February 11, 2020

Consolidate Companies Using Dynamics 365

Small Business
Ronald B. Allen

Dynamics 365 gives you two options for consolidating reports of multiple businesses within Business Central. Using the Consolidated Trial Balance report in the Accountant Role Center lets you carry out a simple consolidation setup or an advanced one. Both will provide the overview you need of your business’s overall financial health. At Exigo Business Solutions we recommend that businesses with multiple entities need scalable accounting software and should use Dynamics 365 or software that is built on the Dynamics 365 platform. Does your business need Dynamics 365? We can help you find the answer.

The way it works is that Dynamics365 takes your general ledger entries from all of your separate business entities and consolidates them into one report. The consolidated “company” is a holder for the data from the individual companies but does not have any “live” or editable business data. Within the consolidated report you will have Business Units that represent your individual companies.

How you do the consolidation will give you the best insights if the process is carried out with an eye toward revealing intercompany processes, transactions, and other relationships. Consolidation can be done despite companies having different charts of accounts, using different currencies, or having different fiscal years. You can set this us using different exchange rates for currencies in each general ledger account and you can enter either percentages or full amounts of financial information for each individual company. If at any step along the way you would like a bit of help, feel free to contact Exigo Business Solutions for advice.

Simple Company Consolidation versus Advanced Consolidation

Many times you may not require advanced consolidation settings. For example, you may only own part of a company and need less information than if you were in charge of all operations. You can go through the basic steps of a simple company consolidation.

Simple Company Consolidation with Dynamics 365

Dynamics 365 has a guide for doing simple assisted setups.  Here are the steps.

Pick from two options, create a new consolidated company or consolidate data within a company that you have already created for this purpose. (The company ought not to contain transactions.) You can preview the results to make certain that the transactions and master data may be transferred successfully to your consolidated company.

Go to the Accountant Role Center and pick Assisted Setup.

Pick the set up that you want and follow each step in the guide.

• Select the Business Units

• Test the Consolidation

• Run the Consolidation

• Review Your Consolidated Trial Balance

If this works for your purposes, it is a quick and easy way to consolidate companies. If you need a more high-powered approach, you can do the advanced consolidation that Dynamics 365 provides.

Advanced Company Consolidation with Dynamics 365

Because of the details involved, you will set up an advanced company consolidation manually. For example, you may have companies that you do not wish to include in the consolidation. If you need help in setting up this consolidated company, take a look at the Dynamics 365 Getting Ready to Do Business Section. You will set up the consolidated business just like you would set up other businesses.

You will create a list of companies you wish to consolidate, verify all accounting data before consolidating, import the files, and then create consolidation reports.

To sign in to your consolidated company, click the light bulb icon which opens a “Tell Me” feature, enter your Business Units, and pick the correct link.

Choose “New,” and fill in the necessary fields. To get a brief description, just you’re your mouse over any field.

Note: Make certain to follow Generally Accepted Accounting Principle rules in regard to fiscal periods for the business units and not the parent company.

You will want an exchange rate to use if the business unit uses a foreign currency. And, you will want to include consolidation information in regard to the general ledger accounts of the business unit.

Preparing General Ledger Accounts for Consolidation

You will need to do this if you have different charts of accounts for the business unit in question and your consolidated company. If you will run the report frequently, you may wish to specify which accounts you will post credits and debits for as well as a method for translating currencies.

Start by picking the light bulb icon to open the Tell Me icon. Then enter the Chart of Accounts and pick the correct related link.

Open the card that goes with that account and fill the necessary information on the Consolidation “FastTab.”

Setting Up Exchange Rate Consolidations with Dynamics 365

When currencies used by one or more business units differ from than used by the consolidated company, you need to set up exchange rate methods for each account in question. And, you must do this before you carry out the consolidation.

The information in the Console. Translation Method will determine the exchange rate for each individual account. Use the Currency Exchange Rate Table in each business card to select the exchange rate from the business unit to the consolidated company. If your consolidated company uses exchange rates, you will need to change rates in each business unit. Currency exchange rates are copied to the units from the Currency Exchange Rate table and may need to be modified manually in any given unit from the business card.

These are the methods for setting up exchange rates for your accounts and how they are used.

Average Rate, Entered Manually

This method is used for income statement accounts. Calculate the average exchange rate for the period in question either as a best estimate or as an arithmetic average. This must be done for each business unit that needs an exchange rate.

Closing Rate

This method is only used for balance sheet accounts.

Last Closing Rate

This method is also used for balance sheet accounts. You use the exchange rate for the date when the balance sheet (or income statement) is prepared. It must be entered for each business unit separately.

Historical Rate

In this case, use the exchange rate for the date when a transaction occurred.

Composite Rate

This method requires that you translate all current period amounts at an average rate and then add to the balance that was previously recorded. Use this method for retained earnings accounts as these will include amounts from various periods making them a composite of the amounts that get translated from various exchange rates.

Equity Rate

This is like the composite rate. The differences get posted to separate accounts in the general ledger.

Choosing the Rate

Pick the rate to use by going the light bulb, Tell Me, and then Business Units. Choose your link there and follow the directions.

Excluding a Company from the Consolidation

To do this, simply go to the business unit card and clear the checkbox next to Consolidate for that item.

Including a Partially-owned Company in the Consolidation

In this case, you can use a percentage for each transaction. That percentage will match your percentage of company ownership. Thus, a 50% owner of a company will include 50% of items such as invoices. Set the percentage that fits on the business unit card by adding the correct percentage in the Consolidation % field.

Test Your Data before Consolidating

Dynamics 365 lets you test to make sure that the consolidation will work. When you do this, Dynamics 365 Business Central checks for differences and discrepancies between individual business units and the consolidated company. Specifically, it looks at issues like account numbers and dimension codes that don’t match. You need to fix these before the system will run the report. You can do this by testing the database such as when you are importing an XML file.

Start by opening the consolidated company. Follow the light bulb, Tell Me, Business Units route and choose the appropriate link.

Then do one of these:

• Test a file by choosing the Test File action. Just enter the file’s name and click Print.

• For testing databases, pick the Test Database option.

Running the Consolidation in Dynamics 365 Business Central

Once you have tested your data and fixed any errors, sign in to your consolidated company. Go to the Accountant Role Center and pick Run Consolidation. Fill in the necessary fields. Use the Where field to pick the Company Name and

On the Accountant Role Center, choose the Run Consolidation action.

Fill in the required fields.

In the Where field, choose Company Name, and then choose the consolidated company in the “is” field.

Eliminating Repeated Transactions

One of the necessary tasks that are best done before consolidating but commonly needs to be done to fix things is getting rid of repeated transactions.

Although we would like to fix this issue beforehand, it is the consolidated report that often brings these issues to light. To process eliminations in your consolidation, you will have to do it manually.

When you discover errors you will enter journal lines to eliminate them. You can test the effects of your journal line changes by running the Run G/L Consolidation Eliminations report. Do this before posting.

When you post with adjustments, the G/L Consolidation Eliminations report shows you the tentative trial balance. You can then compare entries in the consolidated company and the effects of your journal eliminations.

Consolidate Companies Using Microsoft Dynamics 365 Business Central

Dynamics 365 and Business Central make it possible to efficiently consolidate business data from various companies, even those using different currencies. The software walks you through the process with help readily available at every turn.

Does your business need Microsoft Dynamics? If you need to consolidate financial information from several business entities, this may well be the case. Contact us at Exigo Business Solutions for advice on how to use Microsoft Dynamics 365 in your business.

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