Choosing the Right Financial Reporting and Consolidation Software for Your Business

If you are looking for a reporting, consolidation, and budgeting tool, this article will help you understand what questions to ask potential system vendors.

You already know—it's always better to spend time exploring and evaluating than to be disappointed later. All system providers have beautiful webpages with nice statements - but how do the tools really work, and do they fit your company's needs?

How to choose the reporting and consolidation system?

We decided to write this article because we often see during demo calls that potential clients don’t know what questions to ask vendors, assuming each system will somehow handle their reporting and consolidation.

Unfortunately, this is not the case — systems differ, and a lot.

We will outline the key functionalities and features to consider when selecting a reporting, consolidation, and budgeting software. You should understand exactly what your company needs and then ask potential vendors the right questions.

1️⃣: Trial Balances vs. Transaction-Level Consolidation

The first choice you need to make when choosing a reporting and consolidation software is simple: Do you want to base your group reporting and consolidation only on Trial Balances (with limited details), or do you want full transparency reporting with drill-downs to the transaction level?

⚠️ Most mid-market tools are strictly TB-based, leaving you with extra manual work to identify intercompany balances and transactions for partner-level eliminations and other consolidation adjustments.

🌀 Systems with advanced functionality (like Emfino) can operate on transaction-level imports. That means:

• Any report, even consolidated reports, can give you detailed drill-downs to the transaction level.

• Intra-group eliminations and other consolidation adjustments are automated, rule-based, and at the transaction level.

So… do you need “just numbers”… or do you want to see the story behind every number?

2️⃣: Currency Translation in Consolidation

When evaluating reporting and consolidation systems, always check how they handle currency translation from local functional currencies to the reporting currency. Poor translation logic can distort your group results.

This may sound technical, but if you don’t look into it upfront, you risk being disappointed later 😒with how poor monthly reports and consolidation may appear, and spending time on manual adjustments.

Key questions to ask:

• How does the system handle Balance Sheet accounts that shouldn’t be translated using month-end rates — e.g., investments, share capital, reserves, retained earnings, current year profit? 

• How are movements in these accounts treated — new investments, disposals, dividends, increases in share capital, transfers of current year profit to retained earnings?

• Does the current year's profit in the reporting currency in the Balance Sheet agree with the P&L?

• What is the source of exchange rates? Is there an automated daily upload?

⚠️ You’ll be surprised how limited most mid-market tools are in this area. As most mid-market systems only import Trial Balances, they don’t “see” the underlying movements in equity or investment accounts — just the closing balances. That means you often need to use manual journals or recalculate historical rates manually after each movement to ensure correct balances in the reporting currency.

🌀 With Emfino, you can define a currency translation strategy for each account in your Group COA. Translation occurs automatically at the transaction level, ensuring transaction-level drill-downs and Balance Sheet splits by partners in both the local and reporting currency.

3️⃣: Data Validation in Financial Reporting Systems

If you want to trust financial data in the system and ensure data accuracy and completeness for all Group entities, proper VALIDATION of data imports is a must.

Ask system providers whether they provide at least the following:

• Check that Debits and Credits balance in the Trial Balance (TB) and in the Transaction reports.

• Check that Trial Balance opening balances agree with the previous period’s closing balances — to catch any historical adjustments.

• Check that Turnovers by accounts in Transaction reports agrees with account turnover in Trial Balance reports.

• Option to define your own data quality checks.

• Functionality for automated rejection of data imports when incorrect data is detected.

⚠️Most mid-market tools either do not have data import checks or offer only very limited ones. And even then, they often lack automated rejection of incorrect data — making data quality each entity’s responsibility.

🌀 For Emfino, data validation is one of the main priorities.

4️⃣Other Key Features to Evaluate when Choosing a Consolidation Software

If you’re choosing a reporting and consolidation system, here’s the list of other detailed (but essential!) questions to ask system providers before making your choice:

🔹 Custom Report Builder: How flexible and user-friendly is it? Can you build any reports you need easily without vendor or IT involvement? Can you import and use other Key data (e.g., headcount, ESG metrics) for integrated reporting? Can the custom-built reports show transaction-level drill-downs and splits by partners or dimensions?

🔹 Checkpoints / Data Freeze: Can the system “freeze” reported data — e.g., at Q2 reporting to investors — and later allow you to access it exactly as it was, so you can explain variances between original and updated data?

🔹 Commenting Functionality: Can users comment directly in the system on variances (actual vs. budget, actual vs. checkpoint, etc.)?

🔹 Budgeting: How convenient is the budgeting process? Can you import P&L, BS, and Key Value budgets from Excel? Are budgets detailed enough to support all your custom reports?

🔹 Balance Sheet Transparency: Can you see Balance Sheet account splits by Partners and/or Dimensions (e.g., Accounts Receivable by partner)?

🔹 Automated Adjustments: Can the system perform automated, rule-based bookings — like IFRS adjustments, group adjustments, or cost allocations — directly in the system — to support IFRS reporting or profitability analysis?

🔹 User Management: How flexible is the user rights setup? Can you define rights by entities, accounts in the Group Chart of Accounts, dimensions, and report types?

🔹 Multiple ERP and Local Chart of Accounts Compatibility: If your group operates with multiple ERP or accounting systems — and subsidiaries use different local Chart of Accounts — can the consolidation system handle imports from all of them?

🔹 Data Quality & Mapping: If your local accounting data isn’t perfect (and whose is? 😊), is there Advanced Mapping functionality to improve data quality within the system (e.g., adding partner names, dimensions, or reclassifying intra-group transactions to group accounts for consolidation)?

🔹 Integrations: How are data imports managed? Is there an API or Excel import? Are there automatic validations or error reports for incorrect data?

🔹 Intra-Group Reconciliation & Eliminations: How exactly are intercompany transactions and balances reconciled and eliminated? Is it rule-based and automated, or does it require manual input each month?

🔹 Accounting System/ ERP or COA Changes: What happens if one group company changes its ERP or Chart of Accounts? Can the system ensure smooth continuity in reporting and consolidation? How exactly is it handled?

🔹 Setup Support & Training: Does the system team assist in designing or reviewing your Group Chart of Accounts and dimension structure to ensure smooth reporting and consolidation? How is training organized? Who will be your main contact, and through which channels (video calls, Slack, online help)? Do consultants have real finance and consolidation experience, not just technical? Is there a knowledge/demo database where to find information on handling various system-related questions?

🔹 Self-service solution: Is the system a self-service solution where everything can be administered by the finance team or IT department, or vendor involvement is needed?

🔹 Setup timing: Is the system ready for setup, or needs custom implementation? How long does the setup or implementation take, and what are the steps?

🔹 Pricing: How transparent and predictable is pricing? Are there implementation fees or service charges beyond the subscription?

🔹 Audit Trail & Security: Can the system track all changes to data, mappings, and user actions for audit purposes? Is the data hosting compliant with GDPR? Is it cloud-based and accessible from any location? Are there system penetration tests or audits performed, and are the results available?

🔹 Scalability & Performance: How fast does the system process large imports and complex consolidations? Can it handle growth — more entities, more dimensions, more users — without slowing down?

These are the questions that help you look beyond the sales pitch and understand how a reporting and consolidation system really works day-to-day.

Because once you start automating group reporting and consolidation, there’s no way back to Excel 😊

Good luck with finding the one 😊!

✨Insightful article by KPMG: "From Legacy to Leading: The case for modern consolidation solutions".