Best accounting practices to better reconcile intragroup transactions
Even though accounting systems vary, a few common guidelines can make managing your intragroup transactions easier.
- Have a way to identify intragroup entry lines. The partner company code must be indicated somewhere. The simplest way is in an information field if one exists. Another method is to see if the entry selection query can retrieve the sub customer or supplier account for the entry. Thus, if the query can include the customer/supplier code in a column on each entry line retrieved, it is easy to import the lines whose customer/supplier code is referenced among the list of group company codes.
- Make the effort to indicate the reference number or invoice number precisely, as it will serve as a reconciliation criterion.
- In the case of a transaction in a foreign currency, it is useful to have the amount in the original currency in the entry to be able to extract it along with the accounting amount, in order to reconcile on this common amount between the two companies, even if they do not have the same accounting currency.
- Try to use dedicated intragroup accounts in the company’s chart of account. Usually done for customer/supplier sub accounts, but it is also useful to differentiate them in purchases and sales.
- Good management of exchange rate differences when recording payments allows for the proper settlement of a receivable or debt.
- Last but not least, keep the clearing of receivables and payables up to date. In addition to ensuring a clean aging open balance and facilitating payments applying, this allows you to work only on the open outstanding lines in the balance sheet for reconciliation between group companies. Less pollution in the general ledgers thanks to clean posting saves a lot of time in reconciliation work. Without this, reconciliation work have to begins with the tedious task of ignoring all unnecessary lines.