Technology Alone Won’t Solve Your Intercompany Billing Challenges
It might seem counterintuitive for a company that provides intercompany billing technology solutions to make that statement. Yet, there is much to be said for looking beyond the software itself when taking on the critical task of improving intercompany billing in large, multinational companies. The solution typically requires a three-pronged approach of process expertise, operational excellence, and technology.
When an organization purchases a technology solution to address a business problem, the decision makers involved will have expectations about the level of effort the implementation process will require. They might presume the technology will be plug-and-play. In fact, the trend toward SAAS models has fueled the perception that even a large-scale implementation will be a hands-off proposition.
However, technology implementations will always require lock-step partnership between the enterprise and the software vendor, as well as a change management strategy and plan, to ensure a successful deployment. The best vendors can easily say to their clients “we’ve walked in your shoes before,” and guide clients through the implementation journey. Therefore, a solid partnership of people, infrastructure, and expertise is the best assurance that the implementation will achieve the expected outcomes.
When it comes to intercompany processes in particular, the right approach to a technology implementation is even more critical to success. Since intercompany is a back-office function, staff members may simply expect it to work—and they may not consider the consequences that can result when it doesn’t work. Yet, the complexities of intercompany billing processes inherently create pain points that take time, energy, and resources to address.
To effectively avoid the costly consequences of a suboptimal intercompany billing process, the solution must be holistic in design and approach, and go beyond software.
Consultation: The Difference Maker
For an intercompany billing technology solution to deliver the best results, it must be complemented by skilled consultation from technology and subject matter experts. Since the solution is designed to improve a process that has far-reaching implications, including tax and regulatory complexities, the stakes are especially high.
Any technology implementation runs the risk of automating poor or ineffective processes, and that’s especially true with intercompany processes. Typically, the decision to invest in an intercompany solution is triggered by an acknowledgment that the current process does not support clean books and records, reduces productivity, or drives unnecessary costs. These problems can be difficult to articulate to senior leaders; often, it’s not clear such problems exist until material costs or compliance risks are associated with them. Perhaps the finance department makes a request during the annual budget cycle for additional head count to work on intercompany accounting. Or the company notices it’s overpaying on indirect taxes but hasn’t been able to identify why.
The best approach to solving issues like these isn’t to automate the current way of working; it’s to design the optimal way of working that accounts for process dependencies, and then automate that process to make it as touchless as the design requires. Simply digitizing the current workflows and processes misses the mark and risks expending significant resources without achieving a good return on the investment.
Layering a technology solution onto an existing process that isn’t working optimally is akin to treating the symptom, which is rarely effective. A better approach—one that’s positioned to achieve its intended objective—is to diagnose the root cause of the problem and implement a solution that combines the right technology with effective process execution.
What to Expect
When choosing a technology solution to solve your intercompany billing challenges, it’s important to go beyond assessing just the software, its features and functionality. The following considerations can make a significant difference in achieving the best possible results from your technology implementation.
- Expect your chosen vendor to possess both technical expertise and a keen understanding of the intercompany function and processes, including how those processes can impact the organization from a tax and regulatory perspective. Since some software vendors hail from a strictly technical background, this capability should not be viewed as a given.
- Your implementation should include a root cause analysis of process complexity and pain points, and recommendations for eliminating these factors to optimize the process. The vendor can streamline the analysis step by providing targeted questions upfront and decomposing current processes, helping everyone involved to prepare. For example: Which type of billing method would best support your organization’s needs from a strategic and operational perspective—entirely touchless or light-touch? Does your billing process need to support manual intervention for ad-hoc billing? What is your audit process for reconciliations? What is the average settlement time? Are settlement issues occurring because entities are failing to comply with country-specific regulations? The vendor should be able to obtain all the information needed for a successful implementation, while minimizing the number of touchpoints and the necessary time commitment on the part of your internal team.
- An effective intercompany billing technology implementation should combine process optimization with true automation, which goes beyond workflows. A workflow-only approach risks missing the bigger picture, including the interconnectivity between poor processes and unintended tax, regulatory, or other business consequences. A consultative approach takes a wider view, ensuring the intercompany accounting process is fully automated from wing to wing and supports the business holistically.
- Given the dynamic business environment, it’s crucial to ensure your implementation includes ongoing operational support from the vendor, including assistance with the ongoing updates that any intercompany solution will inevitably require. Change is a constant, especially in tax and regulatory environments. Leaning on the software vendor for updates and other back-end support enables the organization to keep the system and the process current without tying up internal resources.
If your multinational organization is facing intercompany accounting challenges, such as tax overpayments or penalties, compliance risks, and staff inefficiency, contact the experts at FourQ. Our OneBiller solution centralizes the intercompany accounting function, automates manual processes, and reduces costs and risks.