Accounting teams in multinational enterprises and shared service centres are well aware of the month-end close burden. And intercompany invoicing is a big part of that problem. If you can’t reconcile your intercompany transactions, you can’t close your books come period-end. The tracking, paying, and reconciling of intercompany accounts is time-consuming, resource-heavy, and prone to errors. Enterprises that undertake high volumes of intercompany activity must dedicate a significant amount of time to their intercompany eliminations on a regular basis. And many accept this as part of the process.
Invoice references = eliminate the need for Intercompany Invoice matching
Intercompany matching, the process by which companies mirror intercompany transactions in order to eliminate them from the financial reporting, adds to the burden of month-end close.
A lot of companies have to match potentially thousands of intercompany invoices accumulated during the period either manually or using an automation solution for a simple reason. And that is a lack of matching invoice references (assignment fields in SAP terms) on the accounts receivable (AR) and accounts payable (AP) side to efficiently find and match those invoices.
It is, however, possible to ensure that all your intercompany invoices are created with a matching reference field by default.
At Aico we have developed a preventative solution to Intercompany Invoicing matching. Aico ensures all invoices and purchases of intercompany transactions always carry the same reference, which allows for easy matching and elimination. Because Aico works with all major ERP systems, intercompany transactions created with Aico always match also in the respective ERP systems. During the month-end close, this means no time is wasted on matching. Instead, you can proceed with reconciling accounts automatically.
Automated intercompany journal postings = eliminate errors and corrections
No intercompany transaction is complete without a timely and accurate journal posting into the respective company ledger. It is not a given in the case of large organisations with group companies scattered across the world.
Company A may have created an invoice for a sister company B in another country and accounted for the invoice by creating and posting a journal entry. Meanwhile, the receiving company may take a week to approve the incoming invoice and post the corresponding journal. As a result, these journal postings of the same transaction end up in different accounting periods.
With automation in place, you can book the accounts receivable on the seller side and accounts payable on the purchasing side simultaneously. For example, Aico software creates AR and AP invoices simultaneously and posts journals automatically when both companies have approved the transaction if an approval is needed at all.
Join the related webinar: Wednesday, April 20th, 2022 – 12:00 PM (EEST)