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UKFinancial management can be intimidating for organisations looking to expand beyond a single entity. Fortunately, multi-entity accounting can serve as an integrated solution for parent businesses that oversee multiple companies and diverse entities.
A singular cloud-based finance management software can empower and simplify multi-entity operations. Before choosing which software to implement, ensure you understand how well it can support businesses with multiple entities.
To find out how Xledger’s multi-entity accounting software can help scale up your business, click here.
Multi-entity accounting consolidates the financial records of multiple business units, subsidiaries, or divisions under a single umbrella managed by a parent company.
In other words, multi-entity accounting centralises the entire financial data for a company. Parent businesses can then maintain visibility into individual entities and the company, as a whole.
Within accounting circles, an entity is a distinct and legally identifiable business that maintains separate and independent financial data. This method of independent operating captures the following information:
When parent companies treat each entity as a separate entity, accounting standards are upheld, therefore increasing transparency, accountability, and effective financial management.
To understand the structure of multi-entity organisations, it’s easiest to break it down into three subsections; entity, subsidiary, and division. After grasping this structure, the concepts of consolidation and intercompany transactions become far more accessible.
Distinct financial and legal establishment operating within the larger structure. Maintains its own financial records and legal status, operating autonomously while connecting with the broader parent framework.
Wholly or partially owned and controlled by a parent company. Ownership is established through equity shares or voting rights, giving the parent influence over financial and operational decisions. The subsidiary maintains independent legal status.
Takes various forms, including distinct segments within entities, or a separate unit under the parent company.
Although the shift to multi-entity accounting systems like Xledger carries undeniable benefits, particular challenges require careful navigation regardless of your chosen software. What matters is choosing the software you can trust to help you navigate these challenges confidently—and that’s precisely what makes Xledger the #1 choice for multi-entity accounting.
Businesses should aim for seamless integration between their multi-entity accounting software and existing business systems. Seamless integration is critical for successful adoption, however, organisations should be prepared for adjustments along the journey which may impact the integration timeline.
Each entity within the parent company must uphold stringent security protocols to ensure sensitive data is protected across all platforms. Enforcing data security and privacy protection will ensure each entity remains compliant and avoids the risk of fraud.
To avoid user dissatisfaction and disengagement, businesses should provide adequate training when using multi-entity accounting. This training should be continuous and available to all staff members, not just the finance department. That being said, it’s wise to give full administrative access to CFOs or finance leaders.
We’re proud to equip multi-entity organisations with specially designed and tailored tools to meet their accounting demands. Xledger’s robust multi-entity and consolidation capabilities help multiple business entities to navigate complex financial structures and gain valuable insight into their organisations operational health.
Our software caters to all businesses looking to:
For more information on how how Xledger can redefine your multi-entity organisation, book your free demo today.
If you’re a CFO for a mid-market business, you might want to put off carbon accounting for as long as you dare. It’s not that you don’t care about reducing emissions and staying accountable. It might simply be that your financial reporting team already has enough work on their plate.
Tussa Kraft is the parent enterprise for a group of companies specialising in renewable energy, telecommunications, IT, and the sale of energy and communication products.
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Speak to one of our dedicated team members for more information on how Xledger can support your business.
