4 minute read
Real Ways to Streamline Your Financial Consolidation
The pandemic has increased the workload for finance teams in sport – managing the furlough situation as well as meeting the demands for constant reforecasting and scenario planning. However, the usual financial statements must still be produced on top of all this extra essential work.
Many businesses – whether in sport or any other industry – struggle to generate timely, accurate financial statements. Pressure from investors and other stakeholders to produce them quickly can be at odds with the finance team’s responsibility to ensure they’re correct. Managing the balance between these two competing priorities is difficult enough when you’re only dealing with one entity. It’s exponentially harder if you need to consolidate results from several different business units to produce a single set of reports and are juggling the added demands created by the volatile nature of financial planning as we emerge from lockdown.
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Challenges of complexity
What makes consolidation so challenging is that the data required for reporting is not always in one place. As businesses expand, they may invest in or acquire other companies, or diversify their offering to create different income streams – there can be ticket sales, hospitality, retail (and online sales), other events and more.
While diversifying and creating new income streams is welcome, particularly just now, it’s not always so great for the corporate finance team, however, in terms of workload and time pressure. Dependent on the systems used and how they are organised, to prepare consolidated financial statements, data may first have to be exported from each system and converted into a standard format. It then needs to be normalised to
ensure like is combined with like. Only then does the consolidation reporting process really begin.
As any finance professional reading this will know only too well, what follows can be a long, involved process of reviewing account details, allocating overhead costs, identifying and eliminating intercompany transactions, adjusting balances and completing other tasks. Much of this work may have to be done manually, using spreadsheets, so the risk of errors is significant, especially with so much pressure to work quickly.
Addressing the pain points
Automating data conversion can help address some of these issues, and companies with highly skilled finance and IT staff often develop complex extract, transform and load (ETL) processes for just this reason. This can be a long, involved process, however and – like other forms of integration – software upgrades or other system changes can disrupt the entire process, resulting in costly maintenance. Few busy finance teams in sport have the time or the resources for this.
“A system like NetSuite gives mutlicost centre sports businesses fully automated, real-time financial consolidation, resulting in a faster close process and more timely reporting." Consolidation made easy
Fortunately, there is another option for consolidated accounting that is both faster and easier to manage, and that is the right ERP / financial software. One
of the solutions proven most suitable to the flexibility sports and venue-based businesses require is Oracle NetSuite, and as Eureka Solutions customers including Ageas Bowl, St Andrews Links Trust, Powerleague Fives and Luton Town FC, are all now benefitting from the streamlining NetSuite brings them – and NetSuite internationally is used by numerous other football, rugby, cricket, NFL, NBA and other sport teams – we’ll use that an example here.
NetSuite automates the consolidation processes, eliminating the challenges of working with multiple systems by providing a cloud-based financial management solution specifically designed for multi-entity businesses. The unified platform stores data centrally, so instead of dealing with multiple sources and formats, a club’s finance team can work with a single set of data.
If subsidiaries are involved, they are able to manage their financials in the way that works best for them, with their own chart of accounts, journal entries and workflows. They can use different currencies and accounting rules than the parent organisation, and even have different reporting periods.
When a transaction is posted to a subsidiary account, it’s also posted to the corresponding account at the headquarters level. NetSuite automatically converts the account code used by the subsidiary to the correct parent account code. Everything happens in real time, ensuring accurate, consolidated financial data is available whenever it’s needed.
To maintain data integrity, accounting staff at the cost centre or subsidiary level only have access to the records for their part of the organisation. The corporate finance team have different requirements, however, so permission-based rules give them access to any information that’s appropriate for their role, from summarised results to individual transactions at the subsidiary level.
The ability to link one cost centre’s or subsidiary’s sales order to another’s purchase request simplifies the reconciliation process. When an intercompany order is invoiced, NetSuite identifies the transaction and automatically posts an elimination journal entry. This not only saves time by ensuring that accounting rules and legal requirements are being adhered to, it reduces the risk of costly fines or other penalties.
The time to be strategic
A system like NetSuite gives multi-cost centre sports businesses fully automated, real-time financial consolidation, resulting in a faster close process and more timely reporting. As the role of the finance leader in sport develops to become more strategic – a change that has been accelerated with the pandemic – this streamlining can be the difference between meeting deadlines and not. U Eureka Solutions is a 5-star NetSuite Partner and were named Outstanding NetSuite Partner of the Year for the UK and Ireland earlier this year. They are also a leading Sage 200 Partner with one of the most technically proficient business solutions teams in the country, so are ideally placed to talk through your challenges with real sport related examples.
