If you are part of Finance organization of a large corporation, it is most likely that you have, or will, run into intercompany transactions at some point of your career. Those sales, purchase and loan transactions occurring between two or more companies within one corporation. Those transactions that tend to be a big headache during the month end close. The ones that cloud your decision making between month end closings when you don’t know which company owes and how much and to whom, and what is the true balance of all of your companies. 

You would think that transactions within one corporation would need less attention from the Finance organization, but oftentimes that’s not the case. Intercompany transactions require just as much audit trail, reconciliation and dispute handling as transactions between two external companies. Netting and settlement of these transactions are a chapter of their own.

There really should not be a reason why internal transactions within one corporation should be labor intensive, require extensive reconciliations, be complicated and time consuming, and increase risks when company balances are in the dark. After all, it’s all within one corporation.

Blockchain by its nature has the cure for all challenges in intercompany transactions. It:

  • Provides a single version of truth
  • Gives full visibility to company balances
  • Removes discrepancies
  • Removes disputes
  • Provides full audit trail
  • Eliminates the need for reconciliations
  • Automates netting and settlement

With a blockchain based intercompany ordering, invoicing, and loan issuance solution corporations will be able to significantly reduce manual labor that is currently needed to deal with disputes, reconciliations and settlements.

Intercompany transactions are a great way for any corporation to get started with blockchain. Starting and finishing an intercompany blockchain project is faster when you are not entwined to lengthy legal discussions and blockchain project and network governance challenges with your consortium. This will give the organization a chance to learn the technology internally first, in order to better understand the demands for a large scale consortium implementation.