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Finance & Accounting

Intercompany Accounting — Shedding Light on the Biggest Priority You Never Knew You Had

Accounting, is a basic and vital business function for a company of any size, is a process that takes on deeper complexity, however, when a firm establishe

FourQ Staff
FourQ Staff

May 21, 2020

Accounting, is a basic and vital business function for a company of any size, is a process that takes on deeper complexity, however, when a firm establishes subsidiaries, business units, divisions, geographic supply chain or distribution units or other legal entities under its umbrella. Called intercompany accounting, this process must detail the complex interactions that occur between those related companies in order to track and reconcile expenses, evaluate both entity-level and consolidated financial performance, and file value-added and corporate taxes. For larger firms with multiple subsidiaries, this level of oversight requires the assembly of a team of tax, finance, and technology experts. Several trends, such as increased consolidation, integrated and flexible international supply chains and distribution channels, and growing globalization have highlighted the need for meticulous management of this discipline — but, in practice, intercompany accounting processes haven’t kept pace with the trends. While intercompany accounting is still based on time-tested principles for tracking income and expenses, old-school manual spreadsheet-based accounting processes fall woefully short when paired with this level of complexity, leading to issues like:
  • Errors in documentation
  • Currency conversion issues
  • Overlooking or misunderstanding complex or changing legal and tax regulations
  • Unresolved discrepancies and unmatched invoices
  • Corresponding flaws in enterprise resource planning (ERP) systems
And all of the above can contribute to significant delays throughout each phase of the accounting process.

Special Considerations for Multinationals

In recent years, the intercompany accounting teams of multinational organizations have begun facing escalating pressure in this arena, both internally from a variety of key stakeholders, and externally from vendors, legislators, and regulatory agencies. They are being challenged to:
  • Reduce costs
  • Ensure tax compliance to be prepared for audits and prevent penalties
  • Pay vendors promptly to avoid unnecessary interest payments
  • Show a positive return on investments
In addition, they’re being asked to do all of the above at lightning-quick speed in a way that provides transparency across the board. The largest global companies are under sustained pressure from stakeholders to “ get it right” when it comes to intercompany accounting — partly in response to several high-profile companies that have botched the process and damaged their share price and reputation – but the standards are cascading towards all companies with intercompany accounting. While solutions to these challenges vary, in general, intercompany accounting teams have not had access to a single solution that addresses all of the concerns. As a result:
  • Firms hire additional staff to attend manually to a growing pile of tasks
  • They onboard new vendors that haven’t yet been burned by their past due balances
  • Many end up paying exorbitant consultant fees, followed by software licensing fees to implement and support software (poorly suited to the specific application) that they must then train their teams to use
  • Some companies just decide to treat resulting penalties or fees as a cost of doing business.
All of these costly solutions at best only get companies through temporary pain periods, just to find them reoccur again year after year.

Exploring FourQ Solutions

With the introduction of OneBiller and PayMaster, FourQ now provides the only full-service, practitioner-built solution for automating intercompany accounting and invoice management for large multinational organizations. Our unique blend of expert consulting and purpose-engineered software helps companies institute best practices to centralize their intercompany accounting, automate back-office manual processes, minimize global compliance and tax risks, optimize resource efficiency, and maintain vendor relationships with on-time payments. Ours is a comprehensive intercompany accounting approach built for the world’s largest companies and with a focus on ROI. As a result, we are able to present to you upfront the productivity and ROI results that you can expect to achieve. And we stand behind our expertise and capabilities: our clients pay a percentage of the transaction value managed by our software—meaning our fees are always based on your confidence level and our mutual success. Our team of global tax, finance, and IT experts work collaboratively with your internal stakeholders, consultants, and vendors to understand your business’s global footprint, compliance and tax exposure risks, invoice workflows, and key performance metrics. We layer the specific knowledge gathered in discovery with our own expertise to set up and structure your FourQ environment, which translates into optimized workflows for incoming invoices, streamlined acceptance and dispute processes, and up-to-date compliance documentation for real-time audits. Our tax team simultaneously develops automated and optimized processes to mitigate incremental tax costs and penalties. With FourQ solutions, your intercompany accounting team can leverage an array of other benefits, including:
  • Increase control, predictability, and reliability throughout the process
  • Automatically generate invoices and ensure that journal entries are in sync across all entities
  • Easily and quickly identify and resolve discrepancies
  • Generate internal and external reporting
  • Resolve disputes and avoid costly delays at the end of the accounting cycle
  • Evaluate the financial performance of any division in isolation
  • Extrapolate and analyze data easily from any given reporting period

Learn More About What We Can Do for You

Our globally compliant automated intercompany accounting and invoice management solutions have been battle-tested in the most complex environments in 120+ countries worldwide. Chances are high that whatever you are seeing, we’ve seen. For more information on how we can help solve your organization’s intercompany accounting challenges, schedule a free consultation today.

FourQ Staff

Built by finance, accounting, and tax experts, FourQ is Intercompany Financial Management software that streamlines the global operations of the world’s largest companies. Providing automated intercompany processing seamlessly integrated with global vendor invoice management, FourQ helps multinational companies increase efficiency and improve global business operations. This increases operational productivity while saving millions of dollars annually through improved intercompany billing and payment and tax optimization. Discover why FourQ processes over $34 billion annually across 110 countries and how it can transform global operations at your organization.

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