Planning and consolidation

One of the objectives of financial management at an enterprise of a Group companies is the solution of problems of financial planning (budgeting) and the consolidation of financial statements. Usually when talking about the system of budget management, are referring to the formation of major types of budgets:
  • The Income and Expenditure Budget allows you to manage of incomes and expenditures and profitability of an enterprise. With it, an enterprise manages its profitability.
  • The Cash Flow Budget allows you to manage cash, liquidity of the enterprise. With it, an enterprise manages its solvency.
  • The Balance Sheet Budget allows you to control the structure of assets and liabilities and funds of an enterprise. With it, an enterprise manages its cost.
Herewith, the construction of the budgeting system of an enterprise is often faced with the following problems:
  • Lack of accuracy and relevance of the data:

1. The actual data is scattered across various systems and local spreadsheets on workplaces of employees.

2. Complexities of the plan vs. actual analysis with the necessary degree of detail.

3. The difficulties with the source identification of the problem does not allow quickly find the most correct way of solution.

  • Inefficiency of processes:

1. Business processes are not standardized, their execution takes a lot of time and accompanied by lots of errors.

2. Difficulties in determining stage of a business process and who is responsible for the current task.

  • Inconvenience of working with existing systems:

1. Information systems used for planning are complex, inflexible, aimed at advanced users.

2. Business users find it difficult to work by themselves in the information systems and usually it is necessary to involve IT-specialists for helping.

Using the solution of SAP BusinessObjects Planning and Consolidation, you get a unified tool budgeting for the entire group of companies. In this case, the total sequence of the construction of the budgeting management system is as follows:
  • Definition and configuration ownership-based hierarchies used for performing statutory consolidations
  • Formation of Calculations relevant Master Data and its assigning to the objects of financial structure
  • Creation of calculation formulas for each item, for each object of the financial structure
  • Report Design and planning data entry forms
  • Setting up business procedures in accordance with the regulations of the planning
  • Roles of Users and Authorization Concept Design
Choosing the solution of SAP BusinessObjects Planning and Consolidation, you get the following benefits:
  • Ability to plan on the basis of reliable data from various sources and make more informed decisions.
  • Build an interrelation and a comparability of long-term (strategic and tactical) indicators with operational activities of the divisions.
  • The ability to perform planning as a "top-down", bringing targets to the level of divisions, and "bottom-up" approach, consolidating information at group of companies level.
  • The ability to monitor execution of business processes of budgeting, including the initialization, correction, approval and adoption of the budget.
  • Reduce budgeting cycle through more effective interaction of employees of financial services and operational managers within a unified system and general rules.
  • Reduce the complexity of the modification of common business processes and reporting forms by IT department.
As we can see, the tasks of budgeting are closely related to the consolidation of reporting by forming of a package of management reporting at group level under requirements of management of company or in accordance with IFRS.
Herewith arise all sorts of objective and subjective factors that prevent the effective consolidation process:
  • High difficulty of accounting data collecting at the subsidiary level, as a result, the delay in providing information to the management company.
  • Poor integration with accounting systems and a large amount of manual data entry.
  • Errors in data collection and a large number of adjustments at the company management level.
  • Several types of accounting and / or charts of accounts.
  • The need to identify and exclude of intercompany turnovers.
  • Low possibilities of audit of financial transactions.
  • Changes in the group structure, the emergence of new reporting requirements.
Using the option IFRS Starter Kit with the decision of the SAP BusinessObjects Planning and Consolidation you may:
  • Flexibly modeling of the structure of the group of companies and integrating with data sources.
  • Automating routine procedures:

1. Recalculation of foreign exchange
2. Goodwill calculation
3. Transfer of balance
4. Redistribution (reclassification) items due to be uniform format
5. Recalculation of operations between accounts and items
6. Identification and excluding of intercompany turnovers.
7. Calculation and implementation of transformation and consolidation adjustments.

  • Audit the transformation of the initial information for the consolidated data.
  • Ensure rapid closure of the reporting period.
  • Using the unified solution for the basic financial processes like planning, budgeting, forecasting, consolidation and reporting.