Looking Back on a Year in Intercompany

What’s the first thing that comes to mind when you think of intercompany? For us at BlackLine, it’s visibility. That’s especially true when we look back and see how businesses that historically struggled with different functions have been able to drive positive business outcomes by implementing our BlackLine Intercompany Solutions.

Regardless of where these improvements are initially implemented, the benefits aren’t realized by only one function; they ripple through the entire organization. So, whether you’re a part of FP&A, tax, treasury, finance leadership, or shared services, or if you’re an intercompany champion or global process owner - you can benefit from your organization improving intercompany strategies and best practices.

Throughout the year, we’ve listened to stakeholders and champions that make intercompany operations hum. Here’s a look back to some of the insights we’ve gained from those relationships and what we’ve shared with the greater intercompany community to help them achieve key business objectives through improved function-to-function visibility.

Delays in closing the books, increased costs due to painful statutory and tax audits, and the uncertainty that comes with unsettled balances - these are just some of the issues that are top of mind for Chief Financial Officers. Improved management of intercompany transactions translates to significant, measurable impacts on business outcomes and finance and accounting operations. By optimizing intercompany processes, enterprises save staff time, reduce tax leakage, improve talent retention, and — ultimately — improve profit margins year to year, all of which are important to CFOs.

Controllers have a front-row seat to which intercompany processes are working well and which ones are failing, which is why they can become intercompany heroes by optimizing processes with a top-tier solution. This includes Predictive Guidance, an AI application for intercompany that enables enterprises to proactively identify high-risk areas - so corrections can be made early in the cycle. By educating CFOs about the importance of implementing a sustainable intercompany strategy, controllers can be instrumental in organizations achieving better business outcomes.

Across industries, more businesses are hiring Global Process Owners (GPOs) or expanding their roles, and this move can be extremely advantageous in the intercompany sphere. When given proper support, GPOs can deliver strategic value to multinational organizations by creating synergies among their entities and significantly reducing costs. GPOs can direct intercompany optimization in areas of record to report, labor arbitrage, tax compliance, shared services, and mergers and acquisitions. Multinationals also benefit from establishing a Center of Excellence, in which experts from various functions who understand how technology and accounting intersect ensure that an enterprise follows intercompany policies and best practices.

Every operation must face challenges in managing Intercompany transactions, but because treasury enters the cycle downstream, it feels undue pressure to settle transactions in a timely and effective manner. Still, there’s no reason for treasury to white-knuckle its way through the job. Instead, this function should adopt intercompany best practices and solutions. The benefits are huge: significant time savings in the netting and settlement process, increased visibility and collaboration with tax and accounting colleagues, and knowing the exact amounts of a multinational’s currency exposures.

Ever since the 2021 G20 Leaders Summit in Rome - when the group created a two-pillar initiative to address global economic challenges - BlackLine has taken a proactive role in educating businesses so that they’re better prepared for impending changes, including those that are still in flux. For example, businesses must plan for the additional workload and data requirements that will result from the incremental implementation of the 15% GMT, as well as the plethora of additional regulatory and tax demands that they’re likely to encounter in the coming years.

If there’s one intercompany activity that illuminates a multinational’s connectedness, it’s the year-end close. Are your teams working in silos and struggling with disconnected data, or are they working with a “single source of truth” model of data management? When it’s the latter, your KPIs make it clear that you’ve efficiently prepared your financial statements, balanced accounts, and adhered to regulations - so your organization can benefit from highly efficient processes, control over tax compliance, optimized cash management, and fatter profit margins.

With last year in the books, it’s a good time for intercompany stakeholders to assess: What steps have we taken to optimize processes and improve function-to-function harmony? Are our teams working smarter instead of harder? How are these changes (or lack of changes) informing our strategies for the coming year?