{"id":4097,"date":"2019-08-13T18:05:00","date_gmt":"2019-08-13T18:05:00","guid":{"rendered":"https:\/\/www.peeriosity.com\/shared-services\/articles\/?p=4097"},"modified":"2022-09-02T08:01:07","modified_gmt":"2022-09-02T08:01:07","slug":"intercompany-accounting-where-it-reports-and-biggest-challenges","status":"publish","type":"post","link":"https:\/\/www.peeriosity.com\/shared-services\/articles\/2019\/08\/intercompany-accounting-where-it-reports-and-biggest-challenges\/","title":{"rendered":"Intercompany Accounting \u2013 Where it Reports and Biggest Challenges"},"content":{"rendered":"\r\n

Introduction<\/strong><\/p>\r\n\r\n\r\n\r\n

Even with a decade or more of experience, in performing Intercompany Accounting from within a Shared Services structure<\/a> that includes a global scope (although often delivered through regional centers), the one process that is fully self-contained, Intercompany, continues to be a challenge to deliver efficiently for many leading companies.\u00a0 Even though the scope is within a company, because it represents all internal payable and receivable activities between legal entities, transactions for materials and services can touch almost any department.\u00a0 With personal performance incentives and business funding decisions dependent on business unit performance, the discussion quickly escalates beyond the logic and rules-based structure of accountants and process owners, who have an interest in delivering an efficient and effective process, but who aren\u2019t personally accountable or impacted by the measured performance of a business unit.\u00a0<\/p>\r\n\r\n\r\n\r\n

Certainly, reporting structure can make an impact, for example being part of a global Shared Services organization that has \u201ca voice at the table\u201d, can have significant advantages over being a centralized accounting process that\u2019s viewed as a support function, or a process where there isn\u2019t clear ownership. \u00a0Unfortunately, once the decision-making process is clear, there are many other considerations to creating smooth processes that work efficiently, and, hopefully, automatically, without the need for rework or complicated approval processes.<\/p>\r\n\r\n\r\n\r\n

iPollingTM<\/sup> Results Review<\/strong><\/p>\r\n\r\n\r\n\r\n

Recently a Peeriosity poll was created by a member to better understand this issue, with the added benefit of identifying a group of peers with experience for additional dialogue.\u00a0 The following comments were added as background to the issue:<\/p>\r\n\r\n\r\n\r\n

\u201cWithin our organization, we have a challenge in defining what a good end-to-end<\/a> Intercompany process looks like. The primary reason for this is linked to the fact we have multiple handoffs between many impacted internal functions who have a role to play in its running. This has ultimately led to an inability to assign one specific group that is accountable to own it. \u201c<\/em><\/p>\r\n\r\n\r\n\r\n

The first poll question considered the issue of organizational alignment, and specifically who the primary owner of Intercompany Accounting is.\u00a0 For 82%, the primary organization is a General Accounting<\/a> or Record-to-Report process that resides within Shared Services.\u00a0 The balance of 18% was evenly split between a Headquarters Finance function and not having a clear primary owner for the Intercompany Accounting process.<\/p>\r\n\r\n\r\n\r\n

\"ipolling:<\/figure>\r\n\r\n\r\n\r\n

The second poll question looked at the biggest challenges facing the company\u2019s Intercompany Accounting process<\/a>.\u00a0 Not surprisingly, for 32% the biggest issue is the complexity created by having multiple ERP systems and the impact that has on process automation.\u00a0 Interestingly, the issue of process ownership was the most significant factor for 21% of companies, which suggests that, even when Intercompany Accounting is within a Shared Services or Headquarters Finance function, process ownership continues to be a primary obstacle.\u00a0\u00a0 For the balance of responses, 16% reported the biggest challenge is poor data which leads to downstream system errors, 5% struggle with burdensome regulatory requirements, and 21% cited a variety of other reasons.\u00a0 Here are the details:<\/p>\r\n\r\n\r\n\r\n

\"ipolling:<\/figure>\r\n\r\n\r\n\r\n

Below are a few of the comments from Peeriosity members:<\/p>\r\n\r\n\r\n\r\n