Xero for Multi-Entity Companies: Consolidation Made Easy
Running multiple entities or subsidiaries introduces complexity, shared costs, intercompany loans, and multi-currency reporting. Without proper structure, bookkeeping becomes inconsistent and consolidation slow. Xero simplifies this with flexible multi-entity management tools. This guide explains how to organize, maintain, and consolidate multiple companies using Xero efficiently and accurately.
Step 1: Create Separate Xero Organizations for Each Entity
Each legal company should have its own Xero organization.
- Keeps data, chart of accounts, and bank feeds separate.
- Enables individual tax filings and permissions.
- Maintains clear audit trails for each business.
This separation is essential for compliance and clean reporting.
Step 2: Use a Consistent Chart of Accounts Across Entities
Uniform account names and numbers make consolidation easier.
- Start with a master chart of accounts.
- Apply the same structure to each Xero file.
- Avoid entity-specific naming unless required.
Consistency ensures accurate consolidated reporting later.
Step 3: Manage Intercompany Transactions
When entities share expenses or loans:
- Create Due To / Due From accounts in each file.
- Record mirrored entries in both entities.
- Reconcile balances monthly so intercompany totals net to zero.
This keeps all internal transfers transparent and balanced.
Step 4: Automate Consolidation with Tools
Xero itself does not natively consolidate multiple organizations, but add-ons fill the gap.
- Fathom: Consolidates entities for P&L, Balance Sheet, and KPIs.
- Spotlight Reporting: Offers customizable dashboards for group performance.
- Syft Analytics: Handles multi-currency conversions and eliminations.
These apps connect directly to each Xero organization and produce group reports automatically.
Step 5: Handle Multi-Currency Accounting
If entities operate globally, enable multi-currency in Xero.
- Record transactions in local currency while reporting in home currency.
- Use Xero’s built-in exchange rate tracking for revaluations.
- Verify that consolidation tools support currency translation.
This prevents inconsistencies in consolidated financials.
Step 6: Review and Lock Each Entity Monthly
Before consolidating:
- Reconcile and close each entity’s books.
- Lock prior periods to maintain data integrity.
- Generate verified trial balances for consolidation.
Regular discipline ensures smooth consolidation without backtracking.
Step 7: Centralize Reporting and Oversight
Use one dashboard for group metrics: revenue, gross margin, and expenses by entity.
Assign user roles across all organizations for visibility while maintaining security and access control.
Why Multi-Entity Management in Xero Works
- Separate yet standardized books for compliance and clarity
- Scalable reporting for growing portfolios
- Easy consolidation through connected apps
- Lower total software cost than enterprise systems
With the right workflow, Xero delivers enterprise-grade multi-entity accounting for small and mid-sized groups.
FAQs
Can I manage multiple companies in one Xero account?
Each company needs its own Xero organization, but you can access all from one login.
How do I consolidate multiple Xero entities?
Use add-ons like Fathom, Spotlight Reporting, or Syft Analytics.
Can Xero handle multi-currency consolidation?
Yes, with multi-currency enabled and supported consolidation apps.
How often should I reconcile intercompany accounts?
Monthly reconciliation prevents variances and speeds up consolidation.