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Online Company Consolidation in Microsoft Dynamics 365 Finance and Operations

Microsoft Dynamics 365 Finance and operations

Company consolidation processes are a frequent challenge that we face with Microsoft Dynamics 365 Finance and Operations implementations. Some companies have different subsidiary companies in Latin America, for this reason we need to create not only separate entities, but also separate charts of accounts (COA).

In this article I will focus on the Online Company Consolidation capability in Microsoft Dynamics 365 Finance and Operations and how to efficiently implement it.

1.    Create a consolidation entity

To create a company consolidation entity in Microsoft Dynamics 365 Finance and Operations, we must access in Organization administration > Organizations > Legal entities.

Microsoft Dynamics 365 Finance and operations

Then click on New and mark the company as:

– Use for financial consolidation process.

– Use for financial elimination process (Use this if your company manages intercompany transactions).

Microsoft Dynamics 365 Finance and operations

Microsoft Dynamics 365 Finance and operations

Add the entity into organization hierarchy.

Microsoft Dynamics 365 Finance and operations

Since this is a legal entity, there are some configurations that we need to do:

  • Generate number sequences

Go to Organization administration > Number sequences > Number sequences.

Then, click on Generate and follow the wizard.

Microsoft Dynamics 365 Finance and operations

Microsoft Dynamics 365 Finance and operations

Microsoft Dynamics 365 Finance and operations

  • General ledger parameters

To configurate this parameter click on General ledger > Ledger Setup > General ledger parameters.

Then, click on Batch transfer rules and change transfer mode to Synchronous.

This option allows to immediately transfer source document subledger journal entries to the general journal.

Microsoft Dynamics 365 Finance and operations

  • Ledger setup

Click on the consolidation and elimination entity to configure ledger parameters. For this purpose, select General ledger > Ledger Setup > Ledger.

Remember to take into consideration the COA we want to report in before setting up the ledger for the consolidation entity. Also, Microsoft Dynamics 365 Finance and Operations will create all reports by default with the accounting currency we set up here.

Microsoft Dynamics 365 Finance and operations

  • Number sequence

Go to the consolidation entity and create a number sequence for elimination journals at Organization administration > Number sequences > Number sequences.

Microsoft Dynamics 365 Finance and operations

  • Journal name

Use an elimination journal if the company manages intercompany transactions. This journal will remove the additional entries that were created when posting intercompany transactions.

To start the configuration, we go to General Ledger > Journal Setup > Journal Names and click on New.

Microsoft Dynamics 365 Finance and operations

  • Accounts for automatic transactions

To configurate this parameter, we click on General Ledger > Posting Setup >Accounts for automatic transactions. As soon as we have selected this option, we need to configure accounts for transaction types.

Microsoft Dynamics 365 Finance and operations

  • Consolidation accounts

Part of the company consolidation process is to map consolidation accounts to their corresponding statutory account. In this case, I am consolidating with a legal entity, so we need to consolidate from our local accounts to our global accounts.

Select each company we want to consolidate and enter the consolidation account, or our global account.

For this, go to: General Ledger > Chart of accounts > Accounts > Main accounts. Select every account and map to the global COA.

• Global COA:

Microsoft Dynamics 365 Finance and operations

• Local COA:

Microsoft Dynamics 365 Finance and operations

At this point, we will have completed our setup of the consolidation legal entity and we are now ready to consolidate our balances.

2.    Consolidate in Dynamics 365 Finance and Operations

Access to the consolidation module in Dynamics 365 Finance and Operations.

First, click on Consolidations > Consolidate Online.

Go to the core options to create our consolidations. Be very careful when selecting every option to get accurate results.

  • Criteria

  1. Main account: select the accounts that should be included in the consolidation. If we don’t select an account range, Microsoft Dynamics 365 Finance and Operations will show us all charts of accounts.
  2. Use consolidation account: if we set this option to Yes, the selected consolidation account from field becomes available. Select whether all accounts should be merged to the consolidation account that is set on the Main accounts page, or whether we want to select the account from one of the consolidation account groups.
  3. Consolidation period: select the range of dates for the consolidation.
  4. Mark the gap for Include actual amount and Rebuild balances during consolidation process.

Microsoft Dynamics 365 Finance and operations

  • Legal entities

Select the legal entities that should be consolidated.

Microsoft Dynamics 365 Finance and operations

  • Currency translation

On the Currency translation tab, we define the legal entity, account and exchange rate type, and rate. Then, three options are available in the Apply exchange rate from field:

  • Consolidation date:Use the consolidation date to get the exchange rate. This rate is equivalent to the spot or month-end rate. We will see a preview of the rate, but we can’t edit it.
  • Transaction date: in this scenario, use the date of each transaction to select an exchange rate. This option is most often used for fixed assets and is often referred to as a historical rate.
  • User defined rate:after we select this option, we can enter the exchange rate. This option can be useful for average exchange rates or if we’re consolidating against a fixed exchange rate.

Microsoft Dynamics 365 Finance and operations

Then click on OK and the online company consolidation process will begin. It can take several minutes depending on the number of transactions and companies that we need to consolidate.

Microsoft Dynamics 365 Finance and operations

3.    Check your Company Consolidation Transactions

There are several ways in which we can view the results of our consolidation process. So, let’s take a look at a few of them:

  • Trial balance

Go to General ledger > Common > Trial balance

Also, we will visualize a consolidated trial balance for the periods on which consolidations were performed.

Microsoft Dynamics 365 Finance and operations

  • Consolidation Transactions

Click on Consolidations > Consolidation transactions.

Here, we will be able to get all entities for which consolidations were performed, as well as all the transactions that were brought over for the consolidated period.

Microsoft Dynamics 365 Finance and operations

Microsoft Dynamics 365 Finance and operations

If you follow the steps mentioned above and have a clear vision of what your company requires, I have no doubt that you’ll be able to perform consolidations and create reports without any major issues.

Microsoft Dynamics 365 Finance and Operations has many powerful capabilities for your company to enhance your business processes and operations.

If you require more details about Microsoft Dynamics 365 Finance and Operations, feel free to contact us and one of our experts will reach out to you.

Mario Rodríguez

Microsoft Dynamics 365 Finance and Operations Junior Consultant at Pangea Group
Mario is consultant for Microsoft Dynamics 365 Finance & Operations at Pangea Group.Mario has 4 years of experience working with GP, AX, Microsoft Dynamics 365 Finance and Operations and finance and distribution modules.
Mario Rodríguez

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