An Out-of-the-Box Consolidation and Close Process

Posted by Steve Berry

Jul 12, 2018 10:42:00 AM

Out-of-the-box Consolidation Process

Compared to Excel-based manual processes, Oracle Financial Consolidation and Close Cloud Service (Oracle FCCS) dramatically reduces the time and effort needed to do a financial close. 

At Strafford we like to think of the Oracle Financial Consolidation and Close Cloud Service (FCCS) as an out-of-the-box consolidation and close process. That’s because, unlike Excel-based methods (which are decidedly not out-of-the-box), Oracle FCCS does a lot of the close work for you — such as by providing prebuilt dimensions, dashboards, reports, KPIs, and other useful content. If you were only to use Excel, you would have to build this content manually. You would also have to manually create processes for handling such tasks as GAAP reporting, journal workflow, multi-currency support, and intercompany eliminations. Again, FCCS makes work swift and easy — with an application creation wizard that steps you through questions like:

  • Do you want to include multi-GAAP data and
  • If so, do you want to enter or calculate adjustments?
  • Do you want to enable journal adjustments?
  • Which ratio calculations do you want to include — i.e., liquidity ratios, asset management ratios, profitability ratios, leverage ratios?

Another issue with Excel is: how do you know your calculations, charts, and other painstakingly created content will not break as your month end close process continues to evolve in response to reorganizations, changing regulations, stakeholder requests, and so on? In Oracle FCCS, prebuilt dimensions, reports, calculations, and data entry screens will continue to work with your customer-specific configurations because FCCS itself is fully upgradeable.

Built-in Consolidation and Reporting Features

In addition to prebuilt components and upgradeable easy-to-configure processes, Oracle FCCS also builds in consolidation and reporting features — something else you would have to implement manually with Excel. These built-in features include automated:

  • Intercompany eliminations, including default intercompany eliminations
  • Journals with workflow, including journal capabilities with configurable workflow
  • Currency translation using the PVA method by default for flow activities and the VAL method for balance activities
  • Built-in foreign exchange/currency translation adjustment calculations, including automatic calculation of foreign exchange on opening balance and movements for each balance sheet account along with automated currency translation adjustment calculation
  • Automated cash flow reporting through hierarchies and system calculations that require no further rules
  • Multi-GAAP reporting in conformity to local GAAP and IFRS, with the ability to add additional GAAPs for reporting
  • Detailed data source tracking using a dimension for tracking sources of data that can include data management, journals, intercompany eliminations, and manual input

In addition to features that help automate the consolidation and close process, Oracle FCCS also includes automation (e.g., for scheduling, workflow management, and role assignment) that helps orchestrate those features along with tools to analyze and optimize your overall close performance. In other words, organizations get the best of both worlds — a tailored process that also reflects standard best practices.

Map to your ERP chart of accounts while maintaining flexibility and ease of maintenance. And, more importantly, encourage standardization of your chart of accounts across the organization.

Excel Hell

So, given all the advantages of an out-of-the-box approach, there seems little reason why anyone would rely Excel as their tool of choice for financial consolidation and close. Relying on Excel translates to more manual labor, hence more errors and a slower financial close — also a greater chance your month end close process will break and that you will be out of sync with current best practices, organizational structures, and legal requirements. It also means that you will have very limited time to spend on value add activities like analysis and process improvement.

Even something as seemingly straightforward as publishing 10Qs and 10Ks becomes a burdensome, error prone task — as the information must be rekeyed into Microsoft Word and sent outside for printing.

Another consequence of Excel (and avoided with FCCS) is lack of collaboration between entities, divisions, and corporate groups. That happens when multiple spreadsheets get emailed around the organization, with each group operating off its own and without the ability to easily share knowledge with colleagues in other groups. The problem gets even worse when you consider that Excel (unlike Oracle FCCS) lacks a version control system. So reconciling these different versions takes even more time and leads to even more errors.

Just as Microsoft Office comes in different editions — Standard, Professional, etc. — to suit different users, here’s why an “Excel EPM Edition” would look a lot like Oracle EPBCS.

But not only are different groups working off different content, different groups also have different competencies and opinions when it comes to how information should be presented, what information should be included, how certain terms should be defined, which standards should be followed, and so on — leading to a veritable Tour of Babel, further undermining any possibility the organization will apply consistent best practices. It is likely, in fact, that the close process itself will not even align with FAS 109.

Don’t Talk to the Box

Here’s one more thought about moving to an out-of-the-box financial consolidation and close solution — you can’t talk to a box. You may have questions that a box (even one as smart as Oracle FCCS) can’t answer — like what’s the best way to deploy (on-premises or public cloud)? And what about integrating resources you already have? That’s when it’s time to think out-of-the-box, and call us.

Need help implementing your out-of-the-box consolidation and close process? At Strafford, we aim to deliver enterprise performance solutions instead of simply products and services. Our consultants always take a holistic view of our client’s environment and craft the optimum approach - accounting for the unique variables in play - to achieve the desired result. What's more, we encourage our clients to play an active role during every phase of the project – from requirements gathering and tool selection to system build and end-user training. If you want to improve you close cycles, Strafford can help you do that.

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Topics: Consolidation and Close, Oracle FCCS, Finance Operations