Financial dealings between business entities within a company, commonly known as intercompany transactions, account for 30% to 40% of the global economy, equaling almost $40 trillion annually. In response, Grant Thornton LLP has launched inter.x, a unique offering that uses blockchain technologies to provide transparency for intercompany transactions.
The inter.x solution delivers real-time data-analytics dashboards that monitor intercompany transactions, including transfer-pricing compliance and treasury management.Payments
The offering can assist companies as they contend with the disruption caused by the coronavirus pandemic. For example, inter.x provides deep insights into a rapidly changing supply chain, which makes the offering a useful tool to speed cashflow and increase liquidity.
“Grant Thornton designed inter.x to provide a simple user experience that can red-flag missed opportunities tied to intercompany transactions and identify instances when transactions may have fallen short of company policies,” said Jamie Fowler, chief transformation officer at Grant Thornton. “The inter.x solution has a simple value proposition: Companies bring their underlying data, while inter.x brings the automation and transparency.”
Another key benefit of the inter.x offering is that it uses blockchain technology to permanently store the inputs, outputs, and actual run-time calculations of a transaction – a capability that can help companies improve transfer-pricing compliance.
According to Steven Wrappe, national technical leader of Transfer Pricing in Grant Thornton’s Washington National Tax Office: “The inter.x offering helps users shift their compliance concerns; they no longer need to focus on applying policies, and instead can focus on whether those policies make sense.”
Reducing errors, bureaucracy, and fraud
Intercompany transactions are the fifth most common cause of corporate financial restatements. They are frequently the source of underlying fraud, manual errors, unnecessary bureaucracy and wasted time.
Historically, there have been few innovations for managing intercompany transactions. Most enterprise resource planning (ERP) systems do not share information seamlessly. As a result, finance teams often track data and documentation manually using Excel files and email – a process that lacks critical controls.
Moreover, most organizations do not adequately allocate resources to managing intercompany transactions and the related treasury impacts. They may assume the sheer volume of transactions makes such management impossible. Or they may believe the underlying accounting risks are low. The inter.x offering addresses these issues by providing an automated management-by-exception model that can proactively handle intercompany transactions using the same, or fewer, human resources.
Simple interface and ‘immutable’ data
The inter.x solution integrates far-flung ERP systems, aggregating data in real time, and then creating an end-to-end workflow that behaves as a single transaction. This allows companies to recognize and make immediate decisions rather than waiting until a monthly or annual accounting cycle.
More importantly, inter.x users can track and account for intercompany transactions with an audit trail that is ‘immutable,’ meaning the integrity of the audit data persists over time. The result is a permanent and unforgeable audit trail for consistent transaction information.
