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The Opportunities Presented by Intercompany Financial Management

BeyondTheBlack 2022

3-minute read

We’ve talked a lot about the challenges of intercompany accounting, how to identify intercompany red flags, opportunities around improving these operations, and how you can go beyond zero with Intercompany Financial Management (IFM).

At BeyondTheBlack 2022, Varun Tejpal, managing director of intercompany at BlackLine, took the opportunity to describe in detail how organizations can put IFM to work to realize benefits you wouldn’t have thought possible.

As a quick refresher, IFM is an innovative—yet practical—approach to transforming intercompany processes for better financial outcomes. It involves integrating, orchestrating, and automating the structuring and handling of intercompany transactions to improve operational efficiencies, increase accounting accuracy, and ensure tax and regulatory compliance.

In real-world terms, IFM enables full visibility into intercompany processes and key activities and helps coordinate intercompany transactions as they move from your left pocket to your right pocket.

But how, exactly, does IFM work? BlackLine has crafted a 3-pronged approach.

1) Prevent the month-end intercompany mess by automating non-trade transactions

BlackLine’s Intercompany Non-Trade helps prevent the intercompany mess and ensure consistent regulatory and tax compliance by initiating, approving, and recording intercompany transactions and invoices. We also help enforce trading relationships, policies and required taxes, and transfer pricing.

  • Transaction creation and validation

  • Touchless processing to automate day-to-day activities

  • Transfer pricing control and execution

  • Automated cross-charges and loans

  • Management fees, allocations, and tax agreement

2) Reduce reconciliation complexity using intelligent matching rules

Intercompany Balance & Resolve integrates with all intercompany systems and data to zero out balances—improving financial reporting processes and accounting efficiency.

  • Automate transaction matching and reconciliation

  • Centrally manage dispute processes

  • Gain real-time insights into imbalances and exceptions

  • Reduce the number of days to close

  • Experience cleaner eliminations for group reporting

3) Streamline and automate transaction netting and settlement to ensure cash precision

Intercompany Net & Settle empowers collaboration between Accounting and Treasury with real-time visibility into open transactions. It integrates with treasury systems to facilitate and streamline netting, settlement, and clearing to optimize working capital.

  • Track, age, net, and settle transactions

  • Integrate with treasury systems

  • Settle faster to improve cash management strategies

  • Reduce FX exposure by settling more quickly and improving restricted currency controls

 

What Does IFM Mean for You?

Tejpal noted, “top industry experts are excited about our approach. And, while it’s nice to have the big thinkers endorsing our approach to intercompany, we're prouder of how it performs in the real world.”

Consider the results our customers are seeing:

  • 60% reduction in days to close with an 80% reduction in write-offs

  • $1.8 million saved in reduced process costs and $15 million saved in reduced tax leakage, including an 85% reduction in net BEAT exposure

  • Annual improvement rate of 8% when it comes to defendable tax deductibility

  • 60% reduction of payments and FX exposure

It's clear that IFM can get you to and beyond zero. If you’re looking for a further breakdown of its operational impact, we’ve got you covered!

1) Improve operational efficiency with a solution that systemizes, automates, and enforces processes, so they’re compliant, error-free, and transferable without quality erosion. Learn more

2) Gain global tax control by streamlining a host of tax processing, including pricing strategies that reduce tax leakage and costs related to auditing. Learn more

3) Drive margin improvements to deliver shareholder value by creating pathways for new opportunities for growth, best-in-class performance, and continuous margin gains. Learn more

4) Achieve cash precision so your organization can manage cash more precisely, by avoiding costs and improving how intercompany transactions are settled and resolved. Learn more

It’s Time to Tackle Intercompany

Don’t fret if you’re feeling a bit overwhelmed. Intercompany is a complex and chaotic beast. But keep your focus on the benefits: closing on time, every time; zero write-offs; achieving global tax compliance.

And set your sights on the previously unimaginable opportunities. With Intercompany Financial Management, you have a chance to discover a new, more sustainable, more resilient path to profitability and growth.

Book a demo to see how BlackLine Intercompany can help your company go beyond zero.