Accounting technology / Glossary / Consolidation

What is financial consolidation?

Definition

Financial consolidation is the process of combining the accounts of several legal entities into one set of group financial statements, eliminating transactions and balances between them and converting foreign currencies. Companies with subsidiaries must do it every period, and it is often the slowest step in the close.

Also calledgroup consolidationconsolidated reporting

Compare the softwareBest financial consolidation software →All 14 financial close vendors →

Key step: Intercompany eliminations
Category: Financial close
Vendors profiled: 14

How financial consolidation works

Consolidation needs each entity's trial balance, a common chart of accounts, intercompany eliminations, currency translation and minority interest adjustments. In small groups it is done in spreadsheets; in larger ones in a consolidation module of the ERP or a separate tool. Multi-entity is the single biggest reason companies leave QuickBooks or Xero for NetSuite or Sage Intacct, and it is where AI-native ledgers such as Rillet, Nominal and Light compete hardest.

Common questions

What is an intercompany elimination?+

Removing sales, loans and balances between companies in the same group so the consolidated statements show only dealings with the outside world.

How do you reduce close time with consolidation software?+

By automating intercompany matching, currency translation and the roll-up so the group close starts as soon as the last entity closes rather than days later.

Which software handles consolidation?+

ERPs with multi-entity modules such as NetSuite and Sage Intacct, layers such as Translucent for Xero and QuickBooks groups, and AI-native tools such as Nominal.