Intragroup transactions: 6 action points for a better management of the process
The reconciliation of intercompany transactions is often only seen as part of the consolidation process, because differences need to be eliminated during this process.
In reality, intercompany matching should be part of the closing of the local accounts.
An optimization of your reconciliation process will make sure you gain multiple days in the closing process and will increase the reliability of the financial information.
Hereunder, we list a couple of action points that can help you in optimizing your reconciliation process.
This optimization is of utmost importance as it has a direct impact on the production time of the consolidated accounts.
We recommend taking the following actions:
- Fixing a uniform exchange rate per currency within the group.
- Automation of the intercompany matching between the entities of the group and harmonization of the payments.
- Implementing a strict calendar for the intercompany transaction entries (cut-off date).
- A monthly reconciliation and review of the differences of that month (anticipation by identifying the differences as soon as possible).
- Addressing issues in advance in the general purchase and selling conditions (determination of transfer of ownership, rule of the issuer, adjustment on position of the seller, …).
- An improvement of the reporting and consolidation systems to simplify the identification and treatment of flows between the entities. Different software suppliers have already improved their offer regarding this issue and offer specific modules via web or messaging.
The above guidelines can be supplemented with dedicated software such as Sigma Conso Intercompany, which helps you with the automation of the intercompany reconciliation on transaction level.
On the same topic, you may want to read:
- Intra-group transactions: identifying differences
- How can intercompany reconciliation become part of the fast close process?
- Intercompany reconciliation that benefits the entities and account closing
- Intercompany reconciliation software: yes, but above all a process!