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Streamlining Multi-Entity Consolidations in Dynamics 365 Business Central

Learning how to manage multi-entity consultations in Dynamics 365 Business Central can help organizations manage financial data efficiently.

For companies with multiple business units or subsidiaries, consolidation is critical. Whether it's unifying financial statements across entities with distinct currencies, differing charts of accounts, or unique fiscal years, Dynamics 365 Business Central provides robust tools for consolidating financial data.

In this blog, we’ll explore how Business Central supports multi-entity consolidations and streamlines complex financial reporting across diverse business units.

Understanding Consolidation in Business Central

In Business Central, each entity involved in a consolidation is a business unit. The company in which the data is consolidated is termed the consolidated company. This setup facilitates structured data integration, making it easier for accountants to unify financial data from subsidiaries with different operating systems, fiscal years, and currencies.

Here are the primary ways Business Central supports consolidation:

1. Multi-Environment Data Consolidation: Business Central allows financial data from subsidiaries to flow into the consolidated company, even if they operate in different environments. This flexibility is key for global organizations with decentralized operations.
2. Currency Handling: If a subsidiary uses a different currency than the consolidated company, Business Central lets users set up specific exchange rates, ensuring accurate representation of the consolidated data.
3. Varied Chart of Accounts: Business Central can consolidate companies with different charts of accounts by mapping data appropriately.
4. Flexible Data Import and Export: Consolidation supports importing data from XML files or using the system’s API for automated data sharing between business units and the consolidated company.

Setting Up a Consolidated Company

Setting up the consolidated company is like creating other companies in Business Central. Accountants can customize the consolidated company's chart of accounts independently, which is especially useful when subsidiaries use varied account structures. For instance, the consolidated company’s chart can be tailored to harmonize data from different units, simplifying financial reporting and analysis.

Consolidating Across Different Fiscal Periods and Currencies

In multi-entity organizations, subsidiaries may operate in different fiscal years. Business Central handles this by aligning data from each subsidiary with the fiscal calendar of the consolidated company, thereby generating consistent financial statements. Additionally, exchange rates can be assigned at the individual general ledger account level, adding precision to consolidated reports when subsidiaries operate in different currencies.

Testing Data Before Consolidation

Business Central includes a data testing feature that detects inconsistencies before finalizing the consolidation. Testing flags potential issues such as mismatched account numbers or dimension codes between the business units and consolidated company. This step is critical for reducing errors and ensures that accountants have time to make corrections. The following steps are involved:

1. Open the consolidated company and navigate to Business Units.
2. Run a test by selecting “Test File” if using an XML file, or “Test Database” to review the database.
3. Review test results to resolve discrepancies before running the actual consolidation process.

This pre-consolidation review streamlines the process, reducing time spent on troubleshooting during final reporting.

Running the Consolidation Process

After testing and adjusting the data, users can proceed with the consolidation. An assisted setup guide in Business Central simplifies the process, prompting users through each required step. This tool includes the option to select specific subsidiaries for consolidation and grants necessary access if the consolidated company cannot reach a particular subsidiary’s data.

To start the consolidation:

1. Sign in to the consolidated company.
2. Open the Business Units page and select Consolidate.
3. Complete the required fields in the setup guide, specifying any customization based on the subsidiaries involved.

The consolidation process aggregates financial data into a Consolidated Trial Balance report, providing a holistic view of the organization’s economic health. This report summarizes each account’s data across business units and highlights eliminations, making it a valuable tool for executives and accountants.

Using the Consolidated Trial Balance Report

The Consolidated Trial Balance report displays a comprehensive financial summary, enabling users to assess the organization's overall fiscal status. It offers the following insights:

• Account Totals: A line item for each account aggregates totals for the consolidated company and each business unit. Totals can show as net changes or balances up to date.
• Eliminations: The report distinguishes entries eliminated to avoid duplicate reporting, showing the adjusted totals for the consolidated company.

For smaller organizations, a version limited to four business units is available (Consolidated Trial Balance (4)). This report offers a clear view of each account’s role across business units, providing an effective tool for financial oversight.

Consolidating and Eliminating Duplicate Transactions

Once data from multiple business units is consolidated, it’s essential to eliminate any duplicate transactions. Business Central helps with this through the G/L Consolidation Eliminations report, which allows users to assess the impact of elimination adjustments before posting them.

To eliminate duplicate transactions:

1. Identify duplicate transactions and enter the adjustments as general journal lines.
2. Run the G/L Consolidation Eliminations report to preview the changes and assess the financial impact.
3. After reviewing, post the adjusted transactions to finalize the consolidation.

This approach lets organizations keep their financial data clean, providing a clear view of consolidated performance while avoiding inflated financial results.

Exporting and Importing Data Between Databases

When a business unit’s data resides in a separate database, Business Central supports both manual and automated data transfers. For file-based exports, users can leverage the Export Consolidation batch job, exporting each company’s general ledger data into a standardized format. Data exported in this way can then be processed into the consolidated company, making cross-database consolidation straightforward.

Automating Data Sharing with Business Central’s API

For organizations requiring regular data transfers, Business Central’s API provides an efficient alternative to manual exports. The API allows automated data sharing across different Business Central environments, a useful feature for global companies operating in multiple Azure geographies.

With this setup, companies can eliminate repetitive tasks and ensure accurate, timely data transfers from subsidiaries to the consolidated company.

Best Practices for Business Central Consolidation

Now that you have a better understanding of how these processes work towards streamlining multi-entity consolidations in Business Central, here are some key things to keep in mind:

1. Establish Clear Account Mapping: Ensure all business units align on account codes and structures to prevent inconsistencies.
2. Conduct Regular Data Testing: Frequent testing helps identify and resolve issues, saving time and reducing errors in final reports.
3. Automate Where Possible: Use Business Central’s API to reduce manual work and enhance the speed and accuracy of data transfers.
4. Leverage Exchange Rates Strategically: Assign different exchange rates to specific G/L accounts when consolidating multi-currency data.
5. Review and Eliminate Duplicates: Regularly use the G/L Consolidation Eliminations report to maintain data accuracy and avoid duplication.

Reach Out Today to Learn More About Streamlining Processes in Business Central

Dynamics 365 Business Central offers a powerful solution for companies managing complex consolidations. Stoneridge experts can help you set up these processes and ensure they run smoothly to enhance your solutions.

Get in touch with Stoneridge Software for more information.

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