Centralized Financial Data Repository

The first critical step to achieving efficient multi-entity financial consolidation is ensuring all financial data resides in a single, centralized location. NetSuite serves as this unified source of truth, bringing together financial data from all business units and subsidiaries in real-time.

With NetSuite, each individual entity can manage its own financials autonomously within the same overarching system, following standardized processes and workflows. Transactional data from sub-ledgers such as accounts receivable, accounts payable, and inventory management automatically flows through to the general ledger. This eliminates the need for cumbersome manual data exports and uploads between disparate systems.

Having all entities operating on a single platform provides instant, real-time visibility into subsidiary financial data. Accounting teams at corporate headquarters gain the ability to drill down into individual entity details at any time without having to wait for month-end or quarter-end reporting cycles.

This financial data centralization lays the essential groundwork for harnessing NetSuite’s powerful multi-entity accounting capabilities. With all business units working off the same playbook and a single unified dataset, the financial consolidation process becomes significantly streamlined.

Automated Inter-Company Accounting

Inter-company transactions, such as one subsidiary selling goods or services to another, often create some of the biggest headaches and challenges in the realm of multi-entity accounting. Keeping these inter-company sales, eliminations and adjustments straight using manual processes across multiple entities quickly turns into a convoluted accounting nightmare.

NetSuite tackles this common pain point head-on by automating the inter-company accounting process end-to-end. The system automatically creates the appropriate due-to and due-from journal entries in each respective entity’s books whenever an inter-company sale takes place. It intelligently rolls up all inter-company activity and can generate the necessary elimination journal entries with the click of a button.

This automation takes the legwork and potential for human error out of the critical task of reconciling inter-company accounts. Accounting professionals can easily verify that inter-company transactions have been booked consistently and accurately on both sides of the equation. The financial consolidation process becomes significantly cleaner and more efficient since NetSuite automates the elimination of inter-company holdings, minority interests, and other complex consolidation entries.

Multi-Book Accounting & Reporting

Another major challenge companies face when it comes to multi-entity financial consolidation is dealing with differing accounting standards across subsidiaries located in various geographies. For example, a company may have one subsidiary that is required to report its financials using US GAAP while another must adhere to IFRS standards. Keeping multiple sets of books to support these varied reporting requirements can quickly become a convoluted mess.

NetSuite solves this dilemma through its robust multi-book accounting capabilities. Each subsidiary can easily maintain its own localized book of record in adherence with the specific accounting standards and practices required for its country of operation. Simultaneously, the parent company can maintain a separate, parallel corporate book of record for consolidation purposes, typically in alignment with the accounting standards used at the corporate level.

Transactions only need to be recorded a single time but are seamlessly represented in multiple sets of books simultaneously behind the scenes. Any differences between the accounting standards are automatically handled through a set of pre-defined, customizable rules. For example, NetSuite can be configured to automatically recognize revenue over time in one set of books while keeping that same income as deferred revenue in another set of books based on the different reporting requirements.

This sophisticated multi-book capability makes it straightforward to maintain compliance across multiple jurisdictions without negatively impacting the efficiency and accuracy of the financial consolidation process. Consolidated financial reports are derived from the controlled corporate book of record while individual subsidiaries are still able to maintain their own localized view that meets the necessary in-country requirements. It truly provides multi-entity organizations with the best of both worlds in terms of compliance and reporting efficiency.

Comprehensive Currency Management

With subsidiaries operating across different geographies around the globe, multi-entity businesses inevitably have to deal with transactions and financial reporting involving multiple currencies. Converting these transactions to the functional reporting currency and appropriately managing volatile exchange rates introduces significant complexity to the consolidation process.

NetSuite dramatically reduces the pain and complexity associated with multi-currency accounting. The system automatically records every single transaction in both the localized transactional currency as well as the designated functional reporting currency. It systematically applies the proper exchange rate to each transaction based on the specific date the transaction occurred, following a clear set of rules configured by the accounting team.

This means manual currency conversions and cumbersome spreadsheet-based calculations to derive the consolidated financials are completely eliminated. NetSuite provides dynamic, real-time visibility into the company’s true economic position in the functional reporting currency at any given point in time.

When the time comes to formally consolidate the books, NetSuite seamlessly rolls up balances from all subsidiaries into the parent entity, automatically applying the current exchange rates as of the specified consolidation date. This roll-up can be done in multiple reporting currencies simultaneously if needed, based on the company’s specific reporting requirements. The system automatically calculates all currency conversion gains and losses and flows those entries through to the appropriate accounts.

With NetSuite’s comprehensive multi-currency capabilities, all the complexities and headaches associated with currency conversion and revaluation are intelligently handled behind the scenes without the need for manual intervention. The consolidated financial reports accurately reflect the true economic impact of currency fluctuations without requiring accounting teams to invest hours upon hours of manual effort to make it happen.

Flexible Consolidation Hierarchies & Mappings

Bringing together disparate financial data from multiple entities into a single set of consolidated reports requires carefully mapping accounts across entities and establishing rollup structures to place subsidiary accounts into the appropriate parent buckets. Configuring these consolidation hierarchies and managing the underlying mappings as the business evolves and changes over time often introduces a huge burden on accounting teams.

NetSuite dramatically simplifies the process of building out consolidation structures through its powerful hierarchy and mapping capabilities. Accounting teams can easily define the required consolidation account mappings through an intuitive point-and-click interface, establishing a clear set of parent-child relationships between each subsidiary and the parent company while assigning the appropriate rollup accounts to aggregate transactional data as needed. NetSuite’s flexible consolidation hierarchies support mapping definitions across multiple levels, empowering accounting teams to structure things in a way that best supports the company’s specific reporting needs.

These mapping structures are highly flexible and can easily evolve as the company’s needs change over time. Adding new entities to the business or modifying the relationships between subsidiaries to support a re-organization is a straightforward endeavour. NetSuite maintains all the underlying data linkages, making the consolidated reporting process a highly automated one even as things change.

Real-Time Consolidated Reporting & Analytics

With this massively useful multi-entity accounting foundation in place, NetSuite empowers accounting teams to crank out consolidated financial reports in a fraction of the time it would take using legacy approaches. Accounting leaders gain access to visually rich, interactive dashboards that provide an always up-to-date view into critical consolidated KPIs and financial metrics. Comprehensive on-demand consolidated financial reports can be generated with just a few clicks whenever they are needed.

NetSuite’s approach to consolidated reporting is truly multi-dimensional in nature. Finance professionals can easily analyze consolidated financial data from any angle that matters to the business—slicing and dicing by entity, subsidiary, geography, product line, customer segment, or any other dimension. Users have the ability to drill down into the underlying details behind any reported figure, all the way down to individual transactions.

Beyond the basics, NetSuite delivers powerful capabilities to handle the most sophisticated of consolidated reporting needs for the modern multi-entity enterprise. Whether it’s multi-currency expense allocations, automated minority interest calculations, or any other complex consolidation requirement, NetSuite has it covered.

Those struggling to efficiently generate accurate consolidated reports no longer have to trade off speed and accuracy. NetSuite’s hierarchies, rollups, eliminations, currency conversions, and real-time data come together to produce consolidation reports that are complete and error-free without consuming days of effort.

Game-Changing One-Click Consolidation

Perhaps the most transformative multi-entity accounting capability NetSuite brings to the table is its unparalleled support for one-click consolidation. With a single click of a button, accounting teams can easily consolidate all financial data across all entities spanning even the most complex of global organizational structures.

Under the hood, NetSuite intelligently pulls in all required data from each individual entity, translates currencies as needed, automatically eliminates all inter-company transactions based on pre-defined rules, and systematically rolls up and aggregates all financial data based on the established consolidation mapping structures. Any required top-side adjustments are automatically booked to the proper entities without the need for manual journal entries.

This one-click consolidation capability single-handedly saves accounting teams countless days or weeks of manual work each and every financial close period. More importantly, it instills confidence that the resulting consolidated financial statements are accurate, complete, and fully consistent from top to bottom. With one-click consolidation, finance teams supporting multi-entity organizations are able to keep pace and remain nimble even as their company grows and becomes more complex over time.

Enhanced Financial Controls & Governance 

With its unmatched multi-entity accounting automation and streamlined financial consolidation, NetSuite delivers significant improvements when it comes to maintaining proper financial controls and governance across entities. NetSuite provides granular, role-based access permissions, empowering companies to implement the proper segregation of duties and fine-tune user access based on the specific requirements of each individual’s role. Controllers and CFOs at corporate headquarters are able to retain full administrative access while systematically limiting what users at individual subsidiaries are able to access and modify.

This robust permissions structure is further bolstered by NetSuite’s comprehensive audit log, which maintains a detailed record of every data change and approval action across all entities. This provides critical transparency and a full traceable history of all financial activities across the global business.

To further enhance financial governance, NetSuite delivers a flexible workflow engine that allows companies to define and automate any number of financial approval workflows. This ensures that all purchases, payments, and journal entries systematically flow through the proper review and authorization checkpoints across all subsidiaries prior to posting to the general ledger.

From a compliance and audit perspective, having all entities operating on a single financial management system dramatically simplifies the process of ensuring each subsidiary has the proper financial controls and governance in place. NetSuite’s centralizeddata model provides 360-degree visibility into all transactions across all entities while enforcing consistent financial processes and policies—all of which greatly reduces the company’s financial risk profile.

Real-World Multi-Entity Success Stories

A rapidly growing number of high-growth, multi-entity enterprises are relying on NetSuite to streamline and automate their complex, global accounting operations. Here are just a few examples of how NetSuite is empowering diverse companies to take their financial management to the next level: 

– Movember, the leading global men’s health charity, leverages NetSuite to gain a real-time, consolidated view of financial operations spanning 23 countries. By migrating to NetSuite, Movember reduced its monthly financial close process from two weeks down to just five business days, saving roughly 20 hours per team member each month.

– Lindblad Expeditions, a global leader in adventure cruising, relies on NetSuite to manage the complexities of its multi-entity, multi-currency business in a single unified platform. NetSuite’s powerful automation allows Lindblad to complete its monthly global close cycle in just 12 days while providing real-time visibility across its subsidiaries.

– Mons Royale, a fast-growing, New Zealand-based outdoor apparel company, uses NetSuite OneWorld to streamline financial management across seven international subsidiaries. With NetSuite, Mons Royale consolidated six transactional currencies down to a single functional reporting currency while automating its global consolidation process, resulting in a 40% increase in inventory turnover.

For these innovative companies and so many others, NetSuite has been a true game-changer when it comes to taking financial management to the next level.

NetSuite: The Clear Path Forward for Multi-Entity Enterprises

In today’s fast-paced, global business environment, multi-entity organizations simply can’t afford to rely on a hairball of disparate, legacy financial management systems and error-prone manual processes to manage the financial close and consolidation process. Maintaining this status quo is simply not tenable or sustainable for those with aggressive growth aspirations.

NetSuite’s comprehensive multi-entity accounting capabilities represent a clear path forward for organizations looking to streamline and automate these complex financial processes. By bringing together all entities onto a single, unified cloud platform and automating all the core components of multi-entity accounting, NetSuite empowers accounting teams to generate timely, accurate consolidated financial reports with a fraction of the traditional manual effort.

The benefits of NetSuite for multi-entity financial management extend far beyond simply streamlining the consolidation process. NetSuite delivers the necessary foundation to provide finance teams with continuous, real-time visibility into financial performance across all entities. Armed with these insights, CFOs and controllers can be far more proactive and strategic in how they guide the trajectory of the overall business.

If your multi-entity company is currently being held back by disjointed financial systems and cumbersome manual accounting processes, it’s time to take a serious look at NetSuite. This unified, cloud-based financial management platform is purpose-built from the ground up to address the complex and evolving needs of multi-entity, multi-subsidiary businesses.

From streamlining and automating inter-company accounting to handling multi-currency transactions to delivering game-changing one-click consolidation, NetSuite provides everything needed to master multi-entity accounting and fuel new growth. It’s no surprise that NetSuite is rapidly becoming the de facto standard for running the financials of leading multi-entity businesses across the globe.

Don’t let manual processes and outdated systems constrain your company’s growth and scalability. Now is the time to discover how NetSuite can empower your accounting team to take financial operations to the next level.