Consolidating company accounting functions

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Businesses expand through either organic growth or acquisition.

When a company buys another company, it might become sufficiently large to serve customers on a national or international basis.

We also need to appreciate the important legal distinction between the various different companies in a group, and the group as a whole. Different sets of accounts are used for different purposes.

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To successfully merge financial systems to support a consolidated business environment, companies should do the following: 1.

This process is designed to lower overhead and production costs, create additional revenue streams, attract skilled managers and achieve economies of scale.

The consolidation of business activities reduces operational redundancies and eliminates superfluous staff and administrative functions.

As a result, operating and capital costs decline, which helps improve the bottom line.

For example, airline mergers lead to the consolidation of maintenance facilities, which improves the utilization of both the facility square footage and the maintenance staff.

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