Financial consolidation is the process that combines the accounts of every entity in a group into a single set of financial statements, presenting the group as if it were one economic entity. Each subsidiary keeps its own statutory accounts; consolidation builds a separate view on top of them, in which internal flows no longer exist.
Six steps run in order. Define the scope: which entities are included and under which method. Collect the packages: each entity submits its trial balance and supporting schedules. Harmonise: restate local accounting policies onto group standards. Convert currencies: translate foreign entities at the required rates. Eliminate internal flows: cancel reciprocal balances, internal revenue and costs, and internal margin. Allocate equity: split the result between the group share and minority interests.
The bottleneck is almost never the arithmetic. Consolidation software performs steps three to six reliably. What it cannot do is verify that the numbers arriving from ten entities agree with each other. It assumes the input is right. If entity A declares 40 000 and entity B declares 38 500 on the same flow, the tool eliminates what it is given and the 1 500 difference lands in an unexplained variance.
That is why groups spend the first week of close chasing an intercompany mismatch rather than analysing results, and why closing data reliability determines the calendar more than any consolidation tool does.
Phacet works upstream of the consolidation layer, not in it. Consolidating data from multiple ERPs gives every entity a common base, and the intercompany flow reconciliation agent validates reciprocal positions before packages are submitted, so elimination runs on figures both sides have already agreed. See the closing and audit hub for the wider close sequence.
