Financial Close & Consolidation

Increasing Complexity and Challenges in Financial Close

FINANCIAL CLOSE AND CONSOLIDATION

There are several types of software tools available to support the financial close, consolidation and reporting process.

OneStream software provides a modern, Intelligent Finance platform that simplifies financial close and consolidation, planning, reporting, analytics and financial data quality for sophisticated organizations. Deployed via the cloud, OneStream’s unified platform enables organizations to modernize finance, replace multiple legacy applications and reduce the total cost of ownership for financial systems. OneStream unleashes finance teams to spend less time on the mechanics of managing finance processes and more time focusing on driving business performance.

Organizations that have adopted the modern OneStream platform for financial close, consolidation, reporting and other processes have been more successful in streamlining the process, and ensuring the accuracy of their financial results. And perhaps most importantly, have gained the agility needed to adopt quickly to changing business and industry requirements.

As organizations grow and evolve in complexity, the financial close and reporting process can cross multiple locations and departments, involve multiple systems and consume a great deal of the finance team’s time and resources. Any time and resources freed up from the mechanics of the process can be allocated to value-added activities, such as analyzing financial/operating results and supporting strategic business decisions across the enterprise. How much time and effort are organizations spending on the financial close and reporting process?

06 Conclusion

05 Customer Benefits

04 OneStream Key Features

03 OneStream’s Intelligent Finance Platform

02 Software Options and Tradeoffs

01 Increasing Complexity and Challenges in Financial Close

OneStream’s Intelligent Finance Platform

FINANCIAL CLOSE AND CONSOLIDATION

OneStream Key Features

FINANCIAL CLOSE AND CONSOLIDATION

Customer Benefits

FINANCIAL CLOSE AND CONSOLIDATION

Conclusion

FINANCIAL CLOSE AND CONSOLIDATION

Software Options and Trade-Offs

FINANCIAL CLOSE AND CONSOLIDATION

FINANCIAL CLOSE, CONSOLIDATION AND REPORTING FOR MID-SIZED TO LARGE ENTERPRISES

COMPLEXITY IS THE INEVITABLE BY-PRODUCT OF GROWTH

In today’s volatile and sometimes disruptive economic environment, CFOs and finance organizations must lead organizational decision-making processes with insight, speed and confidence. Yet many finance organizations are still bogged down by inefficiencies in routine processes such as the period-end financial close and reporting cycle, making it difficult to shift time to value-added analysis and decision support.

INCREASING BUSINESS COMPLEXITY IMPACTS TIME TO CLOSE

Half Now Close within Six Days

A Faster Quarterly Close

1 or 2 business days 3 or 4 business days 5 or 6 business days 7 to 10 business days 11 or more business days

12%

14%

19%

22%

21%

31%

24%

27%

25%

2019

2014

VENTANA RESEARCH 2019 OFFICE OF FINANCE BENCHMARK

In other words, there’s plenty of room for improvement. The 2019 Ventana benchmark research, found that nearly two-thirds of those companies (62%) that close within six business days say they provide timely information to their stakeholders, compared to 39% of those that take longer. SEE MORE RESULTS FROM THE SURVEY

39%

62%

Companies that receive timely information from the finance department

A Rapid Close Improves Communication

Fast Closers Have Timely Information

What is the Key Advantage of Executing a Faster Period-End Close?

Executives and managers across the organization gain access to the timely financial and operating results needed to make sound decisions.

Intercompany Eliminations

Currency Translation and Impact Analysis

Integrating & Validating Data from Multiple Sources

Enterprises with multiple locations or subsidiaries that sell goods and services to each other must eliminate all intercompany transactions and balances through the financial consolidation process. The more subsidiaries and intercompany transactions, the more complex this process.

Financial results collected in local currencies need to be translated to the reporting currency at current exchange rates. Actual results may also need to be translated at budget rates for comparison purposes.

The systems used by various subsidiaries and geographic divisions typically have different charts of accounts, operate in different currencies and sometimes even have different fiscal years. All of this data must be mapped and harmonized to corporate standards.

Challenges in Financial Close and Reporting

Account Reconciliations

Journal Adjustments and Allocations

Partial and Cross Ownership

During the financial close process, account reconciliations are performed to ensure financial statement account balances are correct. This can span 100’s to 1,000’s of accounts.

While reviewing period-end financial results, finance teams often need to make top-side journal adjustments, as well as allocations of costs to support the reporting of operating profit by division or product line.

In enterprises with complex ownership structures, the financial consolidation process must correctly account for various levels of ownership and control the parent company or subsidiaries they may have over other entities in the corporate hierarchy.

Financial, Statutory and Management Reporting

Supporting Multiple Reporting Standards

Tax Provision

Financial results often need to be reported for multiple purposes, using multiple rollup hierarchies for management legal, geographical, division, or other purposes.

Enterprises with operations in multiple geographies may be subject to reporting financial results in accordance with multiple accounting standards (e.g., US GAAP, UK GAAP, IFRS, etc.) to support not only corporate reporting but also local tax and statutory reporting requirements.

As part of the period-end close a provision must be recorded for the estimated amount that an enterprise expects to pay in income taxes for the current year, for global operations in all geographies.

Integrating & Validating Data from Multiple Sources

Currency Translation and Impact Analysis

Intercompany Eliminations

Partial and Cross Ownership

Journal Adjustments and Allocations

Account Reconciliations

Tax Provision

Supporting Multiple Reporting Standards

Financial, Statutory and Management Reporting

Purpose-Built CPM Apps

GL / ERP

Cheap and widely available; familiar and easy to use

PROS

Spreadsheets

Error-prone, missing key functionality, no audit trails

CONS

Not designed to integrate data from other GLs, doesn’t support multiple consolidation hierarchies, limited reporting capabilities

CONS

GL is available as part of ERP system and has currency translation, journals, basic intercompany eliminations

PROS

Requires extra license in addition to GL / ERPs

CONS

Integrates data from multiple sources, has advanced consolidation features, robust reporting, full audit trails

PROS

Purpose-built financial close, consolidation and reporting applications found in today’s corporate performance management (CPM) software solutions are becoming the preferred approach for mid-sized to larger enterprises. These applications are designed to integrate data from multiple sources, have specific functionality built-in to handle the complexities of financial close and consolidation and typically have all the required security and audit trails. Purpose-built CPM applications also provide easy to use reporting tools that can automatically generate consolidated financial statements, as well as management reports, dashboards, board books, presentations and spreadsheet-based analysis in a fashion that is not conceivable in a transactional system.

Download and Deploy 50+ additional solutions from the OneStream MarketPlace, without adding technical complexity.

extend functionality

• Account Reconciliations • Transaction Matching • People Planning • Capital Planning • Tax Provision • Reporting Compliance ...and Many More!

With over 650 customer organizations globally, OneStream was designed to address the financial close, consolidation and reporting requirements of the largest, most complex organizations in the world. In addition to its built-in financial intelligence, OneStream includes many pre-built capabilities designed to help streamline financial close, consolidation and reporting.

Integrated Financial Data Quality

Guided Workflows

Built-in Reporting and Analytics

Financial Close and Consolidation

Transaction Matching

Account Reconciliations

Task / Close Management

Tax Provision

Integrated Financial Data Quality

• Read any GL trial balance file or report in any format with no manipulation • Direct integration with any open ERP or data source • Pre-consolidation mapping and intersection validation • Post-consolidation validation and confirmation • E-mail or text error alerts • Complete audit trails and controls • Drill through to source GL or ERP data • Support for phased submissions

With OneStream, Financial Data Quality is not a module or separate product, but part of the core platform. When it comes to financial reporting, speed and accuracy are of paramount importance. OneStream’s Financial Data Quality Management provides strict controls to deliver confidence and reliability in the quality of financial results.

Key Data Quality Features:

OneStream’s Guided Workflows protect business users from complexity by guiding them uniquely through all data management, verification, analysis, certification and locking processes.

Guided Workflows

• Supports statutory financial reporting including US GAAP, IFRS, Multi-GAAP and local requirements • Advanced foreign currency translation • Powerful, automated intercompany eliminations • Flexible organizational structures with varying ownership percentages • Base and topside journal entries • Powerful allocations • Complete audit trails and drill-through capabilities • In-system reporting, analysis, dashboards and Excel® integration

Key Capabilities:

While most CPM vendors attempt to support financial consolidation using a straight aggregation engine, this approach often fails to scale and perform well in complex organizations. OneStream developed a purpose-built financial consolidation engine that contains the core requirements for true statutory consolidation and is designed to meet the needs of the world’s largest global enterprises. OneStream supports strict compliance requirements with comprehensive audit controls on data, metadata and processes.

Financial Close and Consolidation

OneStream delivers confidence in external and management reporting with high performing and true statutory compliant consolidation functionality without compromising the ability to deliver operationally relevant management reporting.

Financial Close and Consolidation

Go Back

OneStream provides a single version of the truth for financial, statutory and management reporting. OneStream provides multiple reporting and analysis capabilities in a single platform including Guided Reporting for end-users, formatted and ad hoc reports, Excel-based reporting, interactive dashboards and mobile delivery. It also provides seamless integration with Microsoft Office®, automating the creation of complex documents such as board books, presentations and regulatory filings.

Built-in Reporting and Analytics

• Risk Management Reporting — delivers a complete statistical view of financial reports including a risk adjusted balance sheet • Drill-To-Reconciliation — link reported balances to reconciled accounts and drill all the way from your financial statements to the reconciliations • Trial Balance Single Sourcing — means there is never a disconnect between what you reconcile vs. what you report • Process Control — leveraging Guided Workflows and the stage engine for complete process controls and a simplified end-user experience • Single Point of Maintenance — reuse metadata & mappings, same user access

Key Capabilities:

OneStream allows customers to attack the challenges in account reconciliations in a unique way, with a solution that is completely integrated with the financial close, consolidation and reporting process. Available from the OneStream Marketplace, the Account Reconciliations solution can be integrated into the financial close workflow, and leverages data that already resides within the consolidation application.

Account Reconciliations

As a complement to OneStream's Account Reconciliation solution, OneStream’s Transaction Matching solution from the OneStream MarketPlace helps accounting teams collect and match large volumes of transactions from two or more sources, identify and resolve differences in order to accurately finalize period-end balances and close the books. The solution supports the loading of transaction data from multiple sources via flat files or direct connect, manual or automatic matching of transactions with a configurable, rules-driven approach and extensive reporting or exporting of results.

Transaction Matching

• Current Tax Provision • Deferred Tax Roll-forward • Effective Tax Rate Analysis • Monitoring of Tax Losses and Tax Credits • Current and Deferred Tax Asset • Balance / Walk Across

Automate and streamline tax data collection, validation and ensure consistency in tax calculations.

For tax departments, the OneStream Tax Provision solution from the MarketPlace is purpose-built to accelerate time to value, reduce risk, drive transparency and increase productivity by eliminating spreadsheets and disconnected point solutions from the entire tax provisioning process. Aligning tax provisioning and reporting with financial consolidation, OneStream simplifies data gathering by leveraging the platform’s built-in financial data quality capabilities. Once tax information is downloaded and prepped, OneStream’s unified platform enables users to leverage existing data and minimize reconciliation, automate reporting and export data to tax compliance systems.

Tax Provision

• Visual Progress Charts • Integrated Messaging • Role and Task Security • Document / Disclosure Management

Key Capabilities:

A key tool for managing the overall financial close, consolidation and reporting process is the Task Manager solution from the OneStream MarketPlace. The Task Manager solution provides a way to organize workflows and tasks both inside and outside of OneStream. It provides one place for administrators and users to manage and ensure the success of their processes — be it the financial close and consolidation, planning, forecasting, reporting or any other financial processes. OneStream Task Manager guides users to the right place to complete tasks and also supports automatic sign-off of completed tasks. It eliminates spreadsheets, manual steps or legacy applications that hinder effective financial close, reporting, planning and other processes. Task Manager provides finance teams with real-time visibility into the status of key processes with the ability to take action on bottlenecks to ensure timely completion and accuracy.

Task / Close Management

Go Back

— Mark DiMatteo | Sr. Manager of CPM Systems XYLEM

“

OneStream unleashes the power of finance by unifying financial close, reporting, planning and analytics through a single, extensible solution. We empower decision-makers with financial and operational insights to support faster and more informed decision-making. All in a platform designed to continually evolve and scale with your organization.

The ability to collect more granular data in OneStream facilitates better, faster business decisions and the confirmation rules built into OneStream ensure data integrity. With OneStream, we have more time available to spend analyzing data rather than updating data, and the flexibility of OneStream provides the ability to respond quickly to changing business needs.”

Increase Operational Insights

Streamline Close

Increase Confidence

Reduce Risk

in Financial Results

52%

25%

24%

Roughly half of the companies surveyed close their books within six business days

25% of organizations surveyed take 11 business days or more

24% of organizations surveyed take seven to ten business days

The financial close, consolidation and reporting process can be relatively easy in a small enterprise using a single, centralized GL/ERP system, a single currency and a simple legal entity structure. But as organizations grow and evolve in sophistication, the process can become quite complex.

NAVIGATING THE COMPLEXITY OF THE FINANCIAL CLOSE

Financial, Statutory and Management Reporting

For Finance teams who need to go beyond traditional predictive analytics, ML is the answer. ML is where people and technology come together. For example, consider a retailer’s demand forecast for Product A in Region B within Store C. To forecast at this granular level, there are so many other factors at play. How about the weather in Region B, for instance? And what if Store C built a new parking garage? Or what if a major competitor opens a location across the street or changes their pricing? Factors like these are all potential features an ML model might consider if your Finance team has made the necessary investments in data scientists. Compared to predictive analytics, ML comes at a higher cost and is harder to scale. But if your organization is committed to the investment, there’s a higher reward in terms of forecast accuracy.

Unlimited Forecasting with Machine Learning (ML)

Unlimited Forecasting

Predictive analytics provides the power to predict future performance based on applying predictive algorithms to historical data. This is not new. But by automating model creation and deployment directly within CPM processes, predictive modeling is easy to execute for any planner. This “ease of use” makes predictive models incredibly powerful for Finance teams.

Predictive Analytics: Low Cost & High Value

Predictive Analytics

Financial Signaling is critical to help Finance teams to move ahead of the monthly reporting cycle by leveraging the Financial intelligence that’s core for their monthly financial processes such as hierarchies, dimensionality, translations, FX rates and blending it with higher-velocity financial transactions and operational data from multiple sources. With this unique capability, Finance teams can begin to analyze these signals on a weekly or even daily basis to compare how their key metrics and KPIs are pacing vs. their forecasts and run rates for the month. This includes information on suppliers or customer orders and shipments, as well as core financial data around working capital metrics, marketing analytics, sales pipeline or operational performance.

Financial Signaling: The Next Inflection Point

Financial Signaling

Financial Close and Consolidation

Go Back

Financial Close and Consolidation

Risk Management Reporting — delivers a complete statistical view of financial reports including a risk adjusted balance sheet Drill-To-Reconciliation — link reported balances to reconciled accounts and drill all the way from your financial statements to the reconciliations Trial Balance Single Sourcing — means there is never a disconnect between what you reconcile vs. what you report Process Control — leveraging Guided Workflows and the stage engine for complete process controls and a simplified end-user experience Single Point of Maintenance — reuse metadata & mappings, same user access

Key Capabilities:

Account Reconciliations

Go Back

Current Tax Provision Deferred Tax Roll-forward Effective Tax Rate Analysis Monitoring of Tax Losses and Tax Credits Current and Deferred Tax Asset Balance / Walk Across

Automate and streamline tax data collection, validation and ensure consistency in tax calculations.

Tax Provision

Go Back

Task / Close Management

Go Back

25%

27%

24%

31%

21%

22%

14%

19%

12%

1 or 2 business days 3 or 4 business days 5 or 6 business days 7 to 10 business days 11 or more business days

2014

2019

Half Now Close within Six Days

A Faster Quarterly Close

39%

62%

Companies that receive timely information from the finance department

A Rapid Close Improves Communication

Fast Closers Have Timely Information

in Financial Results

Increase Confidence

Reduce Risk

Streamline Close

Increase Operational Insights

OneStreamSoftware.com Sales@OneStreamSoftware.com

362 South Street Rochester, MI 48307-2240 Phone: +1.248.650.1490

SEE MORE RESULTS FROM THE SURVEY

Increase Operational Insights

Gain agility in planning, budgeting and forecasting and align operational plans with financial goals and plans to accelerate insights, decision-making & predict with confidence.

Streamline Close

Unified platform with integrated financial and operational data across the enterprise simplifies and aligns financial consolidation.

Reduce Risk

More complete audit trails on data, metadata, process and rules with Guided Workflows that protect users.

Increase Confidence in Financial Results

Support US GAAP, IFRS and local statutory consolidation including reconciliations between standards.

Increase Operational Insights Gain agility in planning, budgeting and forecasting and align operational plans with financial goals and plans to accelerate insights, decision-making & predict with confidence.

Streamline Close Unified platform with integrated financial and operational data across the enterprise simplifies and aligns financial consolidation.

Reduce Risk More complete audit trails on data, metadata, process and rules with Guided Workflows that protect users.

Increase Confidence in Financial Results Support US GAAP, IFRS and local statutory consolidation including reconciliations between standards.

Close within 6 business days

Close in 7 or more business days

Close within 6 business days Close in 7 or more business days

Task/Close Management

OneStreamSoftware.com Sales@OneStreamSoftware.com

362 South Street Rochester, MI 48307-2240 Phone: +1.248.650.1490

OneStream Named a Leader in the 2022 Gartner® Magic Quadrant™ for Financial Planning Software.

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