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Intercompany cross-charging options

I am working for a publicly traded company that has a couple of subsidiaries internationally. We charge items to entities that keep their books in another currency and vice versa on monthly basis. Our monthly intercompany cross-charge process has become an issue, in terms of P&L items eliminating, intercompany balances eliminating after conversion. What is the best way of treating the above transactions in the books of the two companies? Can someone share best practices (checklist/template) to follow in this case?


Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

What software packages are in use:
-at the holding company?
-at each subsidiary?
Do you book transactions in each company in both the transaction and reporting currency (e.g. is an US$ interco charge to a EU subsidiary recorded in the EU company in both US$ and EU)?
Do you raise invoices for these charges?
Are you using a multi currency consolidation reporting package that can help manage interco balances?

The software in use may influence the way you manage the interco process.

Process design means a lot if you want to reduce reconciliation conflicts:
How many interco transactions occur each month?
How do you make sure both sides book the transaction in the same period?
How do you prevent/resolve disputes about the charges?

Your feedback may help others answer in a more targeted way.

(Agent) |

At HQ, we do use multi currency reporting software called EPM for consolidation. Each company record the transcation in local currency and raises invoices on monthly basis. They all use different systems. Thanks

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