Company consolidation processes are a frequent challenge that we face with Microsoft Dynamics 365 Finance implementations. Some companies have different subsidiary companies in Latin America; for this reason, we need to create separate entities and separate charts of accounts (COA).
This article will focus on the Online Company Consolidation capability in Microsoft Dynamics 365 Finance and how to implement it efficiently.
First, we will create a company consolidation entity in Microsoft Dynamics 365 Finance, following this path.
Organization Administration ➡ Organization ➡ Legal Entities.
Click on New, then input the complete name of the new company, the short term, and the country this new company is from. After that, mark Yes for Use for financial consolidation process and Use for financial elimination process (Use this if your company manages intercompany transactions).
Next, we will add the entity into the organization hierarchy; to do so, we will follow the path below. Once there, click on Insert, then legal entity, and select the Legal Entity we just created and locate it whenever we desired to be within the hierarchy.
Organization Administration ➡ Organization ➡ Organization Hierarchies
Since this is a legal entity, there are some configurations that we need to do:
The first step is to generate the out-of-the-box Number Sequences that will be assigned to the processes performed in this company.
Organization Administration ➡ Number Sequences ➡ Number Sequences
Once in the form, click on Generate and follow the wizard.
This wizard will assist you with the process, follow the shown steps, and the Number Sequences will be created for the new company.
To configure 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.
Click on the consolidation and elimination entity to configure ledger parameters. For this purpose, follow:
General ledger ➡ Ledger Setup ➡ Ledger.
Remember to consider the COA we want to report before setting up the ledger for the consolidation entity. Also, Microsoft Dynamics 365 Finance will create all reports by default with the accounting currency we set up here.
Go to the consolidation entity and create a number sequence for elimination journals at:
Organization Administration ➡ Number Sequences ➡ Number Sequences
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.
To configure 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.
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.
We have completed the setup for the consolidation legal entity, and we are now ready to consolidate our balances.
First, we will access the consolidation module in Dynamics 365 Finance.
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.
Select the legal entities that should be consolidated.
We define the legal entity, account and exchange rate type, and rate on the Currency translation tab. Then, three options are available in the Apply exchange rate from the field:
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.
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:
Go to General ledger ➡ Common ➡ Trial balance
Also, we will visualize a consolidated trial balance for the periods on which consolidations were performed.
Click on Consolidations ➡ Consolidation transactions. Here, we will be able to get all entities for which consolidations were performed and all the transactions brought over for the consolidated period.
