How to Save 10hrs per Month on Accounting Consolidations

Overwhelmed at the prospect of making complicated accounting consolidations for your client?

As an accountant, it’s common for one of your clients to own multiple businesses or have numerous subsidiaries. If this is true, chances are they will need consolidated financial statements.

These statements typically include an income statement and balance sheet. Examples of companies that need consolidations include franchises, real estate investors with multiple locations, and multi-location businesses to name a few.

Consolidated financial statements are often required by banks and investors and prove crucial in estimating tax expense. Unfortunately, the process of creating these statements is often long and tedious.

How Most Accountants Make Consolidations

If you are already creating these accounting consolidations, chances are you do so in Excel. Only one form of Quickbooks (Enterprise) currently offers a built-in solution for consolidation, which means if you use QB Pro/Premier, QB Online, or Xero you have to look elsewhere for a solution to this problem (probably Excel). Even if you use Quickbooks Enterprise, there are some inconvenient issues with consolidating data:

  • The chart of accounts for each company must be identical.

  • You may have to switch your account to multi-user mode.

  • Accounts must be listed by type.

And although it may sound tempting to switch to Enterprise from QBO or Pro, don’t forget that you will lose all the benefits of being cloud-based if you switch, not to mention the price increase to do so.

Exporting reports to excel and then combining them manually is the default for most accountants. It gets the job done, but there are some pretty strong arguments against it:

  1. It’s time-consuming. You didn’t become an accountant to manually enter data into a spreadsheet. This simple task probably takes up a sizable portion of your day if you’re already creating consolidations. If you aren’t, then this is a pretty strong deterrent against it.

  2. Prone to making mistakes. Even if you’re well rested, entirely focused, and in the right environment (which is almost never the case by the way), people still make mistakes. Human error is normal and natural, not to mention that it happens to everyone, even you. Data entry is often left to lower level employees and interns, leaving you to look over their shoulder and ensure it’s correct, wasting time and resources. If you are a partner or an owner of a practice, how often should you actually be typing data into a spreadsheet?

  3. Not Scalable. Growth is the most common ambition of any business owner. You want to grow, to make more money, to have more clients, and you need help to do so. Unfortunately, without the proper tools, this simply means hiring more people, which means getting a bigger office space and more computers and onboarding and offboarding more often and a bunch of other expenses that you don’t want or need.

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How to Simplify the Process and Become Indispensable

Okay, this all sounds doom and gloom, but the reality is these challenges create a unique opportunity to differentiate yourself from the herd in the changing world of accounting and bookkeeping in two simple steps.

First, implement a system that allows you to more efficiently create accounting consolidations. This system should automatically pull information without you having to enter it in manually. Ideally, this system also lets you build and manipulate reports in a simple user-friendly interface.

Malartu offers you all the tools to create consolidations without all the nagging issues you would otherwise encounter.

Next, once you’ve made these reports use your new system to become an indispensable asset to your clients.

Clients are looking for more than simple financial statements. To learn more about what your clients want from reports, check out my colleague Sean’s article on “What Your Accounting Clients Want From Business Advisory Services”.

To summarize, business owners want actionable, easy to read information that cuts right to the chase and tells them what changes they need to make to their business, how they stack up against others, and how changes they make affect their business.

By offering your clients this information, matched with your expertise in their industry, you become a trusted advisor to their firm.

The best part is, you already have all the information. Your clients trust you with their financial information, now it’s time to put that data to work.

With Malartu, you gain the capability to exhibit your expertise to your clients. To show them that you cannot be replaced by a computer, to spend time understanding their business and the challenges they face. You can do this once you no longer spend hours each month creating repetitive reports and accounting consolidations.

Now you can make the reports once and gain the freedom to look at any time period in one simple click, eliminating hours or even weeks of work. Let the system do the work for you.

You can pull in benchmark data to compare with your clients. You can create custom metrics and industry-specific KPIs to track your clients’ success.

You can show your clients that you are an indispensable, data driven, decision making advisor.

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How We Helped a Client Automate their Accounting Consolidation Process

One large accountancy that we work with has a client consisting of 3 separate entities.

One is the owner or “parent company.”

The other two companies are linked via loans to each other for tax purposes.

Each month the accountant would have to spend 5-10 hours exporting the each of the respective company’s reports from QuickBooks Pro, combining them in excel, and then calculating eliminations and totals.

When we began our engagement the main goal was to be able to create a simple set of monthly statements that populate automatically and can be sent to the client’s bank and investors.

For the banks who have lent money to the companies, the consolidated format of the Income Statement and Balance Sheet are a necessity and can not be accepted in any other format.

For the investors, looking at individual statements don’t show the health of the company as a whole. They are interested in how the parent company is doing, but want an in depth breakdown of each organization separately.

We built the accounts, set up the data connection to Quickbooks Enterprise, built the statements as dashboards, and set the eliminations to calculate themselves.

In a few days, we were able to turn around the statements and eliminate this recurring monthly task from the accountant’s agenda.

Next, we used the data to create custom visualizations such as income source breakdowns as well as breakdowns for both accounts payable and accounts receivable accounts.

This accountant freed up 10 hours per month of her time, minimized the risk of human error, implemented a scalable solution, and put her firm in a position to act as a trusted advisor rather than a data-entry assistant.

That’s not all, the holding company client is now using Malartu for budget analysis and, as the organization grows, our platform grows with it.

Talk to us about implementing this with your advisory

At Malartu, we have automated consolidations for $250k/yr family owned stores to $20mm/yr corporate subsidiaries.

When you are ready to get some time back and provide your clients with the future of accounting tools, we are ready to help.