---
title: "Financial consolidation"
description: "What is financial consolidation? Combining a parent's and its subsidiaries' accounts into one set of group figures. Learn the steps, with a two-company example."
url: https://1flux.ai/glossary/financial-consolidation
last_updated: 2026-10-11
---

[Accounting](https://1flux.ai/glossary#accounting)

# Financial consolidation

What is financial consolidation, and what has to happen before group figures add up?

Glossary Updated 11 October 2026

Definition

Financial consolidation combines the accounts of a parent company and its subsidiaries into one set of group figures, as if they were a single business.

## What is financial consolidation, step by step?

Consolidation adds up each entity’s balances by account, translates foreign-currency entities into the group currency and removes transactions and balances between group companies, through [intercompany elimination](https://1flux.ai/glossary/intercompany-elimination), so internal sales don’t inflate the totals. Where the parent owns less than 100%, the outside owners’ share is shown as non-controlling interest.

Example: a family group combines its UAE trading company (in AED) and its Saudi distributor (in SAR) into one AED view at month-end.

Done in spreadsheets, it can take days and is error-prone. See [running a UAE and a Saudi company in one system](https://1flux.ai/blog/uae-and-saudi-companies-in-one-system).

In 1flux

A consolidation run combines every operating entity’s ledger into a group currency, at average rates for income and expenses and closing rates for balances, and shows the translation difference. The output is a consolidated trial balance in the group currency, with a CSV export. [See multi-entity consolidation](https://1flux.ai/products/accounting/consolidation)

Related

## Keep exploring

### [Intercompany elimination](https://1flux.ai/glossary/intercompany-elimination)

Removing dealings between group companies when consolidating.

### [Currency translation difference](https://1flux.ai/glossary/currency-translation-difference)

The balancing amount from translating a subsidiary's books at different rates.

### [Multi-entity](https://1flux.ai/glossary/multi-entity)

One system running several legal companies, each with its own books.

### [Multi-entity consolidation](https://1flux.ai/products/accounting/consolidation)

Every company's ledger in one group currency, with a visible translation difference.

Last updated 11 October 2026