Learn how automating your intercompany accounting process can help your period end reconciliation become more reliable, predictable & quicker

How to Make Intercompany Predictable and Reliable — Video Transcript

Of all the financial processes your global organization undertakes, intercompany accounting may be one of the most complex and it’s probably the one that doesn’t get quite the amount of attention it deserves.

In the beginning, it may seem simple – create a workflow for the invoices, book the journal entries, reconcile the activities, and you’re done, right? Well, not exactly. Instead, along the way, you quickly encounter a whole bunch of issues – immediately, your process, especially if it’s done at all manually, starts to reveal notable gaps, and I’m not just referring to your documentation.

To help, we’ve created a process for intercompany that is predictable and reliable. Here’s how it works:

So, let’s say that your company, Swiss Choc AG, produces fine Swiss chocolate that’s enjoyed around the world. While your chocolate must be prepared in Switzerland to officially be called Swiss, you have several subsidiaries in other countries that supply ingredients and also share non-trade resources, such as marketing expenses and even team members – there are a significant amount of daily intercompany transactions, both trade and non-trade that contribute to the making of every chocolate bar.

Using the preventative controls, you can easily manage, for example, a recharge for a portion of an Almond expert’s time inspecting an upcoming shipment from Almonds, Inc. to the manufacturing entity in Switzerland, with everything from the invoices to the resulting JEs automatically generating, even if a discrepancy needs to be resolved.

Then, when the manufacturing entity needs to buy the almonds from Almonds, Inc., the diagnostic controls ensure that the JEs from both subsidiaries match by automatically applying the correct business rules to identify discrepancies. If there is a need for an exception, journal entries are created, and routed through a risk-based approval process.

Finally, As part of period-end reconciliation, the AP and AR accounts within each company’s ERP are reconciled and net within their GL. The net amount then gets routed to the appropriate party for payment, and your office of finance can sleep well without fear of a misstatement.

Ultimately, throughout the entire intercompany process, the subsidiaries can work together within a controlled environment, ensuring all the necessary accounting information, such as tax codes and currency conversions, are handled correctly. In the end, visibility to supporting documentation and contracts prevent bottlenecks or disputes at period end.

For more information on how Trintech can help you create a more predictable and reliable intercompany process, contact us today!

 

Intercompany Blog Series:
Making Non-Trade Intercompany Accounting a Non-Problem
Intercompany Accounting Series 1 of 3

Detecting the Discrepancies in Your Trade Transactions
Intercompany Accounting Series 2 of 3

Period End Reconciliation — Intercompany Accounting’s End Game
Intercompany Accounting Series 3 of 3