In this article, modern financial
consolidation solutions for Microsoft Dynamics AX customers will take center
stage, with an in-depth look at primary features and functionalities.By ShriShail Technologies Pvt.Ltd.
Financial Consolidation Tools for Microsoft Dynamics AX-
There is a population of Microsoft Dynamics AX users out there who are responsible for parent company financials consolidations of multiple subsidiaries. Bringing together organizationaldata from a number of legal business units, especially if there are different currencies involved, can be challenging without a powerful financial reporting writing and consolidations tool. As data grows in size and importance to decision-making for roadmap planning, executives are looking for a business user friendly solution for the routine task of consolidating information into a singular set of financial reports. If you are responsible for aggregating subsidiary data with Dynamics AX, this article will discuss the options you have that will bring together ease of use, modernity, and power.
Let’s start with the
definition. Financial consolidation refers to combining and reconciling
transactional and operational data into unified financial reports for the
parent company. These reports combine subsidiary data that make up the
parent company’s overall financial health in a straightforward statement.
Consolidations often involve eliminations of inter-company transactions,
currency conversions if diverse currencies are involved, and any added
adjustments that have to be performed manually in Dynamics AX or directly
within the financial consolidation solution in order to achieve a complete
picture of the parent company. This is a great time to look at today’s
consolidation software for multiple reasons, but two might stand out for a lot
of companies.
Two basic reasons to shop for an
automated, modern consolidation tool involve age. Some companies are
ready to get rid of older consolidation software that is too simple for modern
business needs, like FRx, Management Reporter or Prophix. Others would
like to retire their older tools are that are too complex for business end
users to manage, like Hyperion or Cognos. There are also Dynamics AX
customers that implemented the native consolidation module that came with AX2012 – and simply found it to be too cumbersome or not able to meet their
needs.
Recently, I spoke with a controller
who relies on Dynamics AX to oversee multiple subsidiaries around the globe for
a multi-national parent corporation. This controller is charged with
meeting domestic and global standards, in addition to currency conversions,
like the International Financial Reporting Standards (IFRS) to Generally
Accepted Accounting Principles adjustments (GAAP), commonly referred to as IFRS
to GAAP. Some consolidation tools provide flexible sub-ledger analyses
and are part of a comprehensive Business Intelligence (BI) suite, completely
integrated with other solutions like ad-hoc reporting, budgeting, forecasting, modeling, data visualizations, and BI data storage. Let’s drill down into what
financial consolidations look like for Dynamics AX customers, including what
you should know when considering solutions to best meet your company needs.
This blog has covered data integration methods before,
but it is your call whether you pull data live from AX with a potentially
slower real-time analysis, depending how many users are querying data from the
AX server – OR you can rely on the higher performance integration that a BI
data store offers, but it will involve regular replication of your data to an
online analytical processing (OLAP) cube or a data warehouse.
Companies with less subsidiaries to
consolidate, with little or no currency conversions necessary, and/or without
the concern of a sluggish AX server due to substantial and sometimes
simultaneous data queries would probably do very well with a live
integration. Furthermore, if you don’t plan to bring in other data
sources, don’t need to post elimination entries or other adjustments beyond what
AX offers, you can just stick with Dynamics. On the other hand, plenty of
OLAP cubes and data warehouses host consolidations by bringing GL information
directly from AX, so this is a helpful alternative for organizations with
different demands. Sometimes, subsidiaries running other ERP systems are
acquired and even if there is a future plan to move them over to AX, they need
to be consolidated from the time they are acquired, and this is possible with
the most specialized consolidation solutions.
Replicating your data to an OLAP cube
or a commercial data warehouse is easy with scheduled, regular refreshes, or
you can manually push a button. AX data will replicate, typically with
Microsoft SQL Server Integration Services (SSIS), to the BI data store, and consolidations
can be performed at a higher performance because of the stability of an OLAP
cube or a data warehouse. If you have more complex currency conversions
to perform, have concerns about the sluggishness of the AX server with your
regular data queries, and/or if the amount of data you need to consolidate is
substantial, a BI data store will serve you the best. You’ll additionally
want to evaluate which of today’s consolidation functionalities are requisite
for your particular business demands.
Intercompany
eliminations. Here and there, one
subsidiary might buy or sell goods or services to another subsidiary, which
means both line items cancel each other out for both entities.
Intercompany eliminations cancel out and remove these exchanges from the P&L
and balance sheet, and this can be performed within Dynamics AX or a BI data
store, via the tool you implement. Some BI software even come equipped
with fully configurable Excel or web input forms that you can use to manually
adjust or eliminate transactions in business user friendly ways.
Currency
conversions and consolidation adjustments.
Currency conversion enables international companies to consolidate their
transactional data into unified financial statements in a single currency
through this function. Consolidation adjustments, including IFRS to GAAP,
help professionals meet national and international accounting rules, update
inventory, or temporarily correct incomplete subsidiary information, amongst
others. These are simple functions that assist you when completing
statutory statements. And there are more user-driven elements.
Allocations, reconciliations, and modeling organizational
changes. Some organizations opt to allocate particular expenses
or revenues to a department, a division, and/or a specific subsidiary.
You can perform these allocations within AX, before loading data to a BI
solutions, or within some data warehouses and OLAP cubes, you can design
allocation processes of various complexity levels. Should you decide that
the BI data store option is best for your needs, plenty of organizations prefer
to have subsidiary or parent company staff reconcile the information to ensure
accuracy, which can be completed with AX, a BI front-end software, or in the BI
data store. And finally, some data sources allow you to perform some
modelling by replicating and alternating however many company trees or
hierarchies necessary to see the impact of acquisitions, divestments, and/or
reorganizations. You can visualize the effect of particular changes on
the parent company portfolio with this functionality.
There are plenty of aspects to
consider when shopping around, due to the complexity of consolidations.
Solver, Inc. is happy to answer questions and generally review BI360’s
easy-to-use, Excel-powered consolidation tool for Microsoft Dynamics AX with
both real-time or data warehouse integrated analysis, comprehensive reporting
and collaboration as a way to accelerate company performance management.
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