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Financial complexities are no joke and can get confusing quickly. Luckily for you, we’re the experts; our job is to make the complex seem simple.   

You may know a lot or nothing about multi-entity solutions. Multi-entity accounting can be an integral part of a healthy, scaling organization.   

To make it easy, we will discuss the multi-entity accounting structure, its many benefits, and what sort of organizations would benefit from implementing this game-changing solution. 

What is Multi-Entity? 

A multi-entity business is an organization that operates through multiple legal entities such as subsidiaries, divisions, operations, or brands under a single corporate structure. This parent company is responsible for maintaining the various entities’ accounting processes and providing centralized financial oversight while maintaining operational independence. 

Multi-entity accounting provides a centralized approach for efficiently managing a company’s consolidated financial data. By creating one set of financial records for all underlying entities, parent businesses can gain an accurate and holistic view of their overall economic performance while maintaining visibility into individual entities. It is vital for a multi-entity organization to be able to drill down from the parent company to identify key financials of each entity, properly seeing the financial health and identifying any anomalies.  

These companies with entities need to gain this holistic insight to properly deliver precise financial reporting, budgeting, and strategic planning.  

An example of this could be the Disney company, which owns subsidiaries such as Pixar, Marvel, and Lucasfilm. Another example is that under the parent company PepsiCo, there are various brands such as Doritos, Gatorade, Tropicana, etc.  

Defining More Beyond Multi-Entity Accounting 

Multi-entity accounting has many parts, and managing multiple financial complexities can be daunting. Read more to better understand the basics of multi-entity accounting. 

What is an Entity? 

An entity is a distinct financial and legal establishment operating within the parent organization’s structure. Every entity maintains its financial records and legal status, providing operational autonomy while remaining interconnected within the broader corporate framework. 

What is a Subsidiary? 

A subsidiary represents an entity that is either entirely or partially owned and controlled by a parent company. Ownership of a subsidiary is established through equity shares or voting rights.  

What is a Division? 

A division is a distinct segment within an entity or a separate business unit under the parent company, but it is not its own separate legal entity. 

What is Consolidation? 

Consolidation collects financial data from all an organization’s entities. This process is important for stakeholders to view and gain insight into overall performance. 

What are Intercompany Transactions? 

Intercompany transactions are financial transactions between different entities within the same organization. The transactions involve the transfer of goods, services, or funds between subsidiaries, divisions, or the parent company. 

The Benefits of Multi-Entity Accounting with Xledger 

With multi-entity accounting, you can easily navigate between your entities and your consolidated company. Let’s explore some of the benefits Xledger can provide with our multi-entity accounting solution.  

Improved Financial Visibility 

Multi-entity accounting allows you to achieve a more thorough and overarching view of financial performance across all entities. This will deliver insights that are necessary for informed decision-making.   

Efficient and Customizable Consolidation of Financial Data 

Our multi-entity consolidation solution simplifies financial management processes. With multi-entity accounting, data is collected from all entities to simplify reporting and provide a clear picture of a parent company’s overall financial health. With a better understanding of this financial health, leaders can make more informed and strategic decisions. With Xledger, our customers can customize their consolidated dashboards to suit their needs.   

Streamlined Reporting and Analytics 

It is critical to be able to see the big picture to make the best business decisions. With Xledger, you can access real-time financial reports and analytics, fostering agile responses to market changes and facilitating strategic planning. 

Secured Data and Privacy 

Xledger prioritizes the security and privacy of our customers. Multi-entity systems must uphold stringent security protocols to protect sensitive financial data across all platforms. This is one of the many reasons why Xledger ensures strict round-the-clock monitoring tools, controls, and policies, and dedicated manned security.  

Training and Support for Our Customers 

Multi-entity accounting can become complex quickly, which is why we are proud to offer training and support to our customers throughout their time with us.  

Single Login Accounting System 

With a unified accounting system like Xledger, you can effortlessly combine financial statements and navigate between individual entities and consolidated reports. With a single login, you can access all your entities and enterprise levels.   

Tracking Intercompany Transactions 

Intercompany transactions must follow tax regulations and GAAP/IFRS accounting standards to avoid compliance risks. Xledger helps automate and track intercompany accounting, ensuring transparency and compliance. 

What Type of Organizations Would Benefit from Multi-Entity Accounting 

Many types of organizations would benefit the most from multi-entity accounting. Discover whether you and your business would benefit from this solution. 

Businesses with Multiple Entities 

If your company is already a parent to many entities, subsidiaries, or divisions, you are the perfect candidate for a multi-entity accounting solution. Xledger provides multi-entity organizations like yours with powerful tools to manage complex financial structures and gain a comprehensive view of your organization’s financial health. 

Growing Companies 

Are you seeking to acquire new entities or expand? We see multi-entity accounting in your future. Without the proper financial tools, it’s easy to lose control when attempting to scale your business. With Xledger, our inheritance feature makes setting up the finances for a new entity simple.  

Looking to Upgrade your Multi-Entity Management System? 

Make your team’s multi-entity process more efficient and scalable with Xledger. Book a free demonstration of Xledger now: https://xledger.com/book-a-demo/