The real and fundamental issues with your reconciliation between companies is something that we in the finance department rarely do. Our books are allowed to remain open for a short period of time after the date that is officially set for closing and this means that we have only the opportunity to take action prior to closing. Follow up the Procedure to Register a firm in the Netherlands.
We seldom have the opportunity to thoroughly investigate the need of policies to resolve the issue of reconciliation between companies, which as we’ve all experienced, leads to more problems in the future, which can result in a disappointing result, which happens every day.
Reconciliation Issues Facing
These problems can cause balances to remain open for weeks or days longer than they are required. A company needs to have strict controls in place to keep balances in order, otherwise the problem will continue increase, eventually becoming completely impossible to manage.
The difficulties with reconciliation between companies typically stem from an absence of communication or clarity between departments, which it could also be due to an absence of support from the corporate side or an absence of thought. For instance, shipping charges can be charged as a percentage of any physical order, however it is it is not mentioned on the purchase orders. The purchasing department could not cover the shipping expense, creating an out-of-balance scenario while the issue isn’t solved by the end of the month.
Another problem that intercompany companies face several companies is intercompany costs. Some companies charge their subsidiary according to their working capital, as an incentive to keep their working capital at the lowest is possible. Many companies face reconciliation issues, also when going abroad Intercompany Solutions can help you in the case it is in Holland.
Uncertainties regarding the method of calculation for these charges can also result in an imbalance of the accounts of intercompany companies. Another reason to be cautious is the absence of clarity when making the charge or lack of acceptance upon receiving the charge has the potential of creating an imbalance.
Many of the problems are due to the absence of top-down policies or education on the issues. Policies that include:
- General reconciliation practice
- Reconciliation is the responsibility of the person responsible.
- Particular format for reconciliation
- Responsible for internal control
- Foreign currency
- Intercompany cut-off policy
- Formal confirmation procedure
- Dispute resolution
However, we as managers and employees in the Finance departments don’t have the time or energy to address these kinds of issues. If we do get any extra time, it’s quickly consumed by the reconciliation process between companies as well as other things to be done.
A Detective Tool
A possible solution is to implement an accounting reconciliation software. This can make the task of detective to identify the specific transactions that aren’t matching more simple. A tool that frees your time to design top-down policies , and cut down on the tedious manual checks after the policies have been put in place.