As one would expect, Intercompany transactions should be a zero-sum game. An intercompany transaction should be as simple as moving money from one department to another, but for large companies with a large global footprint and a myriad of internal and external transactions crossing multiple jurisdictions and for many multinationals, the total intercompany dollar volume is frequently larger than actual revenue. You can see how this level of complexity and scope can be overlooked by CFOs and heads of finance.
Beyond the walls of finance and accounting, other stakeholders in the organization may not even know they’ve got intercompany problems. And these problems can grow to bigger operational problems over time and can add up to millions of dollars in operating costs every year. Apart from the economic impact, it can spill over into other forms like increased stress on your staff who are on the front lines trying to track and rectify imbalances and errors every month.
FourQ has been spent decades in planning, testing, implementing and tuning the intercompany processes for one the largest companies on the planet. Over the course of those years, we’ve learned a lot and tracked a lot of variables and factors that contribute to waste, errors, penalties, anomalies and costs. Some of the insights we’ve tracked and recorded are the key warning signs that can show up when organizational operations and intercompany processes are not working well.
Below are the top 10 warning signs that can show up when intercompany is not working well. If you run across one or more of these signs, it might be worth investigating what intercompany financial management can do for your team.