Intercompany Reconciliation and Netting

Alexander Schächtele
Alexander Schächtele

As Consulting Director, Alexander Schächtele is responsible for the implementation and consulting projects of multiple multinational corporates of different sizes. He holds a degree in Economics from Freiburg University and is a Certified Corporate Treasurer (Frankfurt School of Finance & Management). Before joining BELLIN in 2011, Alexander worked as a corporate tax and accounting specialist.

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Few other treasury disciplines are characterized by the same discord and procrastination as reconciling intercompany invoices and netting. However, no other discipline can measure up when it comes to saving resources, allocating them justly and using them effectively.

Netting and Reconciling Your Intercompany Trades

What is intercompany reconciliation and netting all about? Individual group companies – a bit like the different branches of royal dynasties – like to focus on their own figures and their own well-being. Considering others and seeing the big picture appears to be difficult. Payments to sister companies are delayed, which represents a waste of liquidity and means that smaller group companies are lumbered with the refinancing costs. There is often disagreement on who should be paying, for example when it comes to fees, and this can obscure the picture and distort analyses. Hedging commodity and FX risks can be particularly problematic for groups without a netting process in place.

Software Solutions for Intercompany Reconciliation and Netting

So how can software help support the intercompany invoice and payment reconciliation process?

  • Web-based and fully integrated Treasury Management Systems can be accessed by users worldwide with full collaboration.
  • Any data and processes are available on one single group-wide platform.
  • Cash flows from all group companies converge in the Netting Center.
  • A considerable reduction of cash in transit
  • Allows for gross/net comparison and virtual settlement.
  • Enables effective hedging of FX risks.

Multilateral Netting with Coupa Treasury

With Multilateral Netting, payments are reconciled when they’re posted and not just when the payment is due. Receivables and payables can be reconciled automatically, and a straightforward interface to the ERP system allows users to write off outstanding receivables. A structured process also means greater visibility for the entire group in case of disagreements and provides a solid footing for clarifying such cases. This is motivation for all companies to do their bit and contribute to a successful netting process. It also makes sure management have all the information they need for strategic decision-making.


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