Managing Global Business And Multi Entity Issues

By BAASS Consultant | May 10, 2013 12:00:00 AM
Companies today face multi-entity and global business management issues far earlier in their life cycle than ever before. It’s not uncommon for a small company to start their business in one city, then open an offshore development office, house customer service in a yet another location, and grow to have sales offices scattered across the country and internationally – all within the first few years of business. As exciting as that kind of growth sounds, it’s a nightmare to manage for a traditional financial system.

In a multi-entity environment, each office typically operates autonomously, subject to varying currency, tax, and reporting requirements – such as currency translation, exchange gain/loss accounting, local reporting, and an increased risk of non-compliance. But that’s not all they have to deal with. In addition to managing organic growth, mergers and acquisitions are common in many industry. And with each new business acquired comes more separate entities, their unique challenges, and often a second financial management system. 

Presented with these challenges, finance team often struggle to perform critical tasks such as consolidation, reporting, and analyzing operational and financial information across the disparate sites. They are forced to use cumbersome spreadsheets and add-on reporting solutions along with their traditional financial systems to try to cobble together meaningful data to help management make informed decisions. Instead, the process is manual, slow and error ridden. Data from the multiple entities is collected and consolidated manually, currency conversions are calculated by hand, and the number of inter-entity adjustments and eliminations increases. 

The use of multiple systems and the lack of automation lead to two critical problems for multi-entity or global businesses: diminished operational visibility and a dramatic increase in cost. 

Read the rest over at Intacct's blog here

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