For effective cash flow management, the financier needs to pay great attention to the consolidated budget of the company, taking into account the peculiarities of interactions between structural divisions, subsidiaries of the group and divisions among themselves. So, the consolidated budget is a document common for the whole group of companies. It consists of budgets taken separately for each structural unit and is formed on the basis of the principle of functioning of the whole group as a whole, without division into separate units.
Group reporting
During the analysis of group statements, it is necessary to distinguish between the parent or main company and its subsidiaries. It is worth noting here that the parent company exercises control over the activities of the group.
To obtain complete information about the state of affairs in the company, which includes a group of several interconnected enterprises and organizations, the consolidated financial statements are used. With its help, it is possible to analyze the property and financial position of all companies of the group for a specific date, to obtain information about their overall profitability.
Consolidated financial statements are prepared when the parent company:
- owns most of the shares of another legal entity or is part of its founders (owns more than 50% of the authorized capital);
- has the ability to influence the decision making of subsidiaries.
Consolidated financial statements for a group of companies contain assets, liabilities, capital, income and expenses of several legal entities included in the structure of the company. It provides an opportunity to form a general idea of the group.
Budget Consolidation Issues
The financier during the preparation of the consolidated budget may encounter the following difficulties:
- In different structural divisions, various principles are applied which pick on when forming the budget. All departments or enterprises of the holding plan expenses and incomes taking into account only their own characteristics, provide only for the types of articles characteristic of them. In a word, there is no single (unified) budget template for everyone;
- the need to consolidate the budgets of enterprises that work in different areas of activity, have a different cost structure;
- as a result of the growth and expansion of the company, its structure, the number of divisions, types of activities, etc., change, and all this must be promptly addressed and changes in the budget structure;
- a large amount of data that must be constantly processed, analyzed, generated reports and make informed decisions based on the information received.
To level out all of the above, use , which allows you to speed up the processing of information, form a consolidated budget, as well as carry out continuous monitoring of its implementation.
Some of these programs are which is already used by companies in Moscow and Russia is WA: Financier.
Using it you can:
- introduce a unified budgeting methodology;
- Create a unified budget template
- to consolidate the budgets of different departments and the company as a whole;
- analyze the implementation of plans for various parameters;
- monitor compliance with plans;
- generate consolidated financial statements depending on the requirements and tasks facing the CFO.