Managing Intercompany Processes: Multinational CFOs’ Key to Driving Better Business Outcomes

In today’s world of finance, CFOs are responsible for, well, everything. They must ensure that an organization’s finances are stable, growth opportunities are maximized, and operations run efficiently. They must also continually gauge risk, set borrowing limits, and monitor Tax & Compliance.

The stakes couldn't be higher for leaders overseeing the incredibly complex world of intercompany finance, which can involve processing millions or more transactions in a single quarter. But as CFOs do all they can to grow the enterprise and reduce costs, many overlook a key component that could help them achieve key business outcomes across the enterprise: managing intercompany processes.

While this area of financial management isn’t as top of mind as, say, mergers and acquisitions, CFOs should focus their attention on these intercompany processes, because they have the potential to empower a multinational business to tap into newfound ways to significantly improve efficiencies, reduce costs, and even retain essential talent.

For multinational organizations to remain viable, finance leaders must navigate innumerable challenges, and recent global market headwinds have made that job even harder. Tax regulations have been changing quickly and become more aggressive, demand for goods and services has slowed, and consumers responding to rises in inflation have been “brand hopping,” making their behaviors more difficult to predict. All the while, businesses striving to digitize processes continue to struggle to retain critical talent and maintain levels of institutional knowledge (“Top 5 Priorities for CFOs in 2024,” Gartner, Inc., 2023) 

Multinationals — being the acquisitive organizations they are — continue to grow, and each newly acquired territory brings a whole new financial system to manage and integrate. Since many of these businesses rely on manual processes to process many of these transactions, some businesses tend to react by hiring more people to pick up the slack, leading to increased costs. Some outsource, but outsourcing can come with drawbacks of its own. Neither of these strategies is sustainable over the long term. Even efforts to lower costs are short-sighted, as economic headwinds are predicted to “outlast the benefits of temporary cost cuts,” according to a recent Gartner survey of CFOs (Ibid).

CFOs can overcome these challenges and follow a path toward a more resilient, certain, and profitable future by making holistic changes to intercompany processes and optimizing them throughout the ecosystem.

To gain control over perplexing intercompany issues requires that CFOs first assess their current systems and determine what aspects of these systems aren’t working as well as they should. Once CFOs take a hard look at intercompany processes, they’ll soon spot inefficiencies that are directly responsible for driving up costs. Here are some examples:

• Data Insecurity. Many multinational businesses manage data in silo fashion using manual processes. This means that data is prone to human error, leading to interminably long close periods, huge imbalances, and frequent disputes. In this climate, it’s impossible for CFOs to feel confident in their ability to budget and forecast.

• Integration Friction. As organizations acquire new systems, integrating them quickly and maintaining a healthy operation can be difficult, leading to implementation delays and exorbitant IT costs.

• Tax-Related Costs. Because multinationals are working with questionable data, they cannot be certain about their ability to comply with regulations, leading to unnecessary tax leakage and other costs.

• Weak Talent Retention. The skill sets needed in today’s global finance market are rapidly evolving, and the people working for multinationals must have the experience and knowledge to be able to change with them. Systemic improvements are needed to ensure that businesses hire and retain the right people.

• Cybersecurity Fears. All businesses are vulnerable to cyber attacks, but those that haven’t adopted automated solutions and rely too much on human-data interaction leave their organizations at higher risk.

What can happen when finance leaders neglect these issues? Potential negative outcomes include reporting errors, increased operational costs, regulatory compliance risks, tax impacts, and cash flow management issues. After identifying problems that lead to inefficiency and wasteful spending, CFOs can implement a strategy to correct those issues by optimizing intercompany processes. 

Conversely, when CFOs implement strategic improvements, the benefits to the enterprise are significant. Some include:

• Becoming more resilient to economic headwinds

• Gaining confidence in the quality of the data passing through the enterprise

• Making better-informed budgeting and forecasting decisions

• Minimizing borrowing costs and virtually eliminating tax leakage

• Developing sustainable, long-term growth strategies

What does an optimization strategy look like? It could include hiring a Global Process Owner (GPO) who can manage multiple global business services as a single organization, operate within an efficient service-delivery model, and create synergies that significantly reduce costs. But improving processes gets you only part of the way - another critical step CFOs must take is partnering with an intercompany solutions provider.

In selecting that provider, the CFO must consider a solution that dramatically improves efficiencies throughout the intercompany ecosystem and can be implemented quickly. (The solution should not be developed in-house, an approach that is sure to result in diminishing returns.)

BlackLine Intercompany Solutions are expressly designed to boost efficiencies in the intercompany space, regardless of the size of the multinational, its rate of growth, or the number of transactions it processes in a single day. It’s why these solutions have been adopted by multinationals and survived the tests of audits, changing compliance, and economic headwinds.

The benefits of partnering with BlackLine include:

• Stabilizing and centralizing processes, improving data quality, tightening efficiency, and achieving unprecedented time savings.

• Leveraging automation tools, data-driven insights, and AI-generated technologies that enable intelligent decision-making.

• Increased productivity of teams who experience improved job satisfaction, leading to improved talent retention.

• Being resilient to tax regulatory changes and feeling confident in reporting.

One BlackLine customer is a publicly traded company with territories that span the globe. The organization had been struggling to manage many different ERPs, and to keep up with exponentially growing transactions, it was continually increasing headcount. This led to increased costs, and the close was still taking too long a reliance on manual processes. Once the business partnered with BlackLine, it significantly increased efficiencies across all regions and reduced costs by millions of dollars each year.

No CFO should be in the position of making decisions by guesswork. Intercompany operations that rely on human-based, manual solutions can’t scale in a financially healthy way. On the other hand, the beauty of optimizing these processes is that the organization can leverage automated, data-driven, AI-guided insights that enable confident decision-making and free up finance teams to focus on meaningful, strategic tasks, leading to improved job satisfaction.

When CFOs reset their perceptions of intercompany financial management, strengthen strategies, and partner with BlackLine throughout the journey, multinational enterprises can achieve a new level of efficiency and accountability that positively impacts profit margins and scalability.