The complexities of inter-company reconciliation

Inter-company reconciliation is notoriously time-consuming, and several factors contribute to its complexity. Understanding these challenges is key to appreciating the capabilities required in any effective transaction matching tool.

• Regulatory Deductions: International transactions, especially those between entities in different countries, are often subject to taxes and regulatory deductions. These variations can complicate reconciliation, requiring tools that can adapt to diverse regulatory environments.
• Foreign Exchange Differences: With subsidiaries operating in multiple currencies, foreign exchange differences can add layers of complexity to inter-company reconciliations. Transactions recorded in functional currencies need careful matching to ensure accuracy in consolidated financial statements.
• Multiple GAAP Books: Multiple group companies may be accounting for transactions to comply with local GAAP requirements, leading to variations in how transactions are recorded. Reconciling these differences to produce a unified financial statement requires sophisticated tools capable of handling multiple accounting standards.

The illustrations listed above are only indicative and not exclusive, but they have been detailed above primarily to give a sense of the capabilities required in any transaction matching tool which can help users tide over these complexities.