Multi-entity management: Mastering financial consolidation

What is multi-entity management?

Multi-entity management is the process of overseeing and controlling multiple business units, subsidiaries, or divisions within a single organisation. It's a crucial skill for today's financial leaders, who must coordinate operations, consolidate reports, and maintain unified control across different legal entities — all whilst enabling decentralised operations.

Whether you're expanding internationally or managing domestic subsidiaries, mastering multi-entity management is key to streamlining financial processes, ensuring regulatory compliance, and maintaining consistent reporting standards across your business units.

Key aspects of multi-entity management include:

• Consolidated financial reporting

• Centralized control with decentralised operations

• Inter-company transaction management

• Multi-currency handling

• Standardised processes across entities

• Unified compliance and risk management

Understanding multi-entity management

Whether you manage a single entity or several changes how the company handles administrative and financial matters. While single-entity management can focus on optimising internal processes and simplifying workflows, multi-entity management brings an additional degree of complexity that requires a strategic approach and high-quality integrations.

Single-entity management vs. multi-entity management

Single-entity management often provides a clear and direct view of financial operations. Cash flows, expenses and income are centralised, making it easier to monitor and manage. Multi-entity management, on the other hand, involves juggling several different financial flows, regulations and perhaps even currencies, which makes monitoring and analysing financial data more complex.

If you're a CFO, controller, or finance manager in a company that manages several subsidiaries or divisions, you're likely to encounter challenges such as consolidating financial reports, reconciling inter-company expenses, and the need for overall visibility of the group's financial health.

Managing administrative complexity

Each entity within a company may operate according to its own procedures, using systems that are not always integrated. This disparity can lead to a significant amount of time spent collecting and consolidating data. Spendesk offers a solution to this problem: integrated tools that automate and synchronise financial processes across all entities.

There are several tasks that can sometimes complicate multi-entity management, which a unified management interface, with decentralised operations, can address with the following solutions:

• Expense reports and receipts: Employees use a mobile app to submit all expenses incurred while working, regardless of the currency or means of payment used.

• Reporting and analytics: Expense reports are automatically generated by the interface. The level of granularity, filters and cohorts are defined by the finance team.

• Integration and automation: Payment and expense data and all financial outputs can be exported directly into the ERP system. This process is even automated by our integrations and the public API.

Controlling spend across several related entities

In order to have an accurate overview of the financial performance of a multi-entity business, account consolidation is essential. It ensures that all financial data is collected, standardised and presented in a consistent way. Spendesk facilitates this consolidation by enabling companies to control expenditure across all entities with real-time monitoring and reporting tools.

Whether centralising payments, managing approvals or streamlining reimbursement processes, Spendesk ensures consistent and compliant financial management.

The benefits of consolidating accounts for multi-entity companies

Account consolidation offers many benefits, including greater financial transparency, more informed decision-making and improved compliance. With Spendesk, companies benefit from having all their financial data in one place, facilitating group-wide financial analysis and strategy. This not only helps to identify inefficiencies and reduce costs, but also to present a true and complete financial picture to stakeholders and regulators.

By equipping your business with the right tools and strategies for multi-entity management and account consolidation, you can not only overcome challenges but also fully take advantage of your organisation's growth potential. Spendesk is an indispensable partner in this process, providing a solution that simplifies, secures and synchronises your financial processes across all your entities.

Unified financial view: the right tools for a single source of truth

In a multi-entity environment, obtaining a unified financial view is crucial. Using platforms that centralise financial data in one place ensures that all stakeholders have access to a single source of truth. This centralisation improves and facilitates global monitoring and management, enabling consolidated analysis and consistent financial reporting across the group.

The importance of financial visibility across entities

Complete financial visibility across all entities enables decision-makers to better understand overall performance and to quickly identify areas requiring adjustment. This transparency also helps to ensure regulatory compliance and to reinforce the confidence of investors and other stakeholders.

Consolidating and harmonising all financial data will produce accurate global financial statements. This provides greater visibility of the Group's financial performance and facilitates compliance with accounting standards.

Optimising performance and decision-making

Consolidating financial data will certainly lead to optimised organisational performance. It enables managers to make informed decisions based on accurate analyses of the group's activities as a whole, rather than on isolated segments that might mask underlying problems or opportunities.

Using platforms such as Spendesk also enables simplified inter-entity reconciliation, with features that automate and verify the matching of transactions between entities.

Case study: how consolidation can improve decision-making processes

Multi-entity companies that have implemented effective consolidation systems have seen a significant improvement in their ability to react quickly to market changes. This is the case for Big Mamma Group, which currently manages more than 17 restaurants in France, the UK, Spain and Monaco.

The restaurant group faced common challenges including managing multiple currencies, reconciling inter-company transactions, and ensuring compliance across different jurisdictions. By implementing a unified financial management system, they achieved streamlined operations across all their locations, enabling real-time financial visibility and more efficient decision-making processes.

Automating accounting processes

While manual approaches are often laborious and prone to error, automated solutions offer greater efficiency and accuracy, especially in complex multi-entity environments. There are three main areas in which accounting tasks can be automated:

• Payments: transactions are made, recorded and reconciled in real time.

• Invoicing: invoices are tracked on the basis of order data. Each stage is tracked in the tool right through to payment and archiving.

• Integration: The ERP and the spend management solution work together to ensure data is harmonised across all entities.

Modern methods use integrated tools that communicate with each other to consolidate financial data automatically, enabling rapid, error-free reconciliation between the various entities.

Integration and reconciliation strategies for multiple entities

Integrated financial systems ensure that all accounting data is consistent and synchronised across all entities. Automated reconciliation helps to align inter-entity accounts, reducing discrepancies and inconsistencies.

Automation plays a key role in ensuring that transactions between different entities are correctly recorded and reconciled, thereby ensuring the integrity of financial data.

Methods for consolidating financial data

Although manual methods have long been the norm, automated approaches now offer greater efficiency and reliability, eliminating the frequent human errors in manual calculations and data entry.

• Payments: Transactions are automatically executed and recorded, simplifying the payment process between entities.

• Invoicing: The software automatically generates and sends invoices, and manages payment follow-up.

• Expense tracking: Expenses are recorded in real time with automatic categorisation, facilitating budgetary control and financial planning.

Cash flow planning and forecasting: the key benefits

Accurate cash flow forecasts are essential for effective liquidity management across multiple entities. These forecasts enable companies to anticipate cash requirements, plan investments and avoid funding shortfalls. By establishing forecast scenarios, companies can better manage cash flow fluctuations and secure future growth.

The importance of accurate forecasts for liquidity management

Accurate forecasts are crucial to maintaining healthy liquidity, which is essential to the survival and expansion of the business. They help to detect potential cash shortages in advance, optimise cash flow and improve overall financial planning.

Risk management and compliance: the role of the legal team in multi-entity management

Compliance with financial regulations, particularly in a multi-entity context, requires a thorough understanding of UK law and the relevant international directives. Companies need to keep abreast of legislative changes and ensure that their financial processes and reporting are fully compliant.

The legal team plays a vital role in risk management and compliance within multi-entity structures. They help navigate the different regulatory frameworks and ensure that the business complies with the laws in force in each jurisdiction in which it operates.

Next steps: Taking action

Numerous companies have demonstrated significant improvements in their spend management through integrated financial systems. By centralising information and automating processes, they've reduced costs, increased efficiency, and improved transparency across all entities.

For companies looking to streamline their multi-entity financial management, the key is finding a solution that facilitates consolidation while optimising risk management and accounting processes. The right tools should enable you to:

- Maintain visibility across all entities
- Automate inter-company reconciliations
- Ensure compliance across jurisdictions
- Generate consolidated reports efficiently

Ready to transform your financial management? Book a demo today to discover how to optimise your multi-entity operations.