PE/VC companies and fast-growing scale-ups often face the challenge of consolidating financial data at group level within just a short time of inception. But which approach makes the most sense in the early years: is a well-structured Excel-based consolidation sufficient, or should companies invest early in a dedicated consolidation or financial close tool such as LucaNet, OneStream, or Oracle EPM/HFM?
This question has come up repeatedly in conversations with interim managers and finance leaders in the PE and scale-up space. The answer depends heavily on the group’s size, complexity, and reporting obligations. Most importantly, one should clearly distinguish between management consolidation for internal steering purposes and investor/lender-focused reporting, and regulatory/statutory consolidation to deliver formally audited consolidated financial statements.
Excel
Phase
- Maximum flexibility: Adjustments for new entities, reporting structures, and chart of account mappings can be implemented immediately
Limited implementation or licensing costs: In a dynamic phase with high cash burn, cost efficiency is critical.
No change project: The organization can focus on operations and team building without having to manage a software implementation project in parallel.
Time to evaluate tools: The right consolidation tool can be evaluated strategically later, once the finance team (Group Accountant, Director of Finance, CFO) is fully established since a consolidation software usually requires well-defined processes and responsibilities.
In the buy-and-build phase or at the initial crossing of consolidated reporting thresholds, it allows to build consolidation knowledge before committing to specific software package.
Excel-based consolidation requires discipline and usually one key person driving it. It also requires clearly defined intercompany accounts, reasonably simple ownership structures, and manageable intercompany transaction volumes.
Tool
Phase
As size, reporting frequency and transaction complexity increase, Excel-based models may become more difficult to control and maintain. This is when advantages of a specialist software solutions come into play:
Higher data consistency thanks to integrated validation logic.
Multidimensional analysis by segment, country, product line.
Structured reporting processes, including disclosure management.
Role- and workflow-based approvals for stronger governance.
Better scalability, as the entities, reporting dimensions and approval workflows increase.
Once intercompany transactions become numerous and complex, or when banks and investors demand require more controlled and supportable reporting processes, the business case for a dedicated tool becomes stronger.
Trigger
Points
The transition from Excel to a dedicated consolidation software is often driven by increasing complexity rather than entity count alone. Common trigger points include:
multiple currencies or GAAP bridges,
increasing intercompany transaction volumes,
frequent acquisitions or changes in group structure,
workflow approval and audit trail expectations, and
increasing pressure for faster and more controlled close processes.
Implementation
We have learned over the years that implementation projects often require more time, internal capacity, and change management than initially expected.
Most consolidation tools are part of a broader Performance Management Software package. If you are only using the consolidation function while your management view lives in a different tool, you may not only be overpaying, but may also end up reconciling numbers between two systems.
Where statutory consolidation, lender reporting, or complex group structures already exist (usually in corporate carve-outs), earlier implementation may make more sense, provided the group has sufficient process clarity and internal ownership.
About Group Accounting Partner
Group Accounting Partner is a modern, AI-enabled accounting advisory boutique specializing in group accounting, consolidation, and financial reporting for PE/VC-backed companies and international mid-market groups.