Multi-entity finance, why complexity grows faster than the revenue

Posted by Sven

Multi-entity finance, why complexity grows faster than the revenue

Introduction

For organizations running multiple legal entities across Europe, finance quickly becomes complex. Cross-border operations, different national regulations, multiple ERPs, and fragmented payments create friction that undermines efficiency and strategic decision-making. This is especially relevant for teams scaling rapidly or integrating acquisitions, where inconsistent systems and local differences complicate the problem.

Key challenges faced by European multi-entity groups

Regulatory compliance obstacles

European businesses must follow national rules as well as EU directives such as GDPR, VAT, competition law and emerging ESG expectations. Parent companies can be held liable under principles such as the “single economic entity,” thereby increasing liability for subsidiary actions. Transfer pricing and intercompany documentation receive particular scrutiny in jurisdictions such as Germany and the Netherlands, which require thorough documentation and audit trails.

Consolidation difficulties

Aggregating financials from entities that use different ERPs, charts of accounts, or fiscal calendars creates inconsistencies and delays. Intercompany eliminations, FX translations and currency conversions add manual, error-prone tasks to the close process, and fragmented data slows reporting and analytics.

Operational and payments fragmentation

Decentralised payments and treasury processes lead to duplicated work: multiple approval workflows, inconsistent cash management, and limited group visibility. Europe’s fragmented banking landscape and local bank integrations complicate cross-market liquidity management. M&A-driven growth can worsen these integration gaps and increase reliance on spreadsheets.

Three practical approaches to simplify multi-entity finance

1. Centralize finance operations

Establish a central treasury or finance hub to oversee liquidity, cash pooling, and intercompany flows. Centralization reduces fragmentation, improves FX and liquidity management, and helps embed consistent compliance practices across entities, including transfer pricing governance and transaction visibility.

What centralization typically includes

Group treasury or cash hub governance
Central oversight of intercompany transactions and cash pooling
Standardised approval and compliance workflows

2. Standardise processes and data

Uniform charts of accounts, standard accounting policies, and aligned reporting calendars make consolidation smoother. Centralized data management and strong data governance (with auditable trails) reduce manual work, lower error rates, and support regulatory requirements such as GDPR and VAT documentation.

Core standardisation steps

Align COA and accounting policies across entities
Adopt a single reporting calendar for consolidation cycles
Implement data governance with clear audit trails

3. Leverage the right technology

Multi-entity ERPs and finance automation tools can automate reconciliations, manage intercompany transactions, and provide consolidated reporting and real-time cash views. Integrating spend, payroll, treasury, and FP&A reduces manual effort and shortens the close cycle, turning weeks of work into days for many organizations.

Examples of technology uses

Automated reconciliations and intercompany postings
Consolidated dashboards for group cash and KPIs
Compliance workflows and central audit trails

Conclusion

Multi-entity finance in Europe is complex but manageable. By centralising finance operations, standardising processes, and adopting targeted technology, organisations in Benelux and Scandinavia can reduce inefficiencies, improve their compliance posture, and create clearer, faster group-level reporting. For finance leaders, focusing on governance and data consistency unlocks better visibility and enables more strategic decision-making.