Who can use this feature
Roles: Owner, Admin, Staff and optional on custom roles
Plans: Available on Standard, Plus, Advanced and Scale
Syft's consolidation feature allows you to consolidate complex corporate structures and other consolidations with ease and then visualize, analyze, forecast, and report.
This article is a step-by-step guide to help you create your a consolidation and answer any technical questions you have.
How to create a consolidation
You can consolidate financials from any accounting software, trial balance, transaction list, or ERP together (including Xero, QuickBooks Online, Sage Accounting, QuickBooks Desktop, MYOB, Exact, FreshBooks, FreeAgent, Acumatica, NetSuite, Sage Intacct, and more).
⚒️ Multi-level consolidations
You can consolidate an unlimited number of entities as well as other consolidations to create large group structures. We support customers with consolidations that include over 500 entities.
To create a consolidation:
Click on "Add entity" at the top right of your screen
Select "Consolidation" and then complete the fields including the consolidation's name, country, reporting currency and financial year end.
💡 Pro tip
The reporting currency is the currency that your data will be displayed in. Syft supports exchange rates for over 170 currencies.
Once you've setup the basics, you need to select the entities to consolidate. You can update your selection at any point including adding new entities that have been acquired.
Set the consolidation method, either:
Proportional: The proportional method is a management accounting approach for consolidations whereby the financials of an entity are multiplied by a proportion (or percentage). The proportion won’t be applied to contact and product data.
Acquisition: The acquisition method allows for business combinations and acquisition accounting under IFRS and GAAP. Entities are fully combined and you can add journals in the consolidation to account for goodwill, fair value, and non-controlling interests.
Additionally, you can set acquisition or disposal dates for each entity in the consolidation. Syft will automatically handle the correct accounting treatment for the entity across both the P&L and balance sheet. If there are contacts with the same name from underlying entities within a consolidation, these contacts will be grouped together.
Understand the impact of acquisitions and disposals
Acquisitions
When a business is acquired during a financial year, the business is acquired along with the profit and loss that has accrued for that financial year, i.e. the Profit and Loss (This Year) account on the balance sheet.
This means that the Profit and Loss (This Year) account on the balance sheet will not reconcile with the P&L. On acquisition date:
The balance sheet will be added to the consolidation's balance sheet with the most recent balance for each account
The profit and loss will be added to the consolidation's profit and loss with the cumulative amount for each account from the financial year start date to the acquisition date
Disposals
After a disposal, the profit or loss earned during the period in which the entity was owned by the consolidation remains on the balance sheet under the Profit and Loss (This Year) account. The consolidation's profit & loss and balance sheet will clear all accounts that relate to the disposed entity to zero following the disposal date.
P&L and Balance Sheet layouts
Once you've selected the entities for a consolidation, the Profit & Loss and Balance Sheet layouts are merged. Syft will automatically create a group for each and every account across all consolidated entities, and then combine groups with the same name to improve the ease of use. You can ungroup, move and rename accounts at any point to configure the layout the way you like.
💡 Pro tip
Layouts created in a consolidation can be made available in the underlying entities once you click "Save"
Eliminations
Eliminations allow you to remove the impact of inter-group activity to show a correct and accurate view of the consolidation. Common uses of eliminations include removing the impact of inter-group loans and revenue (or expenses) between entities. To create eliminations, navigate to "Layouts" > "Eliminations".
You can either eliminate accounts between entities or individual transactions.
🔭 Guidance
Best practice is to use account eliminations and eliminate a single account with another single account. This helps track the impact of the elimination and avoid errors.
Account eliminations
Create a new account elimination, you'll be prompted to:
Name the elimination: So you can manage the elimination later.
Create a new netting account: This is where any net amount from the elimination will be posted. This account can be either a P&L or Balance Sheet account (once selected, you can't change this so you'll have to recreate the elimination).
Select the accounts to eliminate: Select the accounts from the entities you wish to eliminate.
Once the name and category of the netting account is set, it cannot be changed. It can be viewed in the eliminations overview page and managed directly in Layouts. You can also assign a type to an elimination, either Profit and Loss, Accounts, Loans, Investment or Other. Use the enable toggle to turn an elimination on or off.
💡 Pro tip
Account eliminations are continuous. Accounts will continue to offset one another until the elimination is deleted.
Transaction eliminations
When creating a new transaction elimination, you'll be prompted to:
Name the elimination: So you can manage the elimination later.
Create a new netting account: This is where any net amount from the elimination will be posted. This account can be either a P&L or Balance Sheet account (once selected, you can't change this so you'll have to recreate the elimination).
Select the transactions to eliminate: Select the transaction from the entities you wish to eliminate.
Once you've created a transaction elimination, the transaction amounts within the elimination (debit or credit) will display their original total value and currency. This is to avoid confusion in the case that you've changed currencies or applied a proportion using the proportional consolidation method. Proportions and currencies will be applied to all your visualizations and reports once you navigate to them.
💡 Pro tip
In cases where a transaction-level elimination is contained in an account that is part of an account-level eliminations, the account-level elimination will override the transaction-level elimination.
Eliminations that net to zero
If an account eliminates to zero, the netting account created by Syft will be hidden from the P&L or balance sheet unless the option to show zero accounts is toggled on.
Budgeting and forecasting in a consolidation
You can create budgets and forecasts at the consolidation or underlying level entity. If you'd like to view budgets and forecasts from an underlying entity at the consolidation level - along with budgets and forecasts from other entities - use Build P&L and Build balance sheet.
If you have a forecast within a multi-currency consolidation and set the forecast to roll, each underlying entity can only have a single account classified as retained earnings in their COA or the forecast will not balance. This only applies to multi-currency consolidation and not single-currency consolidations - entities can have multiple retained earnings accounts in a single-currency consolidation.
Adding and removing entities from a consolidation
To add an entity to a consolidation, navigate to "Home". Click the three dots next to the consolidations name, click "Edit settings", then click "Consolidation settings". Click the dropdown and select the additional entities. Click "Save". The entities will be consolidated from the beginning of their transactional history (if you'd like to consolidate from a specific date, use an acquisition date).
To remove an entity, navigate to "Home". Click the three dots next to the consolidations name, click "Edit settings", then click "Consolidation settings". Click the dropdown and select the entities you wish to remove. Click "Save". The selected entities will be removed from the consolidation from the beginning of their transactional history (if you'd like to remove the entity from the consolidate from a specific date, use a disposal date).
⚔️ Disconnecting an entity before removing it
Disconnecting an entity will not remove the entity's data from a consolidation.
View the structure of a consolidation
To view the organization structure of a consolidation, navigate to "Home". Click the three dots next to the consolidations name, click "Edit settings", then click "Org structure". You can zoom in and out to view the structure of the consolidation.
My data seems incorrect
Consolidations are a technically complex accounting topic. There are a few things to review that could cause confusion, such as:
P&L and balance sheet layouts including the chart of accounts allocations
Acquisition and disposal dates for each entity in the consolidation
Account and transaction eliminations, especially if they eliminate across the P&L and balance sheet
Journals posted in Syft at different levels within the consolidation
FX Rates
Navigate to "Options" > "FX Rates" to view the current end-of-period and average exchange rates used for your entities within a multi-currency consolidation and override them here if required. To change an exchange rate, click on it and edit.
The exchange rates displayed are month end rates, for example, if the current month is November then the rates used are October rates.
