Blog Post
Intercompany Accounting Software: Managing Multi-Entity Chaos
For any company with more than one subsidiary, "Intercompany" is often a dirty word. It represents the messy, manual process of ensuring that when Entity A pays for Entity B's expenses, the books actually balance. Without specialized intercompany accounting software, this chaos leads to month-end bottlenecks, tax compliance risks, and audit nightmares.
Why is Intercompany Reconciliation So Hard?
The complexity stems from volume and currency. If you have 10 entities trading with each other in 4 different currencies, you aren't just matching transactions; you are managing FX gains/losses, transfer pricing rules, and tax implications simultaneously.
Traditional ERPs often struggle here because they treat each entity as a silo. This forces accountants to extract data into Excel to perform the eliminations manually—a process prone to human error.
The Role of Automation Software
Specialized intercompany reconciliation software acts as a bridge between your entities. It automates the "Due To / Due From" matching process by:
- Centralizing Data: Pulling transactions from all entity ledgers into one hub.
- Automated Matching: Automatically pairing invoices from Entity A with payments from Entity B.
- Currency Conversion: Standardizing disparate currencies to a reporting currency for easier matching.
What to Look For in a Solution
When selecting a tool to manage this chaos, prioritize these capabilities:
1. Multi-Currency Support
Global business requires global tools. Ensure the software can handle live FX rates and automatically calculate realized/unrealized gains on intercompany loans.
2. Automated Eliminations
The ultimate goal is a consolidated financial statement. The best software generates the elimination journal entries for you, ready to be posted back to your ERP consolidation module.
3. Visual Dispute Resolution
"I never received that invoice." This common intercompany dispute delays the close. Modern tools provide a chat-like interface attached to specific transactions, allowing controllers from different entities to resolve discrepancies inside the platform, not via email.
Reconwizz: Built for Complex Structures
Unlike rigid legacy tools, Reconwizz thrives on complexity. Our platform is designed to handle the web of intercompany transactions for high-growth multi-entity firms.
Whether you are a holding company managing 50 subsidiaries or a fintech operating in 12 countries, our customizable matching engine ensures that your intercompany accounts reconcile to zero every single month—automatically.