Ventana Research, an authoritative and respected market research and advisory services firm, defines intercompany financial management (IFM) as a “discipline for structuring and handling transactions within a corporation and between its legal entities.” It maximizes staff efficiency and accounting accuracy. It also optimizes tax exposure, minimizes tax leakage and “ensures consistent tax and regulatory compliance.”
According to Ventana, “by 2026, one-half of organizations with 10,000 or more employees will have implemented IFM to achieve tax, risk management and accelerated financial close benefits.” The research firm states, “Typically each instance of an IFM issue is relatively small, but in larger, multinational corporations, the money involved adds up to a meaningful annual cost.”
Large, multinational corporations have very complex systems and processes – often exacerbated by having several different ERP systems. Ventana’s Next Generation ERP Benchmark Research finds:
- Two-thirds of organizations with more than 1,000 employees have more than one ERP system
- 27% of percent of these organizations have more than four ERP systems
IFM provides these companies with a way to capture the “required attributes of intercompany agreements and streamlines intercompany dispute resolution and handles taxes with an integrated tax engine to maximize tax deductability.”
Ventana states, “Being strategic in accounting is all about flawlessly managing the details, especially in areas of hair-curling complexity.”
Revelwood’s partner, BlackLine, provides software for intercompany financial management and other accounting activities.