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FinanceMarch 25, 2024

How to optimize your corporate ownership structure management

As your company grows, it's essential to have efficient financial governance of your subsidiary structure through each acquisition. This helps ensure compliance with regulations and streamlines your financial processes. As companies expand into different industries and regions, managing subsidiary information while staying within legal and regulatory boundaries has become more complicated – and has put additional pressure on finance teams to effectively bring subsidiaries into the fold and manage complex ownership structures. 

This pressure requires organizations to leverage the most effective tools to optimize their data use, manage risk, and enable data-driven decision-making. So, what are the right tools to use? And how can you optimize your corporate ownership structure management? 

The limitations of using your ERP 

Enterprise Resource Planning (ERP) systems are primarily designed to help organizations manage various aspects of their operations, including financial management, human resources, supply chain, and more. While ERP systems can be invaluable tools for many aspects of corporate management, they’re not typically the best choice for managing corporate ownership structures. Here are five reasons ERP systems fall short when managing complex ownership structures. 

  • Limitations of using multiple ERPs   
  • Lack of data customization 
  • Inefficient legal and regulatory compliance 
  • Lack of real-time tracking and reporting 
  • Integration challenges

For organizations that utilize multiple ERP systems, ownership structure management can quickly become a major complexity for finance teams. When using multiple ERPs (without additional tools), data can be siloed, posing an increased risk for reporting errors. 

Lack of data customization

ERP systems are designed to be highly structured and standardized to meet the needs of a wide range of organizations. Managing ownership structures often requires high customization, which ERP systems may not support. You may need specialized software or legal tools to handle intricate ownership arrangements effectively. 

Inefficient legal and regulatory compliance 

Managing corporate ownership often involves complying with various legal and regulatory requirements, which can vary significantly by jurisdiction and industry. ERP systems may not have the necessary features and updates to ensure compliance, leading to potential legal risks. 

Lack of real-time tracking and reporting 

Ownership structures can change frequently, especially in larger corporations. ERP systems may not be agile enough to provide real-time tracking and reporting capabilities for these changes. Specialized ownership management tools or legal software might be more suitable for this purpose. 

Integration challenges 

ERP systems are designed to integrate various business functions and may not seamlessly integrate with other specialized software or tools used for ownership management. This can result in inefficient workflows and data duplication. 

Optimizing your ownership structure management with CPM software 

Effective subsidiary management starts with the use of the right tools. Modern businesses can gain a lot from leveraging Corporate Performance Management (CPM) software that streamlines essential financial processes like budgeting, planning, consolidation, and the close process. Modern CPM software can also simplify your ownership structure data management. This comprehensive system supports informed decision-making and quick responses to changing regulatory requirements. 

Benefits of leveraging a CPM solution 

  • One place to maintain your full ownership structure 
  • Flexibility 
  • Sub-consolidation capabilities 
  • Scenario analysis 

One place to maintain your full ownership structure: A CPM platform can also maintain an organization’s full ownership structure – even when using multiple ERPs. This function gives you a single source of truth to maintain your entire ownership structure – reducing risk and optimizing resources. 

Flexibility: A CPM platform, like CCH Tagetik, gives users the flexibility to handle different accounting standards, sub-consolidations, and unique reporting standards. For example, a COM platform can automatically manage both GAAP (Generally Accepted Accounting Standards) for entities based in the US and IFRS (International Financial Reporting Standards) for international entities – enabling users to easily maintain both US and international standards. 

Sub-consolidation capabilities: CPM software can facilitate the sub-consolidation of financial data from different subsidiaries or entities within a corporate ownership structure, enabling finance teams to automate complex 

Scenario analysis: CPM software can be helpful for conducting scenario analysis when assessing the impacts of changes to ownership structure such as acquisitions and restructurings. 

CCH® Tagetik
Go beyond traditional Corporate Performance Management (CPM) software with a strategic and intelligent platform.

The right tools for the job 

Managing subsidiary structures efficiently is crucial for businesses to ensure compliance with regulations and streamline financial processes. However, as companies expand into various industries and regions, managing complex ownership structures becomes increasingly challenging, putting pressure on finance teams to bring subsidiaries into compliance and manage these structures effectively. 

Efficient ownership structure management requires the right tools to navigate regulatory compliance effectively. CCH® Tagetik empowers finances teams to leverage their data to propel their strategy with faster, better-informed decisions. Book a hands-on demo to explore how CCH® Tagetik can help optimize your corporate ownership structure management. 

Rob Konferowicz
Principal Product Experience - CCH Tagetik North America

Rob is in his 5th year with CCH Tagetik focusing on helping companies make appropriate, long-term strategic decisions on Corporate Performance Management solutions during their software evaluation cycles.

A background in finance and consulting helps Rob translate customer requirements and industry challenges into best practices with CCH Tagetik.

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