A multi-entity close is the period-end process run across several legal entities of the same group, ending in a single set of consolidated financial statements. It differs from a single-company close not in nature but in dependency: no entity can be considered closed until the entities it exchanges flows with agree with it.
Four stages run in sequence, and each one gates the next. They cannot be parallelised beyond a point:
- local close, where each entity completes its own accounts, cut-off and provisions
- intragroup reconciliation, where each pair of entities agrees the flows and balances between them
- package submission, where entities send their consolidation package to head office
- consolidation and review, where eliminations run and the group reviews the output
The critical path sits in stage two, and it is the only stage that grows non-linearly. Three entities produce three possible pairs to reconcile; ten entities produce forty-five. The local close of each entity does not get slower as the group grows, but the reconciliation between them does, which is why groups that double their entity count see their calendar stretch far more than proportionally.
The structural cause is that stage two happens after stage one. Entities close their books, then discover they disagree, then have to reopen a period to correct it. The correction is cheap; the reopening is not.
Regaining time therefore means moving stage two before stage one rather than compressing it. Phacet's intercompany flow reconciliation agent compares reciprocal positions continuously during the period, so disagreements surface while correcting them is still ordinary. Combined with pre-close validation and cross-entity finance control, the close becomes a review of exceptions rather than a search for them. See the closing and audit hub.
