Blog

Intercompany accounting can be a complex and time-consuming process, particularly for multi-currency organizations. OneStream's out-of-the-box Intercompany Matching and Eliminations is a powerful feature that streamlines the intercompany accounting process, ensuring the accuracy of financial reporting and improving efficiency.

Let's consider what Intercompany Transactions are.

Intercompany Transactions are generated transactions that occur during the normal course of business between two or more companies within the same organization. These transactions can be as simple as a transfer of products resulting in a Receivable to the supplying company/Payable to the receiving company and the offset between Sales/COGS. Without intercompany eliminations, Assets (Receivables)/Liabilities (Payables) and Revenues (Sales)/Expenses (COGS) would be overstated on consolidation. Common intercompany transaction types are:

• Intercompany Receivables/Payables
• Investments in Subsidiaries/Equity
• Intercompany Loans/Notes Payable
• Intercompany Sales/COGS

Next, let's consider how we can remove these overstatements from our financials automatically with OneStream. This is where Intercompany Matching & Eliminations goes to work. Intercompany Matching and Eliminations is the process of matching and canceling out account balances between the intercompany partners at the intercompany account levels and storing the discrepancy in a Plug Account (balancing account). OneStream's Intercompany Matching feature automates the reconciliation of intercompany transactions and makes the process faster and more accurate. Using the Entity, Account, and IC Member to reconcile and match intercompany balances, Intercompany Eliminations identifies any discrepancies and automatically eliminates the balance between intercompany partners at the account level. OneStream's additional built-in functionalities also come along for the ride without additional effort allowing you to reap the full benefits of OneStream's Intercompany Eliminations such as:

• Currency Translations
• Automatically recording the discrepancy in the balancing account
• Drill-down to source data
• Audit Trail and Reporting

The IC Matching Report displays intercompany partners and accounts with their balances. This report is accessible directly through the workflow.

In the following IC Matching Report, the partners have different local currencies. Currencies are displayed in the reporting and local currencies for matching amounts and the difference.

The discrepancy offset is stored in the balancing, “plug” account

After consolidation, the intercompany balance has been automatically eliminated, ensuring the accuracy of the financials.

OneStream's Intercompany Matching & Eliminations is a powerful feature that streamlines the intercompany accounting process and improves accuracy and efficiency in financial reporting. By automating the reconciliation of intercompany transactions and allowing users to define specific matching criteria, organizations can reduce the risk of errors and improve the efficiency of their financial workflows. If you're looking to streamline your intercompany accounting processes and improve the accuracy of your financial reporting, consider incorporating OneStream's Intercompany Matching & Eliminations into your workflows.