Consolidations in Oracle Hyperion Financial Management


January 23rd, 2017

In the world of corporate financial reporting, what are consolidations?  And what is Oracle Hyperion Financial Management?

Hint:  it has nothing to do with infomercials about credit card/debt consolidation for your own personal finances.

Let’s explain it by using the example of a theoretical company that makes and sells bread.  Everyone eats bread.  We’ll call our company TheBestBread.  They have factories that make bread and stores that sell bread all over the world.  TheBestBread is a business so of course it will be helpful for them to know if they are making money and not losing money and it would also be helpful to know if they have the necessary supplies and funds to keep the business running.

Now, we get into a little bit of financial accounting.  Imagine every factory and store that TheBestBread have and as they go through each day of business, they are buying supplies, making bread, using up supplies, paying workers, and selling bread.  We’ll imagine there’s an accountant (or two or three) at each factory and store keeping records of all these things that take place which involve buying, using, making, paying, and selling.  The accountants are very busy and by the end of each month there are a lot of records that were made.  (Now in truth, a lot of these records are automatically recorded by sophisticated software such as point-of-sale systems and inventory systems.)  So imagine that there thousands upon thousands of these records because TheBestBread has so many factories and stores.  TheBestBread needs to accumulate all these records because they have records coming from all over the world in all different types of currencies…US Dollar, Mexican Peso, Euro, British Pound, Japanese Yen, Australian Dollar, and so on.

Now, we get into financial reporting consolidation.  TheBestBread needs to accumulate all their records of buying/using/making/paying/selling and have a total combined view of how all factories and stores have done.  In simple terms, this is called financial consolidation.  We consolidate the accounting information that the factories and stores in US and Mexico have with the same type of information that come from Great Britain, Japan, Australia, and all other countries.  Once, all the accounting information is consolidated together, then TheBestBread can see meaningful financial reporting about how well their business is running.  They will be able to see if they are making money from selling bread.  This will be shown in a formal financial report typically called the Profit & Loss statement (it can also be called the Income Statement).  And they will be able to see how many supplies they have and how much they owe their suppliers and how much funds are available for the business in a formal financial report typically called the Balance Sheet.  And the best solution in the world that TheBestBread would choose to provide all of this financial reporting is Oracle Hyperion Financial Management (called HFM for short).

HFM (and its associated tools) is a financial reporting system that is very flexible.  What that means is HFM can take in financial accounting information in any currency and in various different forms & ways and consolidate all those information together.  Typically, the Profit & Loss statement and the Balance Sheet are the most well known financial reports.  But then many businesses need to see something called the Cash Flow statement that shows how it has used its cash.  And then many businesses need to see more detailed information from different parts of all financial reports.  An example of detailed information is being able to see how much Australia is making money selling bread vs. what supplies Japan is spending money on.  HFM can provide all these types of financial reports.  And HFM can be available to all users whether the person is in the US or Mexico or Australia or Japan.  People from all over the world can see the same information at the same time and be able to see how the business is running (if it’s making money or losing money or it needs to buy more supplies or owes more money to suppliers than it can pay out).  That is a very powerful concept when everyone at TheBestBread can see at the same time how the business is doing.  HFM makes this happen over and over each month.  And then realize that HFM can continue to accumulate all this information over the course of many months into a full year.  It enables TheBestBread to make decisions to make the business better.

Now, where does TopDown Consulting come into the picture?  We are consultants who have the experience to help a company such as TheBestBread to implement HFM (and its associated tools) to the best of its capabilities.  We have worked with HFM on average for at least a decade and we are the experts on the reporting system.  We have experience working in all industries from consumer products to manufacturing to financial services to software and internet technology.  We know how to put HFM to the best use to deliver the Profit & Loss statements, Balance Sheet reports, Cash Flow statements, and other financial reports that relate to the company.  Our solutions are crafted from the knowledge of a decade plus of experience in working with HFM.



About TopDown Team

The TopDown Team includes members of TopDown Consulting who want to let the community know about webcasts, conferences, and other events. The team also conducts interviews on various EPM industry topics.

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