NOTICIAS

In today’s increasingly globalized corporate world, intercompany operations are inevitable. Subsidiaries that share expenses, internal loans, service provisions, and cross-billing create a complex web of transactions known as intercompany operations. While these practices are common in conglomerates and multinationals, they represent one of the greatest challenges when it comes to reconciliation and financial closings.

What should be a routine process often turns into a bottleneck that delays financial reports, generates additional costs, and exposes companies to errors and inconsistencies in their statements.

The Maze of Intercompany Reconciliations

Each subsidiary within a corporate group may operate with different systems, currencies, and even accounting standards. This means that, when it is time to reconcile, finance teams face fragmented information, mismatched formats, and registration timelines that rarely align.

The result is an “intercompany maze,” where invoices issued by one subsidiary do not always match the counterpart’s records, and where manual adjustments become the norm. The more subsidiaries involved, the greater the challenge.

As we highlighted in a previous Conciliac blog post, this problem often goes unnoticed until it directly impacts financial closings. The lack of standardized processes not only delays consolidation but also complicates external audits and reduces confidence in reported information.

Slow Financial Closings: The Hidden Cost

The time spent resolving intercompany inconsistencies has a real cost. According to the PwC Finance Effectiveness Benchmarking 2024 study, leading finance teams have reduced their costs (as a percentage of revenue) by nearly 25% thanks to automation and standardization, while simultaneously increasing their strategic contribution to the business. By contrast, many companies still dedicate entire weeks to matching subsidiary operations, delaying the delivery of monthly, quarterly, or annual statements.

A slow financial closing is not just an internal efficiency problem: it limits the ability to react to market changes, delays investment decisions, and increases the risk of regulatory penalties. Moreover, external auditors often identify intercompany operations as a major source of inconsistencies, raising the likelihood of costly reprocessing.

As emphasized in Deloitte’s Finance Transformation Strategy Series, the key lies in replacing manual processes with digital workflows that reduce friction, accelerate closings, and strengthen information reliability.

In other words, every extra day that a financial closing is delayed is time taken away from analysis and strategic planning.

On-Time Processes as the Solution

The good news is that technology already provides concrete alternatives to transform this scenario. Automated intercompany reconciliation, with standardized processes and preconfigured validation rules, enables parallel review of subsidiary operations and detection of discrepancies as they occur.

Using “on-time” processes makes all the difference: instead of waiting for month-end to uncover inconsistencies, intercompany transactions can be reviewed quickly and proactively, correcting errors before they escalate and avoiding backlogs that delay the close.

This way, what once took weeks can now be resolved in hours, freeing up resources previously tied to repetitive manual tasks.

Automation also reduces reliance on spreadsheets and last-minute adjustments—two factors that historically increased the margin of error and diminished confidence in consolidated information.

A More Agile Future for Corporate Groups

The digitalization of intercompany reconciliations is not just an operational improvement: it is a strategic shift. According to EY’s Corporate Reporting Survey, trust in financial data has become one of the most influential factors in the relationship between organizations and their stakeholders. Reducing closing times not only strengthens that trust but also projects professionalism and transparency to investors and regulators.

Companies that shorten their financial close cycles gain a competitive advantage: they deliver accurate information faster and free the finance function to focus on what truly adds value—margin analysis, growth projections, and investment decisions.

Multinationals that have already taken this step recognize clear benefits: cost reductions, greater transparency in audits, and renewed responsiveness in volatile environments. What was once a “silent pain” is now an opportunity to professionalize financial management.

If your company is still struggling with lengthy intercompany closings, it’s time to move toward automation. Request a demo of Conciliac EDM and discover how to streamline your reconciliations to gain timely insights, free up resources, and achieve accuracy in every financial close.

 

 

Sources:

PwC – Finance Effectiveness Benchmarking 2024

Deloitte – Finance Transformation Strategy Series

EY – Corporate Reporting Survey

IFRS Foundation – International Financial Reporting Standards

Conciliac Blog – Intercompany reconciliation: the silent challenge of multinational groups