Intercompany Settlement
Agreement-driven reconciliation and multilateral netting
At BELLIN, we know the challenges corporate treasurers face when managing a heavy intercompany business load and trying to avoid wasting hours of valuable manpower and resources on processes that fail to bring transparency or efficiency. Accurately forecasting internal receivables is no easy task. The bigger a corporation, the more complex the task of ensuring each group subsidiary knows when it is going to get paid for intercompany invoices. We are also aware what a headache mitigating FX risk and excessive bank fees can be when group subsidiaries are located in different places across the globe. Added to this is the perennial concern of reducing cash-in-transit and valuable resources that can be eaten up by creaky intercompany settlement processes. Our tm5 software brings elegance and simplicity to the reconciliation and multilateral netting process with a revolutionary approach that combines the best of both worlds from payables and receivables-driven processes: Agreement-driven Netting®.
You benefit from full automation in the processing of internal receipts and are able to drastically reduce the cost and complexity of intercompany business and your working capital requirements and FX transactions.
Translating the power of automated, structured and fair reconciliation to productive and profitable netting
Intercompany reconciliation takes a macro view of all intercompany trade. In the reconciliation section of ICNETTING, our system automatically matches invoices and displays any discrepancies, making reconciliation a structured and efficient process that saves you time and money. Many netting centers choose a process that prioritizes either the invoice owner or the payer, leaving the counterparty out of luck when a dispute occurs – and making for complex accounting down the road. Instead, our tm5 software harnesses the full potential of Agreement-driven Netting.
Streamlining the reconciliation of payments between group companies brings key benefits to your business:
- Significant reductions in internal cash flows
- Strict, easy-to-follow payment schedule
- Quick resolution of mismatches on intercompany bookings
- Elimination of uncertainties in cash management
- Reduced payment transaction fees
The multilateral netting section of ICNETTING handles the second half of the intercompany netting and reconciliation process, summing reconciled invoices from your intercompany transactions into a single balance paid to or received from the netting center in the chosen currency. It facilitates an intragroup billing system that can significantly reduce your company’s liquidity requirements and enhance capital utilization and introduces a cyclical pattern to intercompany cash movements. It helps ensure reliability in intercompany payment transactions, allowing you to calculate netting statements and organize the resulting intragroup payment transactions to conclude the netting process.
Benefit from a seamless flow of payments within your company and take your intercompany settlement process to the next level:
- Overview of all internal invoices from deliveries and services
- Settling of internal exchange rates and improved hedging capabilities
- Virtual netting for group subsidiaries based in jurisdictions that prevent default netting
- Integration with treasury transactions from the TT module for interest rates, currencies and commodities
- Detailed reports on all payments made via internal or external bank accounts
Virtual netting
Virtual netting ensures smooth cash flow across subsidiaries in all global jurisdictions. Netting is not allowed everywhere. Nevertheless, wherever a group subsidiary is located it will be fully integrated into the reconciliation process. Virtual netting ensures that invoices and receipts are matched wherever a subsidiary is based. Any disputes are processed through the agreement workflow, resulting in reliable cash flows.
- Effective hedging of FX risks
- Seamless management of standard netting, gross netting and virtual netting
- Faster and more efficient quarterly balance reconciliation
Professional dispute management for fair intercompany trade
An addition to reconciliation, dispute management (ICDISPUTE) handles the resolution of unreconciled transactions in the netting process. Disagreements between participants can be handled between the parties involved. If no agreement can be reached, then ICDISPUTE alerts selected managers or higher-ups who are responsible for establishing the veracity of the dispute claims. You can decide who has the final say and make sure the process is fair for everyone.
Benefit from a systematic and solution-oriented process and achieve structured dispute management that lets you indicate and define:
- The reason for the dispute
- Differing invoice amounts
- Additional background information
- Any number of escalation levels
- Automated email notification based on the length of the outstanding dispute
Reconcile intercompany balances
At the end of an accounting period, this component completes the reconciliation process between group companies prior to balance sheet and P&L preparation. It handles an essential task for achieving a fast close and serves to complete the reconciliation process both at individual invoice level and balance level within a single application. After reconciliation has been completed in ICBALANCES, all outstanding items will have a match, including adjustment entries, slashing your closing time from weeks to days.
- Benefit from automated reconciliation of account balances
- Reconcile mismatches for goods-in-transit, cash-in-transit, intercompany loans or intercompany royalties
- Identify differences between market rates and your records in domestic currency
- Create detailed adjustment entries to correct and document differences
Inject structure, automation and cooperation into your intercompany business. Introduce agreement-driven reconciliation and netting today.
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