Currently, intercompany receivables and payables are reconciled in the consolidation system or in Microsoft Excel® at the end of the month; this is generally done manually using balance data. Intercompany receivables/payables are usually posted manually, which creates a lot of work during month-end closing. The consolut Intercompany Suite minimizes and automates this manual work and allows it to be performed on a day-to-day basis instead of at the end of the month. The result: fewer manual operations and a faster month-end closing. The consolut Intercompany Suite consists of three components that differ according to the stages of process improvement:
- Intercompany Reconciliation
- Intercompany VAT
- Intercompany Sweep / Payment Factory
The diagram below shows the automation stages of intercompany processes that are supported by the consolut Intercompany Suite:
Intercompany Reconciliation – simplification
The first step in the optimization of intercompany processes is a judicious use of the standard SAP Intercompany Reconciliation module (ICR). The Intercompany Reconciliation component of the consolut Intercompany Suite includes:
- Analysis of intercompany business transactions
- Development of a suitable concept
- Implementation using the standard SAP ICR module
- User training
With the functions provided in the dialog, users can assign intercompany receivables and payables to each other in a manner similar to open item management. Items are assigned automatically using reference fields, with manual assignments only required in exceptional cases. Both manual and automatic assignments can be made during day-to-day business.
In addition, the reconciliation function allows for efficient processing of intercompany relationships that are reconciled in accounting using balance data.
In short, the Intercompany Reconciliation component both minimizes the manual tasks involved in reconciliation and allows them to be performed on a daily basis instead of at the end of each month. The result: less work and a faster month-end closing.
Intercompany VAT – harmonization
While the first component optimizes intercompany reconciliation, the aim of the second component – Intercompany VAT – is a harmonization that makes intercompany reconciliation largely redundant. With this component, intercompany business transactions are not separated in the SAP ERP system – which makes a subsequent reconciliation necessary – but processed in an integrated manner.
In the area of accounting, this is done by supplementing cross-company code transactions with a function to correctly process the value-added tax, enabling users to perform such transactions outside of a taxable entity. This applies to invoices entered in financial accounting and to intercompany cost allocations in controlling. In both cases, the system automatically generates correct invoices for the purposes of taxation.
In the area of logistics, cross-company code activity allocations can be billed automatically using resource-related billing, and outgoing invoices generated in SD can be automatically posted as incoming invoices for trading partners.
As shown above, the Intercompany VAT component eliminates intercompany reconciliation because it integrates the relevant processes in the system. By mapping the process in the system, it ensures the symmetry and correct reconciliation of intercompany transactions.
Intercompany Sweep / Payment Factory – centralization
While the first two components optimize intercompany reconciliation or eliminate it altogether, the third one, Intercompany Sweep – centralization, aims at minimizing the number of intercompany relationships and hence the number of bank connections. This approach is also called Payment Factory.
The objective of reducing intercompany relationships and bank connections is achieved through the implementation of one or more treasury companies.
All intercompany receivables and payables are reposted – swept – to the treasury company. This means that instead of having an intercompany relationship for every trading partner, companies now have only one such relationship; the network representing intercompany relationships is transformed into a star.
The treasury companies are the only ones with external bank connections – they handle all bank transactions for their members. The benefits for the member companies are fewer bank connections, reduced complexity, and lower costs.
In summary, the Intercompany Sweep component reduces the number of intercompany relationships and the number of bank connections to decrease complexity and cut costs.
The consolut Intercompany Suite helps you optimize your intercompany processes.
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