In this article, we'll perform an in-depth review of the top 3 tools to create financial consolidations. We'll give each tool a score across 10 metrics, what we consider, the important components of a tool. More on this below but first, let's ensure we're all on the same page on what a consolidation is:

A consolidation is a unified view of the financial data across multiple entities, departments, divisions, subsidiaries or business units within an organization.

Conceptually, a consolidation is quite simple. Take all the different businesses (we'll call them businesses but they could be entities, departments, divisions, subsidiaries, business units or even other consolidations) and put them together!

Typically, businesses that are consolidated are usually separate legal entities but since that isn't always the case we'll keep this loose definition. However, certain complications arise - and need to be accounted for - when creating a consolidation for the following reasons:

In addition to the above, there are second-order requirements to create and manage considerations. Other things we need to account for:

Score: 7/10

First up to review, is Fathom. Fathom Reporting accommodates inter-group transactions by allowing users to create, manage and revert account eliminations between entities within a consolidation.

You are also able to perform partial account or specific amount eliminations. Partial elimination adjustments are often required in multi-currency consolidations to balance the balance sheet.

Fathom supports consolidations across multiple currencies, recognizing the global nature of business operations. It facilitates the translation of financial data using different methods for profit & loss and balance sheet items, ensuring accurate representation of currency translation impacts.

Each company can have just one functional currency on Fathom. By using the multi-currency consolidation feature, you can present the consolidated group’s financial statements in one of several different presentation currencies.

Fathom provides functionality to handle acquisitions and disposals throughout the financial year. It allows users to adjust for the effects of these transactions on both the profit & loss statement and balance sheet, ensuring proper accounting treatment in accordance with accounting standards.

Fathom accommodates various reporting standards such as IFRS and GAAP. It allows users to consolidate data from entities operating under different standards while ensuring accurate posting of accounts and journals to meet reporting requirements.

Fathom offers flexibility in data integration methods, supporting both API-based integration and manual data uploads. Users can import financial data at different levels of detail, including account-level and journal-level data, depending on their requirements.

Fathom provides a range of reporting options beyond basic financial statements. Users can generate direct and indirect cash flow statements, statements of changes in equity and comprehensive financial statements, providing deeper insights into the financial performance and position of the consolidated entity.

Fathom allows users to view and export data at various levels, including individual business units and consolidated entities. It supports nested consolidations, enabling users to consolidate multiple levels of entities. Additionally, users can apply filters to analyze data by division or department within the group structure.

In addition to reporting capabilities, Fathom offers features such as data visualization through graphs and charts for consolidations. It also provides tools for reviewing financial data for issues or inconsistencies before generating reports. Multiple export options, including PDF, Excel, and Google Sheets, are available for sharing and further analysis of financial reports.

Fathom aims to streamline the setup process, providing documentation, tutorials, and customer support to assist users in getting started quickly. Support resources are available to address user queries and issues efficiently, minimizing the time required to become proficient with the tool.

Fathom's pricing is structured according to the number of companies that you would like to connect. There are 4 paid plans and all plans include multi-currency consolidation functionality. Each plan is capped at a certain number of companies and it will be at an extra cost to you to connect more companies until you reach the company range of the next plan.

Score 5/10

It would be a crime to exclude Excel from this review. So first up, let's look at how inter-group transactions would work on Excel. Users can create detailed templates to record inter-group transactions, such as eliminations and adjustments, between entities within a consolidated group on Excel. Formulas and functions can then be used to calculate and consolidate these transactions accurately.

Formulas like SUMIFS and VLOOKUP can be used to aggregate and reconcile inter-company balances. Additionally, pivot tables can summarize and analyze inter-group transactions for reporting purposes. However, the way Excel accounts for elimination transactions and accounts are not automated and you will need to ensure your eliminations are accounted for correctly!

Excel supports the management of multiple currencies through functions like CONVERT or XLOOKUP for currency conversion. You can set up currency conversion tables and formulas to consolidate financial data from different entities operating in various currencies. One must note that you will need to manually set up and implement your preferred currency reconciliation method.

Excel is a toss up between unlimited flexibility and inevitable human error - which one are you willing to risk?

You can track and document acquisitions and disposals on Excel by creating separate worksheets or tabs for each entity's financial data. You can then consolidate this data to reflect the impact of acquisitions and disposals on the overall financial statements. These tabs would typically capture transaction level detail such as purchase price, fair value adjustments and goodwill calculations. Formulas and functions can be used to calculate the impact of acquisitions and disposals on financial statements, including adjustments to assets, liabilities and equity.

Excel supports various accounting treatments and reporting standards by allowing you to customize formulas and templates accordingly.

Conditional formatting and data validation can also help ensure compliance with reporting standards.

Excel can integrate data from multiple source systems through various methods such as data connections, Power Query or import/export functionalities. Users can import data into Excel workbooks from the following sources:

Data transformation tools like Power Query can help you clean, filter and consolidate data from different sources before performing financial consolidation and reporting tasks.

You can create almost any graphing visual you could imagine on Excel - with enough time and patience. Excel also offers prebuilt reporting output options, including pivot tables, charts, graphs and dashboards. You can summarize consolidated financial data using pivot tables and visualize trends using charts and graphs. Conditional formatting on Excel can highlight key performance indicators or exceptions in financial reports, while dashboards can provide an interactive overview of consolidated financial metrics for stakeholders.

Excel can accommodate complex group structures by organizing financial data into hierarchical formats. You can create group-subsidary relationships using formulas like SUMIFS or INDIRECT. Consolidation worksheets would typically include rows for each entity and columns for financial statement line items.

Excel offers additional features such as data validation, which helps maintain data integrity by enforcing input restrictions and error checking. Macros enable users to automate repetitive tasks, such as data consolidation or report generation.

Add-ins like Power Pivot and Power BI provide advanced data analysis and visualization capabilities, enhancing the functionality of Excel for financial consolidation and reporting.

The time investment required for using Excel for financial consolidation and reporting depends on factors such as the complexity of the group structure, the volume of data, and the level of automation. While Excel does provide unlimited flexibility, manual consolidation processes can be time-consuming and prone to human error.

Excel available as part of the Microsoft Office suite, making it a cost-effective option for financial consolidation and reporting. The cost of Excel can range from $7/month (with the Microsoft 365 suite) to a one-time fee of $150. However, there may be additional costs associated with advanced features or third-party add-ins for specific functionalities.

Score: 9/10

Finally, let's jump right in and take a look at Syft Analytics. In terms of inter-group transactions, Syft's eliminations tool allows 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 businesses. You can either eliminate accounts between businesses or individual transactions.

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.

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.

Syft supports multi-currency consolidations and exchange rates for over 170 currencies. The reporting currency is the currency that your data will be displayed in on Syft. Choose your preferred currency recon method on Syft. Both available methods ensure that your P&L accounts are converted to the reporting currency using monthly average exchange rates whilst balance sheet accounts are converted at end of month rates.

The first method is the Equity method. Any difference between the exchange rates will be posted to the balance sheet under the Equity method. The second method is the P&L method. Any difference between the exchange rates will be posted to the P&L under the Profit & Loss method.

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 within Syft's "FX Rates" feature. The exchange rates displayed are month end rates, for example, if the current month is November then the rates used are October rates.

Syft allows for you to set acquisition or disposal dates for each business in the consolidation. Syft will automatically handle the correct accounting treatment for the business 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.

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 on Syft.

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.

Syft allows for you to pick your consolidation method between the proportional and acquisition method. The proportional method is a management accounting approach for consolidations whereby the financials of a business are multiplied by a proportion (or percentage). The proportion won’t be applied to contact and product data.

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.

You can consolidate financials together from any of the following:

(Including Xero, QuickBooks Online, Sage Accounting, QuickBooks Desktop, MYOB, Exact, FreshBooks, FreeAgent, Acumatica, NetSuite, Sage Intacct and more)

Syft's consolidation tool can produce a variety of complex reports such as direct and indirect cash flow statements for one or multiple periods. Additionally, you can create a working capital or statement of changes in equity report for the consolidation.

Furthermore, you can create financial statements, budgets and forecasts at the consolidation or underlying business level. If you'd like to view budgets and forecasts from an underlying business at the consolidation level - along with budgets and forecasts from other entities - use Syft's Build P&L and Build balance sheet tools.

On Syft you can consolidate an unlimited number of entities as well as other consolidations to create large group structures. Syft supports customers with consolidations that include over 500 entities.

Create visuals and generate reports at both levels without one affecting the other. Syft also allows for you to filter for divisions or departments within the underlying businesses and create visuals and reports for specific divisions or departments.

All features available to a single business on Syft is available to consolidations as well. This includes visualizing, analyzing and forecasting financial data. Create beautiful reports, dashboards and KPIs as well as a suite of other functions. Export any graph or report to PDF, Excel, Google Sheets or reimagine reporting with live view.

The consolidation setup is quick and easy. Once your consolidation is set up, you can immediately start generating reports. Syft offers around-the-clock support from friendly product support specialists as well as an array of help articles and specialized learning courses at your disposal. All is free of charge!

Syft's consolidation tool is available on all paid plans. There are 4 paid plans in total. The Plus plan has come recommended and it starts from $63/month per entity or $399/month for unlimited entities. This is if you choose to be billed annually. More information on Syft's pricing is shown in the images below.

Based on the thorough review we've conducted, let's take a look at our contenders to see how they stack up against each other.

Firstly, let's talk about Fathom Reporting. It's a solid choice with a score of 7 out of 10. If you're looking for a tool that covers the basics well and offers decent flexibility, it could be a really great fit. The way it handles inter-group transactions and multiple currencies is reliable, and its support for different reporting standards is definitely a plus. However, keep in mind its pricing model is based on the number of connected companies; it might work great for smaller setups but could become costlier as your organization grows.

Now, onto Excel, the classic go-to for many financial tasks, with a score of 5 out of 10. You have unparalleled flexibility and control, which is fantastic if you're comfortable with formulas and enjoy customizing your processes. While it offers extensive capabilities for managing inter-group transactions, multiple currencies and acquisitions, its manual processes and susceptibility to human errors may require additional time and oversight. While it's cost-effective, remember that its scalability might be limited by the complexity of your operations and the risk of human error.

Syft Analytics, scoring 9 out of 10, emerges as a comprehensive solution for financial consolidation. With advanced features for inter-group transactions, multi-currency support, and flexible consolidation methods, Syft offers efficiency and accuracy. Additionally, its user-friendly interface, quick setup and competitive pricing, especially with the option for unlimited entities across all plans, position it as a leading contender in the market.

Ultimately, it boils down to your organization's specific needs and preferences. If you're comfortable with a more hands-on approach and want something budget-friendly, Excel might be your best bet. But if you're looking for efficiency, accuracy, and scalability, Syft Analytics could be the game-changer your finance team needs.