Intercompany elimination challenges now proven to cause severe headaches

Global organizations managing multiple entities are often challenged by their intercompany elimination process.

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This is the process a parent company undertakes to eliminate transactions within its subsidiaries. All profits and losses within the group should be eliminated allowing for only transactions with third parties to be counted. An inefficient intercompany elimination process that is too dependent on spreadsheets and manual activities can result in a material bottleneck for the entire accounting process.

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In a recent article released by OneStream, the main causes of the headaches associated with intercompany elimination fall into the following categories: 

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• Complexity – The intercompany eliminations process often requires a heavy time investment, lacks consistency, and suffers from a lack of visibility to explain any differences.
• Manual Processes – Too much reliance on time-consuming manual processes – such as uploading data from multiple accounting systems, tracking on spreadsheets or exchanging emails with colleagues – leads to errors, inaccuracies, and inconsistencies in dispute resolution.
• Volume of Transactions – Continually increasing amounts of data and documentation results in a high volume of transactions. Some organisations have millions of intercompany transactions to manually reconcile.
• Disparate Systems & Data Issues – Multiple data sources requiring manual intervention to extract and load transactions, often with data in different formats, results in a lack of alignment. Data missing details on transactions (e.g., invoices with no link to the underlying transactions) can be the result of limited or no validation checks.
• Regulation – Evolving regulatory considerations can and will continue to bring change to the intercompany eliminations process.

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The good news is that relief to these challenges can often be found with modern software that is expertly implemented by a knowledgeable professional services team.

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RVNA Technologies partners with OneStream and other leading FP&A Software platforms to help our clients solve challenges such as an inefficient intercompany elimination process.

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‍Read the Full Article

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