Imagine navigating a maze—except this maze is made up of subsidiaries, divisions, and legal entities, each with its own set of rules and regulations. Sounds complicated, right? That’s the reality for many businesses today. But what if there was a GPS for this corporate maze? Enter Intercompany Automation.
Automating Intercompany transactions refers to using technology to streamline and manage transactions between the different subsidiaries or divisions within a larger corporate structure. These transactions can include sales and purchases, fund transfers, and allocation of expenses or revenues. Automation occurs when the system automatically records, reconciles, and reports these transactions, reducing the need for manual intervention.
The Hurdles of Manual Systems
The Time Drain
Manual intercompany transactions are like a black hole for time. The process is cumbersome, requiring multiple steps that divert resources from strategic growth initiatives.
The Error Domino Effect
Manual data entry is prone to errors, and one mistake can set off a chain reaction, affecting financial reporting and even leading to regulatory penalties.
The Blindfold of Real-Time Visibility
In a manual setup, you’re essentially operating blindfolded. Real-time insights are a pipe dream, making it difficult to make informed decisions.
The Compliance Tightrope
Different subsidiaries often operate under diverse regulatory frameworks. Manually juggling these can be like walking a tightrope, with the risk of falling into legal trouble.
As businesses grow and expand into new markets, the volume and complexity of intercompany transactions are likely to increase. Manual systems are not easily scalable to meet these growing demands, leading to operational bottlenecks.
Why Automation is Your Corporate GPS
Speed: The Fast Lane
Automation is like shifting from a manual car to an automatic; it’s smoother and faster, allowing your team to focus on strategic growth. It drastically reduces the time required to complete intercompany transactions. Automated systems can instantly record, reconcile, and report transactions, freeing up valuable time for your team to focus on strategic initiatives that align with your business goals.
Accuracy: The Safety Net
Automated systems act as a safety net, catching errors before they can snowball into bigger issues. The systems are designed to carry out tasks with high accuracy, ensuring that transactions are recorded and reconciled correctly, thereby enhancing the integrity of financial reporting.
Real-Time Insights: The Dashboard
Think of automation as your dashboard, offering real-time insights into intercompany transactions that help steer your business decisions. This enables better decision-making and financial planning, making businesses more agile and responsive to market changes.
Compliance: The Rule Book
Automation comes with a built-in rule book, making it easier to adhere to various regulations, reducing the risk of legal repercussions, and strengthening governance within the organization.
Built-in Intercompany Automations
NetSuite offers built-in features for intercompany automation, which is one of the reasons it’s a popular choice for businesses operating with multiple subsidiaries or legal entities. These features are designed to streamline various aspects of intercompany transactions, from invoicing to expense allocations.
Here are some key functionalities:
- Intercompany Journals
- NetSuite allows for automated intercompany journal entries. When a transaction occurs between subsidiaries, the system can automatically create balancing entries to ensure that books on both sides are accurate and compliant with accounting standards.
- Intercompany Time & Expense Allocations
- NetSuite enables you to allocate time and expenses across different subsidiaries automatically. This is particularly useful for businesses that share resources or services across entities.
- Intercompany Sales and Purchase Orders
- You can automate the process of creating intercompany sales and purchase orders. When a sales order is created in one subsidiary, a corresponding purchase order can be automatically generated in the other, complete with mapped fields like item numbers, quantities, and prices.
- Intercompany Elimination
- NetSuite provides features to automatically eliminate intercompany transactions during the consolidation process, ensuring that your consolidated financial statements are accurate.
- Multi-Currency Support
- For businesses operating internationally, NetSuite’s multi-currency support is invaluable. The system can automatically handle currency conversion for intercompany transactions, taking into account real-time exchange rates.
- Compliance and Reporting
- NetSuite’s robust reporting features can be customized to provide insights into intercompany transactions, helping ensure that you remain compliant with various regulatory requirements.
- Workflow Customization
- While NetSuite offers built-in automation features, it’s also highly customizable. You can use SuiteScript or workflows to tailor the intercompany processes to meet your specific needs.
Automation isn’t just a trend; it’s a necessity for modern businesses. By adopting automated systems like NetSuite, you’re not just solving current challenges—you’re future-proofing your business.
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