Last updated: March 7th, 2024

How to Consolidate Companies in Sage 50

Sage 50 offers a consolidated option of adding the financial data of more than one company into a single set of financial accounts for group companies. In this blog, we will see how we can consolidate companies in Sage 50 with the help of the Consolidation Wizard.

The wizard first creates a chart of accounts for the consolidated parent, based on the chart of accounts of the parent company. Then to ensure accuracy, the wizard matches the subsidiary company accounts with that of the consolidated parent.

Steps to Consolidate Companies in Sage 50

Please follow the steps mentioned below to create a consolidated company in Sage 50:

1. Open a parent or subsidiary company.
2. Go to the File menu. In the Home window, click on Consolidate Company.
3. Click Next. The wizard will start on your screen.
4. Verify if the present company is parent or subsidiary.
5. Enter a file name for the consolidated company. The wizard will then create a new data file in .csi format for the consolidated company.
6. Click Next.
7. Now click on Add to identify the subsidiary companies.
8. Click Next.
9. Navigate to the Related Accounts page. You would see the Consolidate Company wizard maps account numbers automatically from the parent company to each of the subsidiary companies.
10. If you want to map accounts manually:
    • Select the concerned company and click on Relate to map accounts manually.
    • Select Show all un-mapped accounts.
    • Near each of the subsidiary accounts, click Find in the Consolidated Parent Accounts column. This way, you can identify a parent account to map to.
    • After you have matched all accounts, click OK.
    • Repeat these steps for each of the subsidiary companies for which you need to do account mapping.
11. Click Next to finish the Consolidate Company wizard. It will retrieve the opening balances and the transactions for the present fiscal from all the subsidiary companies to the consolidated company you just created.

Example

Let us suppose your company deals in foods and owns:

1. A catering service
2. A restaurant
3. A food packaging service

With this feature in Sage 50, you can combine the charts of accounts of all these 3 companies and set up a consolidated chart for the entire business.

The consolidated company would act as any normal Sage 50 company. You can:

• Maintain your vendors, customers, employees
• Add to their charts
• Generate reports just like you do in case of any other company

Benefits of Consolidating Companies in Sage 50

There are several key benefits of consolidating companies in Sage 50:

1. Simplified reporting – With all the financial data of subsidiaries rolled up into one parent company, generating consolidated financial statements becomes much easier. You get a holistic view of the entire business.

2. Easier analysis – Consolidation allows better analysis and comparison of financial performance across different business units. You can quickly identify areas of strength and weakness.

3. Time savings – Consolidating eliminates the need to manually combine data from multiple companies, saving a lot of time and effort, especially at the period-end close.

4. Improved accuracy – The automated process reduces the chances of manual errors that can happen while combining data from different sources. The matching of accounts ensures data integrity.

5. Better decision making – With a clear, consolidated view of finances, the management can make more informed strategic decisions for the overall business rather than just individual units.

Important Considerations Before Consolidating

Before you start the consolidation process in Sage 50, ensure the following:

1. All the subsidiary companies must be from the same release year of Sage 50, for example, Sage 50 2021.

2. The subsidiary companies must use the same accounting method (cash or accrual) and have the same fiscal year structure.

3. The subsidiary companies must have the same type of general ledger account (account number or account ID).

4. If the subsidiary companies need user IDs and passwords for granting access, you need to enter the credentials for each of them.

5. All transactions created in the consolidated company must have the reference as "Consolidated Trans."

Frequency of Consolidation

There is no strict rule on how often you should consolidate companies in Sage 50. Ideally, you should update your consolidated company when you carry out your year-end procedures.

However, you may update your consolidated company more frequently if you want to keep your records more up-to-date. The frequency can depend on your reporting needs and the volume of transactions.

Conclusion

Consolidating companies is a powerful feature in Sage 50 that can greatly simplify financial reporting for businesses with multiple entities. By following the step-by-step process using the Consolidation Wizard, you can easily combine the financial data of subsidiaries into one parent company.

However, it's important to ensure that all the pre-requisites are met before starting the consolidation process. Also, decide on an appropriate frequency of consolidation based on your specific business needs.

Consolidation can save a lot of time and effort in generating consolidated financial statements while improving accuracy and enabling better analysis and decision-making for the overall business.

Frequently Asked Questions (FAQs)

What are the benefits of a multi-user license in Sage 50?

A multi-user license in Sage 50 provides several benefits:

1. You can create and consolidate multiple companies in Sage 50.
2. You can change the inventory levels for loaded transactions.
3. It reduces complexity.
4. It helps you protect your data from unauthorized users while working with clients.
5. It helps you manage the same tasks simultaneously.

Can I consolidate companies with different fiscal years in Sage 50?

No, all the subsidiary companies must have the same fiscal year structure to be consolidated in Sage 50. This is one of the key pre-requisites for the consolidation process.

What happens if I don't map all the accounts during consolidation?

If you don't map all the accounts during consolidation, those accounts will not be included in the consolidated company. It's important to ensure that all relevant accounts are mapped correctly to have accurate consolidated financial statements.

Can I make changes to the individual subsidiary companies after consolidation?

Yes, you can continue to make changes to the individual subsidiary companies even after consolidation. However, to reflect those changes in the consolidated company, you will need to update the consolidation. It's advisable to decide on a suitable frequency of updates based on your reporting needs.