Inter Entity Eliminations / Inter Company Eliminations

Introduction

Intercompany elimination is the process that a parent company goes through to remove transactions between subsidiary companies within the same group. Parent companies complete intercompany eliminations when they are preparing consolidated financial statements.

Typical Problems

A time-consuming and resource-intense activity which can dramatically slow down the consolidation process.

Due to the complexity, errors are highly likely and lead to consolidation reports not being accurate.

Solutions

Cloud accounting systems allow inter-entity relationships and mapping to be set up.

Due to these relationships, you can automatically eliminate inter-entity accounts during consolidation so that they do not appear on consolidated financial reports.

Benefits/ROI

As the eliminations are automated this reduces manual effort and time, which leads to more accurate real-time consolidated reporting.

The Inter entity mappings are easy to maintain so new entities can be added easily as and when required.