Efficient financial planning and group consolidation: challenges and modern solutions with financial performance management systems

published on 26 June 2025 | reading time approx. 6 minutes

Companies need precise, transparent and audit-proof financial reports. They often face various challenges in this regard. Financial performance management systems (FPM systems) such as Lucanet offer solutions. They improve planning and consolidation, minimize sources of error in manual processes and enable consistent, reliable reports. This is an important success factor for modern corporate management.

Relevance of financial planning and consolidated financial statements

The reliability of financial data is essential for efficient corporate management, as a basis for economically sensible decisions and for the fulfillment of external reporting obligations. In this context, financial planning and the preparation of consolidated financial statements are of particular importance.

Consolidated financial statements must under German Commercial Code (“Handelsgesetzbuch”, HGB) generally be prepared if a (parent) company can control at least one other (subsidiary) company (see § 290 para. 1 HGB (where applicable in conjunction with § 264a HGB), § 11 PublG). In principle, this applies analogously to IFRS (see IFRS 10.1). The consolidated financial statements are the result of the consolidation of several separate financial statements. They present the group as if the consolidated companies were a single company (entity theory). In accordance with § 297 para. 1 HGB, the consolidated financial statements comprise the consolidated balance sheet, the consolidated income statement, the notes to the consolidated financial statements, the cash flow statement and the statement of changes in equity. They may also be supplemented to include segment report-ing. In accordance with IAS 1.10, the components of consolidated financial statements under IFRS largely correspond to those of consolidated financial statements under HGB. In contrast to this, however, IFRS requires the income statement to be complemented by other comprehensive income with earnings components not recognized in profit or loss or both to be combined in a consolidated statement of comprehensive income. In addition, IFRS 8.2 requires segment reporting for companies whose debt or equity instruments are traded in a public market and is an integral part of the IFRS notes. The latter is also far more extensive and complex than the notes to the consolidated financial statements prepared in accordance with the HGB.

Furthermore, planning calculations (e.g. financial, liquidity or budget planning) are also of great importance and essential for companies. Corporate planning is used internally to manage the company and is also an important tool for the early identification of economic risks. For example, according to § 91 Para. 2 of the German Stock Corporation Act (“Aktiengesetz”, AktG), corporations are obliged to take appropriate measures to ensure that developments that could jeopardize the company's continued existence are identified at an early stage. In addition, lenders and investors often require a reliable forecast of the company's future development before providing capital.

Application challenges

When preparing consolidated financial statements and planning calculations, companies often face a variety of challenges, depending on the specific internal and external requirements. Particularly when using common spreadsheet programs, elaborate and complex files have to be created and maintained with considerable manual effort. Especially in the case of complex group structures with numerous subsidiaries, different ownership structures and heterogeneous data sources as well as widely varying data quality, the implementation of consolidation is particularly challenging. Additional complexity also arises from foreign currency translation and consolidation differences, which can often only be managed with considerable manual effort when preparing the consolidated financial statements. Furthermore, individual influencing factors, such as the payment behavior of customers or seasonal fluctuations, can make it considerably more difficult to realistically depict reliable budgeted figures. In such complex structures, conventional spreadsheet programs quickly reach their functional and structural limits. Especially when it comes to consistent, traceable and audit-proof planning and consolidation processes, their possibilities and functionalities are often not sufficient. The specific requirements of the Institute of Public Auditors in Germany (“Institut der Wirtschaftsprüfer” IDW), for example within the framework of the IDW statement on accounting IDW RS FAIT 4 (“Stellungnahme zur Rechnungslegung: Anforderungen an die Ordnungsmäßigkeit und Sicherheit IT-gestützter Konsolidierungsprozesse”), can only be inadequately or not at all met with these tools, particularly with regard to data integrity and process security. In addition, traceability for internal and external stakeholders suffers. This significantly increases the risk of errors.

FPM systems as a solution

The use of FPM systems can help to meet the challenges outlined above. More and more companies are turning to specialized software solutions such as Lucanet. In contrast to conventional spreadsheet programs, such systems enable automated, integrated and transparent processing of all relevant financial data.

Lucanet offers efficient and reliable implementation of consolidation measures as part of the preparation of consolidated financial statements as well as planning processes. Due to the possibility of direct connection to various accounting and upstream systems, data can be transferred automatically, which significantly reduces manual effort and at the same time increases data quality.

The integrated planning functions in Lucanet offer companies a powerful way of efficiently, transparently and consistently modeling different types of planning, such as budgeting, forecasts and scenario-based planning. Different plan variants can be created flexibly in order to simulate different developments and assumptions. A systematic comparison of planned values with the actual values achieved makes it possible to identify deviations at an early stage and take appropriate countermeasures. With the help of detailed scenario analyses and simulations, the effects of planned investments or changes in liquidity, for example, can be realistically evaluated. Individual influencing factors, such as the payment behavior of customers or seasonal fluctuations, can also be flexibly incorporated into planning. The data created with Lucanet can be seamlessly converted into clear Excel files via a direct interface. These can then be easily forwarded to banks, investors, auditing institutions or other stakeholders.

Lucanet also provides support in the area of group accounting with practice-proven and powerful functions. All consolidation steps can be carried out automatically. In addition, disclosures in the notes can be aggregated efficiently, for example for the IFRS notes. This significantly reduces manual effort and minimizes potential sources of error. This means that even complex corporate structures can be depicted reliably, efficiently and in compliance with regulations. The result is transparent and audit-proof consolidated financial statements that meet the highest standards.

Conclusion

Particularly in complex group structures, there are specific challenges in the preparation of consolidated financial statements and planning calculations, which conventional spread-sheet programs are often no longer able to cope with. This can lead to sources of error and inefficiencies in the preparation, auditing and forwarding of information to stakeholders. Modern FPM systems offer effective support here and can raise reporting processes to a new level. Companies should therefore examine the possible applications together with experienced experts and consider implementing suitable software solutions.