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Tech Talk: The Insider’s Guide To Financial Consolidation

Adaptive Planning Adaptive Consolidation Corporate Performance Management and Business IntelligenceI love the title: “The Insiders Guide to Financial Consolidation.”  It’s like when a movie reviewer gives you the scoop, the “Hollywood Insider” view, as it were, of whether a movie is Oscar-worthy or Oscar-worthless.  For the cinematically inclined, this is helpful information, because you want to know what you’re in for before investing time and money in a viewing.  Likewise, you want to know what you can expect from Adaptive Consolidation.

In order to do that, let’s jump in the Way-Back Machine for a moment…

One of the many great ideas we heard through our product feedback program was to create a solution that simplifies the inherent complexity of financial consolidation.  With this feedback in mind, we created Adaptive Consolidation in 2013 as the newest addition to the Adaptive Suite.

OK, fast-forward to now.

Adaptive Consolidation is an intuitive, rapidly-deployable, cloud-based solution that allows finance to streamline the consolidation process by automating previously time-consuming tasks.  Our Financial Consolidation & Reporting and Consolidation Product Overview brochures offer highly detailed insight into Consolidation’s features and benefits. I’m going to simplify things even further by summarizing the core features of Adaptive Consolidation below. Make sure to check back for part 2 later this week.

Adaptive Consolidation core features:

1.       Intercompany Eliminations

The Eliminations Manager includes Adaptive Consolidation’s one-page elimination viewer, which makes it easy to view and understand intercompany eliminations.  Each elimination is shown as a journal entry, with debits and Adaptive Planning Adaptive Consolidation Intercompany Eliminationscredits (on the left and right, respectively), trading partners, and accounts all clearly visible.  Visual cues simplify the identification of source balances, elimination entries, and system-generated variances. Adaptive Consolidation ensures that elimination entries are properly converted to the currency of the organization level where the elimination takes place, and that eliminations are balanced.

Eliminations are based on user-defined rules, which are as simple as selecting which intercompany debit(s) offset which intercompany credit(s), during which period of time, and where to record any variances.

All eliminations are real-time.  Any adjustments that need to be made are immediately reflected by the Eliminations Manager. No waiting for batch jobs or processes to complete.

2.       Allocations Manager

Simple rule definition enables the allocation of costs such as rents, utilities, and shared service center expenses back to the consuming organization levels.  Just specify the levels and accounts to allocate from, the levels beingAdaptive Planning Adaptive Consolidation Allocations Manager allocated to, and the formula to use for prorating the costs.

This formula can be as basic as dividing the costs evenly, or something more proportionately representative, like headcount or square footage.  The Allocations Manager handles it from there.  Like the Eliminations Manager, all allocations are real-time.

3.       Partitioning of Actual Data

Adaptive Consolidation provides the ability to partition actuals data into logical “slices” of total actuals.  Partitions can be, for example, by data source (e.g. Parent Company, Adaptive Planning Adaptive Consolidations Partitioning DataSubsidiary A, Subsidiary B), functional process (e.g. allocations, eliminations, adjustments), or both..

Administrators can decide who can access the partitioned data, from the ability to import, view, and edit data, to hiding a partition entirely.  Partitions are created in a hierarchy, up through which all actuals data automatically aggregates.

Additionally, partitions allow for the isolation of consolidation activities like eliminations and allocations so they can be separately identified until they are ready for incorporation into actuals as a whole.

4.       Minority Interest Calculations

Adaptive Consolidation simplifies the consolidation and reporting process for companies dealing with minority interest requirements. Adaptive Planning Adaptive Consolidation Photo For example, users can consolidate partially-owned entities at multiple levels of the organization.  Adaptive Consolidation also supports US GAAP and IFRS requirements to report subsidiary ownership changes when and as they occur. Further, this feature can be used to plan for changes in ownership, including new acquisitions and subsidiary divestitures.

5.       Multi-Currency

With enhanced multi-currency capabilities, Adaptive Consolidation helps companiesAdaptive Planning Adaptive  Consolidations Multiple Currencies comply with FAS 52 and IAS 21 requirements to record foreign currency transactions using the rate in effect at the time they were captured, and to re-measure certain account balances using the appropriate rate.

By now, you’re probably asking yourself “OK, so what?”  Thanks, I was hoping you’d ask that.   I’ll be answering this question later in the week.


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