Many organisations understand how difficult and time consuming it can be to process intercompany transactions whilst at the same time ensuring that all intercompany accounts are reconciled at the end of each month. This is particularly true if an organisation has multiple legal entities spread across different geographic locations. This, combined with large data volumes, non-standard procedures and insufficient automation, can lead to errors and inconsistencies, making the reconciliation process disproportionately painful for all involved.
Often, the more legal entities there are within a group, the probability is that multiple ERP and general ledger systems will be used, adding additional complications to an already difficult process. Settlements become disconnected, fostering out-of-balance positions that are material to financial statements. Finance teams also have to consider country specific statutory requirements, exchange rates, timing of entries and high volume of re-bills and corrections, as these can cause imbalances that require research to resolve, consuming valuable time and resources.
Whilst Microsoft Excel remains a popular choice for simple matching capabilities during the initial stages of intercompany reconciliation, it falls short of the level of control required around the processes that regulators need, such as user authentication, access controls and audit trails. Through automating intercompany transactions, finance teams can reconcile intercompany balances easily and quickly, removing reliance on Excel and freeing up time to focus on more strategic activities.
Here at Eclipse, we recommend the BlackLine Intercompany Hub for automating, standardising and streamlining intercompany transactions. The solution, part of the BlackLine Finance Controls & Automation Suite, centrally interfaces with all of a company’s core ERP systems and other systems, collecting and distributing intercompany transactional data on a centralised basis. This involves a single process for reconciling, netting and settling intercompany transactions in real time, across currencies and geographies. Issues over currency values, transaction amounts and tax implications are eliminated, as Intercompany Hub takes into account these complexities via its internal rules engine, which is based on an organisation’s intercompany transaction governance guidelines. Therefore, not only do companies benefit from increased efficiency, but also improved controls and reduced financial risk.
For further information on reducing the time, effort and risk associated with processing intercompany transactions, call us on +44 203 866 8800, send an email, or download the BlackLine Intercompany Hub whitepaper, ‘Centralised & Streamlined; A Modern Approach to Intercompany Transactions’: