Six Process Pillars for Optimal Intercompany Billing
When you’re responsible for billing across multiple entities in your global multinational, you’re likely dealing with a complicated technology landscape connected by a variety of disparate ERPs. Creating a streamlined intercompany billing system isn’t simply a matter of updating your procedures or installing new software. It’s examining the pillars of both the process and the platforms of your organization for bottlenecks and opportunities for greater efficiency.
Here are the process pillars your organization can implement in order to fully optimize intercompany billing.
Pillar #1: Wing-to-Wing Process Automation
Automating intercompany billing generally involves both platform and process. But companies that operate internationally with multiple ERPs struggle to gain control, consistency, and transparency. Manual transaction efforts reduce productivity and increase your risk of financial errors.
Ideally, you’ll connect your different systems and source data subsystems to a single platform that is ERP-agnostic. For complete wing-to-wing process automation, you’ll also want to streamline cost capture processes that don’t require direct system connections.
Pillar #2: Billing Transparency and Centralized Data
One of the challenges in shared services billing is determining total cost of ownership across the enterprise. The billing system needs to have one source of “truth” in a centralized space that captures and reports on costs at all levels—from enterprise to project—within a business unit.
For example, one fleet vehicle manager used to spend hours each month creating custom reports allocating costs to each business unit. After centralizing the data and process on one platform that translated 30,000 lines of invoice details, he was able to generate internal reports easily customized to the user’s need for VINs, repair costs, etc.
Pillar #3: Centralized Settlement System
Connecting treasury to a centralized settlement system offers significant benefits for your processes and for your treasury function. Process centralization through multilateral netting reduces cross-boarder flows for lower currency conversion costs and a lower volume of foreign exchange transactions. It also reduces the administrative workload in intercompany reconciliation, eliminations, and risk management.
Additionally, by centralizing your treasury function and providing a single platform for settlement, you can easily centralize intercompany payment and gain crucial capabilities like the automatic clearing of transactions.
Pillar #4: Formalized Dispute Processes
Too often, “dispute noise” around the ledger slows the billing and payment process. Internal stakeholders argue about where a cost should be allocated. Reduce this noise by ensuring both entities book entries, and then manage disputes through a centrally tracked system.
A fair and streamlined dispute process is aligned to a company’s intercompany policy related to reconciliation processes. A centralized system takes entries from both entities and adjusts unmatched transactions for review and approval. This produces journal entries and invoices which are automatically booked to your ERPs.
Pillar #5: Optimized Billing Routes to Minimize Tax Leakage and Maximize Deductibility
Global multinationals often run charges through their home country to capture costs, often creating additional tax burdens. Companies can minimize tax penalties and stranded costs by configuring and continuously managing billing routes for maximum tax benefit.
This requires both understanding the optimal billing routes and implementing an automated solution that reflects current tax laws across countries.
#6: Enhanced Global Intercompany Standard Procedures
Reviewing the platforms and processes of your enterprise will create insights into driving process governance through control mechanisms and is an opportunity to implement best practices across the globe.
Explore FourQ’s Solutions
FourQ is the only full-service and complete intercompany solution for automating billing and invoice management to enhance and streamline the accounting process. FourQ helps global multinationals solve the challenges of connecting multiple ERPs across the enterprise to process huge volumes of data. Our in-house team of finance, tax, and tech experts tailors the FourQ platform to each client’s specific country and business-unit needs.
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