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Transformation of intercompany transaction processing

Financial institution spotlight – emerging drivers for change

A blog by Anastasia Traylor, senior manager, Deloitte & Touche LLP

February 28, 2020

Intercompany transaction processing at global financial institutions has historically been passed over in favor of other finance initiatives. These decisions were generally founded on:

  • A common point of view that all activities are ultimately netted at the consolidated level
  • The ability to overcome the complexity and inefficiencies with manpower

A sea of change may be underway, however, as new drivers for change emerge.

Global financial institutions are experiencing escalating pressure from downstream challenges caused by legacy complex and manual intercompany processes. These challenges include increased regulatory scrutiny due to apparent data quality issues and reporting inconsistencies, as well as bottom-line tax impacts from the meaningful changes brought on by tax reform. These challenges stem from increasingly granular regulatory data required to satisfy reporting requirements for regulated entities and the challenge of satisfying these requirements with numerous disparate systems and siloed intercompany processes. Additionally, tax reform, while complex, also provides opportunities for companies to analyze their tax footprint in alignment with broader business objectives. These factors are causing financial institutions to revisit their intercompany transaction processes, seeking opportunities for automation, optimization, and enhanced governance.

We previously discussed a new framework with leading practices for the intercompany accounting process and optimization that offers a road map to reimagining the end-to-end process informed by our proprietary intercompany maturity model. To implement a strategy that can align with a company's focused objectives, it is necessary first to address the unique challenges facing the intercompany accounting transaction life cycle at financial institutions.

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Emerging drivers for change and transformation of intercompany transaction processing

Enablers to optimize intercompany accounting transformation

Optimizing the intercompany process is a challenge for many companies, and a path to effective governance comes through fixing the historically overlooked classic enablers—governance, people, process, and technology. We advocate a broad and proactive approach in which the primary stakeholders—accounting, tax, and treasury—work together to streamline processes ranging from data management to reporting. Given the complexity, leading practices to consider include developing a common vision and shared goals, along with a framework-based approach that can help to ensure all pieces are moving in tandem for an optimized process.

To continue exploring intercompany accounting transformation enablers and frameworks for optimization, listen to our Dbriefs series Intercompany accounting: Taming the wild beast to understand current challenges driving transformation, how new technology can work for intercompany accounting, and tools for a more effective and efficient process.

Anastasia Traylor is a senior manager with Deloitte Risk & Financial Advisory.

Visit the Controllership Insights blog for additional blog posts.

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