The business environment for multinational companies is always evolving. Businesses are reviewing their internal transactions because of the uncertainties brought about by economic, tax, and market changes. The way a company reports profits and pays taxes is affected by the interactions between its different units. Essentially, employing manual work could lead companies to face struggle when completing financial reporting, complying with audits and ensuring controls. Making improvements within a company allows them to handle such problems with ease and use clever solutions.
Let us examine the process in the following manner:
Swift Financial Close Process
Bookkeeping duties at the end of each quarter and the year are becoming more difficult and time-consuming for businesses. If the procedures within the company are not up to date, issues may take a bit longer to resolve. As a company grows, it often faces greater problems.
Critical Action:
- Make a list of all the stages needed to finish a transaction and suggest how to make them better.
- Eliminate unnecessary products, tools, and materials and remember what is valuable and practical. It leads to fewer mistakes and makes the work faster.
Handling Data more Effectively
Today, both the finance and tax departments are handling a greater volume of data than they have in the past. You can access the information through ERPs, HR systems, and spreadsheets that someone has compiled by hand. A lack of strong data planning can cause companies to make errors and waste time.
Critical Action:
- Join forces with the Finance IT group to find available data sources and solutions connecting them.
- Since all data is stored in one place, there is less chance of duplication and the transfer pricing results are more accurate.
Stronger Audit Readiness
Tax authorities are becoming increasingly strict. Audits now commonly require more detailed information about the Companies IT systems. When data is of poor quality, it may cause problems, delays or even arguments.
Critical Action:
- Collaborate with both the IT and business teams to improve the data.
- You may need to detail each product, modify your timesheet entries or improve the accuracy of your system reports.
Making the Team Structure More Efficient
Intercompany processes need ownership. In most organizations, the burden of handling taxes and transfer pricing is placed on one group, often making their work very demanding. To maximize efficiency, it is recommended to have a team inside Finance that cooperates with tax experts for their duties.
Critical Action:
- Special teams could be established inside each business unit to manage daily work, so that tax experts concentrate on strategic decisions.
Making Use of Suitable Technology
Advances in technology help with managing different types of pricing models. Automating calculations lowers the burden and improves the speed of completing tasks.
Critical Action:
- Review if your current systems meet your current needs.
- Choose technology that suits the data structure and the aims of your team.
- Use tools that automate tasks and give you better control over what you do manually.
Final Insight
Improving how transactions are handled between companies brings several benefits, like faster reporting, less errors, easier audits, and smarter use of staff. Firms should assess their systems, ensure data quality is high, and put resources into investing in proper technology.
Reference: Transfer Pricing Modernize Intercompany Transactions
