For businesses operating multiple divisions or subsidiaries, financial data consolidation becomes a critical process. One platform frequently used by small to medium-sized businesses for enterprise resource management is QuickBooks. However, when dealing with more than one instance of QuickBooks for each of your entities, consolidated reporting can pose a challenge. Let’s take a look at the process, discuss the benefits, challenges, and possible solutions for consolidated reporting out of multiple QuickBooks instances.
The need for consolidated reporting
Consolidated reporting involves combining financial data from several business units into a single, comprehensive report. It gives you a bird’s eye view of your organization’s financial health. This broad perspective allows stakeholders to make well-informed decisions because it brings to light essential details like profit margins, operational costs, and revenue trends across varying divisions.
Now, let’s bring this back to QuickBooks. QuickBooks stores each individual entity’s data as a “Company File”. Each of your separate QuickBooks entities has its own Company File, and also its own subscription. You may also have experienced the hassle of having to log out of one QuickBooks instance and into another to continue working. While QuickBooks does offer a way to unite access to multiple instances under a single login, automated consolidated reporting is still not offered when this is enabled. The Chart of Accounts, inventory items, and other lists are also not synced between QuickBooks companies, which can further complicate consolidated reporting. Despite this complexity, many businesses are stuck struggling to produce consolidated reports out of multiple QuickBooks instances due to the vital importance of accurate consolidated reporting.
Challenges of Consolidated Reporting out of QuickBooks
While we’ve already mentioned some of the challenges regarding consolidated reporting out of QuickBooks, let’s take a moment to review these challenges in some more detail:
- Multiple QuickBooks Company Files: QuickBooks stores each of your Company Files separately, even requiring a log-out/log-in to switch between them without QuickBooks Multi-File deal. This deal only removes the log-out/log-in burden and does not improve consolidated reporting.
- Lack of standardization between Company Files: Due to each company being separate, there is no automatic standardization or syncing of the chart of accounts, inventory, or your other dimension are not necessarily identical, which can be a massive challenge to consolidated reporting. Often significant manual effort is required to keep these in sync with each other and small.
- No automatic option provided by QuickBooks: QuickBooks provides no automated method of consolidated reporting. Common workarounds include manually combining reports from each individual Company File after they are generated and using QuickBooks Combined Reports option available in Enterprise only, which will allow a user to manually merge the reports coming out of each Company File. Both options require an end user to manually merge the data, which is costly, time-consuming, and error prone.
Solutions for Consolidated Reporting
Despite the challenges presented by QuickBooks when attempting to generate consolidated reports, there are several ways to tackle consolidated reporting out of multiple QuickBooks instances.
- Custom Effort: Many QuickBooks multi-company users end up with an internal flow or process designed to produce consolidated reports. This effort is almost always manual and requires mapping accounts, dimensions, customers, items, and more between company files. This is usually not fully automatable and requires manual effort each time consolidated reports need to be generated, leading to time lost generating reports and additional windows for the introduction of human error.
- QuickBooks-specific third-party tools: The first plug-and-play solution are third-party tools exist designed specifically to integrate with multiple QuickBooks environments and produce consolidated reports, such as QQube. However, these solutions are single purpose, and if you decide to grow beyond QuickBooks, they will no longer be useful. They also typically have limitations of their own such as ability to consolidate given disparate charts of accounts, limitations on the number of instances that can be consolidated, and more.
- Enterprise consolidation and reporting tools: Instead of buying a QuickBooks specific tool, a more general-purpose data analytics and reporting environment. One such platform is Solver from Solver Global. Solver has a built-in data warehouse and connectors to QuickBooks Online that would allow you to combine all of your data into a single data model for consolidated reporting. A solution such as Solver also has other features and functionality that could extend its use beyond consolidated reporting, and its usefulness is maintained after moving beyond QuickBooks as it can retain the historical QuickBooks data and then attach to the new ERP solution to continue reporting, further consolidating your historical data with your new state.
- ERP Migration: More and more, this is the option that is being chosen to solve the problem of consolidated reporting in QuickBooks— migrating off of QuickBooks. Other ERP solutions have multi-entity capabilities built-in or support them via plugin, addon, or module. Microsoft Business Central, NetSuite, SAP, and more support this functionality. In the previous bullet, we mentioned using Solver as a migration aid, which is a high-value step to take if you’re considering leaving QuickBooks for a more robust financial management solution at some point in the future.
In conclusion, while QuickBooks may not offer a built-in, comprehensive, and automated solution for consolidated reporting across multiple companies, there are viable ways to overcome this hurdle. By selecting a suitable approach, you can streamline your financial management and consolidated reporting. However, you may ask which solution is right for you. UniverseIT has significant experience with financial reporting, consolidated reporting, ERP migration, and would love to have a brief consultation with you to help you figure out which direction may be best for your organization and if desired, we can even help you implement your chosen solution. Give us a call, toll-free, at 1-877-447-3848 or contact us now. We’ll be happy to help.