financial consolidations Archives

Meet the Maestros: One on One with Centage CPO Ed Gromann

September 4, 2018 By Ed Gromann, Chief Products Officer

Welcome to Centage’s blog series, Meet the Maestros. In these posts, we give you the opportunity to get to know some of the team at Centage who are working to make budgeting and forecasting easier and more accurate for small to medium size companies.

In this issue, we’ve gathered insights from Centage’s Chief Products Officer, Ed Gromann.

What does advocating for the customer mean at Centage?

“Customers are the life force of any business,” says Ed. He’s clear on how important customers and the customer experience is to Centage, and to him. “We continually strive to improve our user experience through a variety of touchpoints, including phone support, health-checks and on-site meetings, just to name a few.” Ed believes in the importance of the voice of the customer so much, he makes sure to participate in gathering this important feedback directly by periodically participating in customer implementations. It goes beyond ensuring Centage is delivering success to their customers. “These on-site engagements serve another purpose: It allows me to observe the customer’s reaction to new features and functions and solicit their opinion for improvement. It becomes a personal focus group.”

What are small to medium businesses looking for in FP&A software?

Many of the organizations that come to Centage have been, until then, using Excel for planning and budgeting. Ed explains that “Although this solution works OK for a short period of time, it inevitably becomes convoluted and painful.” When companies turn to Centage, they want to improve their processes, which have become overly complicated. “We streamline the process,” Ed says, “ensure GAAP compliance and give people back time to do more value-added activities, such as proactive analysis.”

How has data visualization changed and grown in the industry, and where is it headed?

“Data visualization has always been around,” Ed states. However, recent improvements have made visualizations more accessible. “Products such as Microsoft Power BI, transform data into beautiful graphical representations,” Ed explains. But it won’t stop there. Ed continues, “I believe it will continue to improve, making it easier to bring in a variety of data sources and see the results in a visual fashion. Ultimately, the interpretation of the data will become increasingly intuitive.”

With experts like Ed Gromann as part of our team, it’s no wonder that organizations of every size rely on Centage Corporation’s Maestro Suite of solutions which includes Budget Maestro™ to help them make budgeting and forecasting easier and more accurate. Budget Maestro improves the efficiency and effectiveness of business budgeting and planning, financial forecasting, financial consolidation and reporting processes. For more information, take a tour of Budget Maestro, contact Centage, or call 800-366-5111 now.

Emerging Trends in Financial Consolidations

May 30, 2017 By John Orlando, CFO

Financial Consolidations

Increasingly automated business accounting processes are yielding results beyond faster transaction processing and driver-led allocations. Reports, particularly those of financial consolidations, are becoming more dynamic and more useful in assisting us with information to make better operational decisions.

Whether you have a complex business structure or not, you’ll benefit by moving your organization toward implementing these newest trends within your financial consolidation and reporting software package.

Natural Language

One of the biggest benefits of artificial intelligence bleeds into the financial statements that we’re creating, the use of natural language. We’ve gotten used to typing nearly full sentences/questions into Google to get our results without having to pull out whatever key word we think it might want, and similar activity is happening within accounting software solutions.

Complex or jargon-filled communication isn’t helpful if we want the readers of consolidated reports to grasp what they need quickly. Plant operations managers have excellent skill sets but their training and experience may not have included a deep understanding of financial terminology. A somewhat humorous byproduct of the transition to the adoption of plain language by the government is how it actually expanded the length of many of its instruction booklets.

Visual Appeal

Implementing design elements into consolidated financials that include white space, bullets, charts, and graphs aren’t just for prettier reports, they’ve got a good purpose. If you’ve been avoiding updating the look of your financials, you may want to reconsider.

Enhancing a reader’s ability to process information, whether it’s through comparisons or the terminology that is used, benefits us all. The recipients of the financial reports will gain more confidence in understanding the data being conveyed which should also result in them being more accountable with explaining the results and when preparing future budgets.

We’ve become a nation of skimmers. Whether we’re reading the Wall Street Journal or our Twitter feed, we’re glancing at headlines, picking up key words, and moving on to the next thing. Including visual elements in our financial statements (and anything else we produce) helps create more engaged readers who are better able to focus on the key points we want to emphasize and allows them to stop and start reading without losing their place.

White Space – This gives your eyes a place to rest.
Bullets – Emphasize key points within a subject area.
Charts and Graphs – Visuals that show relationships between values or time.

Footnotes and Cross-referencing

What would financial consolidations be without footnotes? A lot shorter, but not quite as useful. Explaining exceptions, references, and providing additional detail is a fundamental need of financial consolidations. How are the entities rolled up? What allocation methods were used? What’s that accrual for potential litigation about? Important stuff.

With digitally viewing financials in the cloud or on your intranet, drilling down to more detail is one of the capabilities that truly enhances a user’s experience by instantly providing supporting detail to the numbers. That, in turn, resolves misunderstandings, discrepancies, and anomalies more quickly, letting people spend more time in working on the present and future rather than reviewing the past.

Implementing the Trends

Adopting these trends in your business will continue your advancement toward making your financial consolidations not just a report that is tossed on a desk after a cursory look but a useful reference tool that builds value with its communication of financial and operational facts.

How can you move to adopt these three trends within your business? Which change will benefit your financial statement users the most?

Businesses of every description rely on the Budget Maestro™ family of software solutions by Centage Corporation to improve the efficiency and effectiveness of their business budgeting and planning, financial forecasting, financial consolidation and reporting processes. For more information, take a tour of Budget Maestro, contact Centage, or call 800-366-5111 now.

Rolling Up the Books: Simplifying Financial Consolidations

April 21, 2016 By John Orlando, CFO

Many of our clients tell us is that what sold them on Budget Maestro as their planning solution was how well financial consolidations are incorporated into our product. With rapid growth through mergers and acquisitions, working with multi-currency business units, and needing to monitor subsidiaries as separate entities, this isn’t the time to be left behind.

What if none of those situations apply to you when you purchase your budgeting software? As a financial professional, you know not to think only of your current space in the marketplace. Budget Maestro’s consolidation abilities come embedded in our product at no additional cost so if you don’t need it now, you can consider having it as insurance toward your company’s future growth.

Why consolidate?

To run your business, your C-suite needs a bird’s-eye view of the financials to see the organization’s financial disposition as a whole. Drilling down, the various operational areas also need to see their own financials to properly manage their divisions.

When business entities combine, your objective is to eliminate all the inter-company transactions to leave only the remaining transactions that involve external third parties? Duplicating or overstating financial data could easily result if you don’t eliminate inter-unit activities.

Parent company Alpha sends a massive forklift to subsidiary Zebra. You need the books updated to reflect the movement of the asset and its corresponding depreciation. Alpha didn’t spend company dollars but there is still an internal cost to Zebra and an ownership change within the company. The complexity increases naturally when inventory is involved where you have to consider the cost and margin percentages in your transaction values.

Options

There are a few different ways of handling these consolidation entries appropriately but for the sake of discussion we’ll stick the scenario of creating a third profile in addition to Alpha and Zebra where the activity is consolidated and the elimination entries are recorded. Everyone will have a clear vision of what the specific inter-company transactions were (helpful in an audit situation) and this give you an easy way to ensure that the net value of your inter-company entries comes to zero.

Removing inter-unit sales transactions, assets and liabilities, and investments through elimination entries will let your financial statements be boiled down to the for-profit activities that your company engages in.

Simplistic but not Simple

These examples are, by necessity, grossly simplified. The real world is rarely this kind. Financial planning software can make the process more bearable even if we can’t get you to the status of them being considered to be ‘simple.’

Use your business budgeting and planning software when evaluating potential business-unit purchases rather than waiting until post-acquisition. You’ll get insight to see what you’re up against logistically for integrating their books and more importantly, it’ll show you the affect the sub’s activities and holdings on your consolidated financial metrics. If you skip this process, there could be a key factor that doesn’t rise to the surface until after the purchase is completed.

The Meat of it

Once you’ve mapped the sub’s chart of account to yours (at least at a high level) and created a third profile to use for the consolidation totals and elimination entries, you’re able to start reviewing scenarios involving the less common activities. Is there a contingent consideration for the purchase, goodwill, or anticipated transfers of PP&E (property, plant and equipment) that you need to record?

Initial acquisitions pose the most challenging scenarios and utilizing a planning tool there is a given. What if you already have 5 distinct business units? What if one of them is booked in Euros? Make sure your planning tools can handle these situations as well. Don’t let yourself be the one to fumble when an opportunity hits your doorstep and you aren’t prepared to handle it.

You’re presented with the chance to buy a startup with some swanky new technology and their financials are recorded in Australian dollars. How soon could you be up and running with an analysis for your C-suite about the affect the potential deal would have on your ratios?

Businesses of every description rely on the Budget Maestro™ family of software solutions by Centage Corporation to improve the efficiency and effectiveness of their business budgeting and planning, financial forecasting, financial consolidation and reporting processes. For more information, take a tour of Budget Maestro, contact Centage, or call 800-366-5111 now.

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