Strategic acquisition: KPIs and leading practices for intercompany
While undergoing a strategic acquisition, there’s a lot to get in order. And when it comes to intercompany, here are the goals we think are most important for your organization amidst this strategic change, meaningful KPIs to track progress, and leading practices to follow.
Goals for your intercompany processes
- Unified systems: Combining the best features and functionalities from existing (or new!) tools to enhance visibility and control.
- Consistent policies: Creating consistency in transactions, compliance, and alignment with global standards.
- Efficiency: Automating to reduce time, effort, and potential error.
- Risk reduction: Identifying and mitigating risks like transfer pricing issues and tax implications.
Meaningful KPIs to track
- Intercompany reconciliation time: The duration to reconcile intercompany accounts post-integration versus pre-integration benchmarks.
- Discrepancy rate: The percentage of intercompany transactions identified with discrepancies or mismatches during the reconciliation process.
- Settlement cycle time: The average time taken from transaction initiation to final settlement.
- Compliance adherence rate: The percentage of intercompany transactions that adhere to global transfer pricing standards, tax regulations, and other relevant compliance measures.
- Intercompany transaction volume: Business activity levels.
Leading practices
- Standardize intercompany agreements: Clearly outline terms, pricing, and settlement mechanisms to avoid disputes.
- Implement automated matching tools: The matching of intercompany invoices, payments, and other transactions can be accelerated with software—which also removes human intervention and reduces discrepancies.
- Regular reconciliation: Schedule regular intercompany reconciliations to identify and resolve mismatches promptly. This helps in timely reporting and ensures accurate financial statements.
- Creating a centralized intercompany hub: Set up a centralized hub or Center of Excellence for managing and coordinating all intercompany transactions. This will enhance efficiency, especially for large organizations with numerous entities.
Considering embarking on an intercompany journey? Read our tips on how to get started.