ON-DEMAND WEBINAR: Using Blockchain to Improve Intercompany Transactions

They’re alerted instantly when unusual transactions occur, rather than discovering issues days later during month-end review. The traditional hierarchical review process disappears in a 15-minute close. But here’s the surprising part – it actually makes their work more valuable, not less. A 15-minute close isn’t about having the fanciest tools – it’s about having the right tools working together in the right way. Here’s our candid analysis of why current fast-close initiatives keep failing, what technology stack is actually needed for a 15-minute close, and the exact record to report service changes required to make it happen. Month-end closes taking 5-10 days are becoming as outdated as paper ledgers.

• First, the platform is 100% programmable via API, making it easy to build just about any integration.
• Organizations often deal with numerous source systems, each with its own data formats and standards, making consolidating information difficult.
• Reconciliation of ledgers then takes place “instantly,” the reports are immediately available, and incorrect bookings are rejected thanks to the smart contract.
• The process is cumbersome and time-consuming, which increases the risk of errors.
• A distributed ledger allows users to verify transactions easily since it provides a single source of truth.
• The reduction of manual and IT-dependent controls by application controls is visible in the numbers in Fig.

Family Applications (

This lets you set rules for handling issues quickly and efficiently, keeping your financial data accurate. By using automated reconciliation software, businesses see big improvements in their financial work. Figure 16 depicts the changes in controls on the different levels with the dashed lines.

Financial Consolidation & Reporting

This meticulous process rigorously compares an organization’s internal financial records with the official bank statement. These trends and predictions highlight the dynamic nature of intercompany billing and the need for businesses to adapt to remain competitive. As the landscape evolves, companies that embrace these changes and invest in the right technologies will be well-positioned to streamline their global billing operations and drive growth. Without multilateral netting, managing payments across multiple entities becomes disjointed, leading to higher transaction costs, cash flow inefficiencies, and increased financial risk.

Learn what’s new in the latest Oracle Blockchain release

Intercompany reconciliation is a critical process in the financial consolidation of companies that are part of a larger corporate structure. When companies engage in transactions with each other, these transactions must be recorded in the books of both parties. However, discrepancies often arise due to timing differences, currency exchange rate fluctuations, or simple human error. These discrepancies can lead to significant issues in financial reporting, tax compliance, and the overall accuracy of a company’s financial statements. Therefore, intercompany reconciliation is not just a matter of regulatory compliance; it’s a strategic imperative that ensures the integrity of financial data across the corporate family.

Strategies to enable a more efficient integration of intercompany accounting processes

Using these standard data parameters will greatly increase the efficiency of the reconciliation process, by eliminating or reducing the need to search and find data pertaining to intercompany transactions. The term describes the process by which a business takes steps throughout the enterprise to ensure the uniformity, accuracy, and consistency of all its data. Primary components include peer nodes and networking, consensus, ledger/data structures, smart contracts, identity and key management, privacy controls, governance/compliance, and integration/oracles.

Technology Solutions for Streamlining Intercompany Transactions

So, in addition to traditional account reconciliation, multi-entity accounting https://www.bookstime.com/ teams also have to perform intercompany reconciliation (ICR) to verify all of the transactions among affiliates of the parent company. As we look towards the horizon of intercompany accounting, several emerging trends are poised to reshape the landscape. The increasing complexity of global business structures, coupled with advancements in technology, is driving a transformation in how corporations manage and reconcile their intercompany transactions. This evolution is not only about improving efficiency but also about gaining strategic insights that can lead to more informed decision-making. Intercompany set-off is a mechanism that allows entities within the same corporate group to net their mutual debts, thereby reducing the volume of intercompany transactions and simplifying the consolidation process.

The Future of Reconciliation in Accounting

• The advantage for the accountant would be that blockchain technology improves the processing of financial records, increases the detection of material errors and reduces the risk of human error.
• Automated reconciliation systems maintain comprehensive audit trails documenting every match, exception, and resolution, ensuring compliance with financial reporting standards like SOX, GAAP, and IFRS.
• Its primary objective lies in the identification and rectification of discrepancies between various financial accounts, statements, or documents.
• For example, one entity may classify a transaction as revenue while another log it as a liability.
• The optimization can be seen in the control steps and in the transaction level controls (see Figs. 9 and 10).
• Blockchain can provide a unified and standardized platform for integrating data from different entities, ensuring consistency and accuracy in the reconciliation process.

However, differences in currency exchange rates, timing of recognition, or even clerical errors can result in discrepancies. Blockchain reconciliation enhances intercompany reconciliation by providing an immutable ledger that ensures transparency and accuracy in recording transactions across subsidiaries. The decentralized nature of blockchain reduces discrepancies and streamlines the verification process, making intercompany financial data more reliable.

Simplify complex intercompany transactions across currencies and entities with GTreasury’s proven netting solution, integrating over 30 years of expertise. Consolidate payments into single transactions per subsidiary to reduce FX costs, streamline reconciliation, and improve cash flow visibility organization-wide. Choose from AR-driven or AP-driven netting options, with flexibility for ‘settle only matched’ transactions. Ensuring the matching of two sets of records—reconciliation—is a Statement of Comprehensive Income fundamental aspect of FinTech operations. It verifies that financial data like transactions, payments, trades and balances are accurate, enabling compliance, operational efficiency and customer trust.

9 Blockchain and Transaction Level Controls: “IT-Dependent Controls”

That’s 84 days per year of highly paid professionals doing work that leading companies have automated. Every time we discuss intercompany reconciliation 15-minute closes with CFOs and controllers, we hear similar concerns. Now, we’ll examine how finance teams need to evolve to operate in this new environment.