How to manage intercompany transactions?
Operations between companies that belong to the same group are always reflected in accounting. These types of operations can be loans of money, collections or payments on behalf of third parties, and can occur casually or regularly throughout the year. In any case, it is vitally important to document the management of intercompany transactions through an automatic data reconciliation solution.
Why is management of transactions between companies essential?
The management of transactions between companies has the same importance at an administrative and tax level as that of operations with third-party companies, since when these transactions are not properly documented, accounting imbalances occur that can harm the group.
In intercompany operations, sales, accounts receivable or interest payments or collection can be reflected. If a company has debts with other entities of the group, these must be reflected for, among other things:
• Avoid tax problems, taking into account the nature and type of operations.
• Increase the transparency of the company when presenting the annual accounts.
• Be honest and clear with investors when documenting transactions that have occurred within the group.
• Facilitate decision-making at the corporate level based on business objectives.
• Reduce legal risks before any operation that could harm the partners and investors of another company in the consortium.
• Identify if illegal activities are taking place within the group.
In short, your accounting data must adjust to the reality of the transactions carried out between companies.
How to document transactions productively?
Accounting Departments often have to check the nature of transactions within huge tables of operations.
Locating, detecting and identifying these intercompany operations is not always easy. In this sense, the best way to be able to identify in the bank statements those operations that are between group companies, whether for purchase or sale, and not between company-supplier and company-external client, is through a tool that facilitate automation.
Thus, we will not have to manually locate, check and validate each and every one of the operations, taking into account accounting data and bank statements.
Through an RPA solution, which allows automating routine processes, we would not need to manually check all intercompany operations in Excel and we could see that there is maximum transparency in them. In fact, we would be able to detect these operations automatically and make short-term decisions if questionable transactions were taking place.
Conciliac helps you in the reconciliation of intercompany balances, so that you can have transparent reports to use at the administrative, tax and strategic level in the management of the finances of your companies. Contact us to discover all the advantages of implementing a reconciliation software solution in your company.