40% OF SENIOR FINANCE PROFESSIONALS SAY DIFFICULTIES IN RECONCILIATIONS AND INTERCOMPANY AGREEMENT IS WHAT DELAYS THE REPORTING PROCESS THE MOST
One of the challenges of intercompany processing is that the material differences often only come to light late in the close process when time is pressing and consideration needs to be given to other matters. In these circumstances it is tempting (and sometimes necessary) to simply accept any differences and postpone a full reconciliation for yet another period.
The key to minimizing delays around the agreement of intercompany differences is to start the procedure much earlier in the reporting cycle and to deploy intercompany accounting software that fully automates the process. In effect, the intercompany process becomes a ‘preliminary close’ in advance of the normal monthly reporting cycle.
The ability to view intercompany mismatches in the cloud at an early point in the reporting cycle allows individual companies to take remedial action and correct their positions before a consolidation is attempted. Invoice details can be retrieved from ERP systems as part of the intercompany functionality in an effort to help reconcile differences at a detailed level. Once the differences are resolved, then adjustments can be posted directly into ERP systems through the intercompany process without the need to manually post reconciling journal entries.
Redwood allows supporting documentation to be stored digitally with the relevant intercompany journals, allowing subsequent journals to be posted with a full audit trail. This cuts down on paperwork and improves the accuracy of the accounting records.
Intercompany reconciliations represent a significant manual and time consuming effort during the close. By automatically identifying intercompany differences, this important issue is addressed earlier in the reporting cycle rather than at the group financial consolidation stage where they are difficult to resolve. This clears the way for the entire process to be accelerated.
To find out more about how Redwood can help accelerate your close
Redwood offers the most comprehensive SaaS Record to Report solution which finally plugs the ‘automation gap’ that still leaves your people undertaking lots of manual work. We offer a flexible and modular approach that allows customers to address their most critical issues first and then create a roadmap to automate the rest of their R2R processes.