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Considerations When Managing Multiple Entities in QuickBooks

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Multiple entities and their consolidation in QuickBooks are a real challenge.

Many QuickBooks users start off using this simple bookkeeping application to track a single business entity. A company or organization with a single location doing business in one market is a single entity. However, a business that has a single location but has transactions taking place in diverse areas or using different currency may want to set up discreet financial entities to better track how one region is doing as compared with another. Additionally, an organization with multiple locations or operations may want to compare these with one another. Each entity will have its own chart of accounts.

While definitions of an entity may vary, essentially it’s a logical grouping of operations that allow comparison of one with another so business leaders can make strategic data-driven decisions. Multiple entities enable reporting at a more granular level and at the top all-in level.

Experience tells us that once a company has entities, it adds new entities at a rate of two to three per year.  If you’re using QuickBooks for accounting with multiple entities, chances are you’re lacking visibility, doing a lot of manual work and dealing with lengthy closes. 

Let’s take the example of a quick-serve restaurant (QSR) franchisee. Each QSR requires its own set of books to track income and expenses, including payroll, facilities management and supplies. One such company is StarCorp, which operates 144 QSRs, which in QuickBooks requires 144 instances to do the accounting. Using QuickBooks, the company had to manually reconcile every location and they were doing it by exporting the data to Excel, which in and of itself was time-consuming.

With the way QuickBooks handles each entity, there are multiple logins and the data is siloed. Each entity has its own database, vendors, customers, etc. to administer – and its own chart of accounts, so consolidations and eliminations are manual processes.

By graduating from QuickBooks, StarCorp has seen groundbreaking improvements in how it manages the business. Rather than manual bank reconciliations for each of its 144 QSRs once a month, it now does a single daily reconciliation that covers all the QSRs, saving nearly 20 hour a month. The accounting team is saving eight hours per pay period on payroll, as data is automatically exported from payroll with no manual work needed. Time spent managing vendor bills has been cut from four hours a week to 15 minutes, and StarCorp is saving another 90 minutes a month with recurring bills.

Multiple Entities in QuickBooks: Questions to Ask

If your company is using QuickBooks and has multiple entities, here are some questions to ask yourself:

  • Are you doing 40 percent or more of your reports using spreadsheets outside of QuickBooks? 
  • Are executives unable to see across multiple entities using a single instance of QuickBooks?  
  • Do you have to sign into each entity to view or enter transactions? 
  • Do you manually identify and eliminate inter-entity transactions? 
  • Does it take several hours or even several days to complete your consolidations? 
  • Does it take 10 days or more to close the books?  

Improved visibility and reporting allow business leaders to make strategic data-driven decisions. This is what separates finance leaders from finance followers. Best-in-class finance leaders have information at their fingertips and can answer the hard questions with relative ease. If you’re struggling with the questions that business leaders are asking, then your role is reactive.

If your company or organization is tired of workarounds to handle accounting for multiple entities using QuickBooks, here are some things to look for in a new financial management solution:

  • A single primary general ledger chart of accounts to simplify entity setup, inter-entity transactions and multiple entity reporting
  • The ability to consolidate multiple entity financials quickly and easily with a unified chart of accounts
  • The ability to compare and analyze financial performance at each entity level or rolled up to the entire business
  • The ability to track and report spending-to-budget and actual results
  • Custom financial dashboards with dimensions by locations, lines of business and more
  • Instant visibility through roles-based customizable dashboards to track, manage and send reports, with 24/7 access from any mobile device
  • Automatic scheduling of reports for the timely, proactive monitoring of key performance indicators

If you’d like to learn more about the limitations of using QuickBooks to manage multiple entities, please read our eBook entitled Stepping up from QuickBooks: Multi-Entity Organizations

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