AI agent · Finance & accounting · Match & reconcile
Intercompany reconciliation
The software matches both sides of every intercompany transaction during the month, not only at close, explains each difference and sends the missing entry to the entity that has not booked it. Group controllers see what remains, with the reason, before the deadline.
Typical volumes for this process, not a client figure.
At close, each entity pair swaps balances and argues over the difference by email.
Both sides matched transaction by transaction during the month; differences explained before close.
Where the time goes today
Entities in a group trade with each other: goods, management fees, shared service recharges, loans and interest, royalties. Each side records its half in its own ledger, sometimes in a different system, a different currency and a different month. For consolidation, what one entity shows as receivable from its sister must equal what the sister shows as payable. Where it does not, the balances cannot be eliminated cleanly.
Today each entity's accountant exports intercompany balances into a spreadsheet near the close deadline and emails it to the counterpart. When the totals disagree, both dig into the transactions, across time zones, in the last days of close. The usual causes: an invoice booked by the seller but not yet by the buyer, different exchange rates, a recharge one side disputes, the wrong partner code on an entry, tax treated differently on each side.
When the deadline arrives, unexplained differences are often absorbed with a top-side adjustment at group level and never cleared at source. They accumulate, get older, become harder to explain and come back as questions from the auditors.
How the agent works
- Extract both sidesThe agent pulls intercompany transactions and balances from every entity's ledger daily or weekly, with the partner code, document reference, currency and date.
- Match pair by pairFor each entity pair it matches invoices to their counterparts by reference, then by amount converted at the group rate and by date. Loans and interest are checked against the agreement schedule, and bulk recharges are matched against their itemised counterparts.
- Classify the differenceEach unmatched item is classified: timing, exchange rate, wrong partner code, amount dispute, missing recharge or tax treatment. The classification cites the entries on both sides.
- Chase the missing sideWhere one side has not booked, the agent sends the counterpart entity the source document and a proposed entry. Where a partner code is wrong, it points the entity to the exact line.
- Report before closeIt maintains a matrix of every entity pair with its status and aged differences. What remains unexplained at your cut-off goes to the group controller with the evidence.
What stays with a person
Group controllers decide who books a correction, at which rate and in which period, and they approve any top-side adjustment. Disputes over whether a service was received or how a recharge was calculated are settled by finance, and pricing between entities is a matter for your finance and tax teams under your group policy, not for the agent.
The agent does not post entries in any entity's ledger. It proposes them with the source document, and each entity's accountant posts. Each entity remains accountable for its own books, and an automated entry in one entity to fix another's difference would blur that line.
What it reads, what it produces
| It reads | It produces |
|---|---|
| Each entity's ledger: intercompany accounts, partner codes and documents | Match status for every entity pair |
| Intercompany invoices and recharge schedules | Differences classified, with the entries on both sides cited |
| Loan agreements and interest schedules | Proposed entries and source documents sent to the entity that has not booked |
| The group exchange rate table | An aged differences report for the group controller |
| The close calendar and prior-period differences |
Controls that come with it
- The group rate table is the only source for currency comparisons, with a rounding tolerance you set.
- No postings in any ledger; entities post proposed entries themselves.
- Differences above a value you set, or older than one period, go to the group controller automatically.
- Every match and classification is logged with the transaction identifiers on both sides.
- Changes to the partner code mapping require approval and are logged.
How you know it works
- Unexplained differences at the close deadline, by count and value
- Age profile of open differences
- Value of top-side adjustments made at consolidation
- Differences cleared within the period versus carried forward
Is your process ready?
- Written rules: an intercompany policy covers cut-off, the rate to use and which side books a recharge first.
- Systems: each ledger exposes intercompany transactions with partner codes, and cross-entity access is permitted.
- Cheap check: each pair either agrees at the group rate or it does not.
- Volume: many entities and thousands of transactions a month; three entities with a monthly management fee do not need an agent.
- Same description: every entity codes intercompany transactions the same way and follows the same cut-off.
The five candidacy checks are explained, with an exam, in the free Module 01.
What goes wrong
- Missing or wrong partner codes, often the first blocker; clean the master data before anything else.
- Different ledger systems with different charts of accounts, whose mapping must be maintained as accounts change.
- Starting at close only, when the value lies in matching continuously through the month.
- Years of legacy differences; agree a cut-off date and clear the backlog as a separate exercise.
Questions we get
Our consolidation tool has an intercompany module. Why add an agent?
If all entities use one ledger, code partners correctly and the module matches most transactions, it may be all you need. The agent helps where the work around the matching is manual: reading the source invoices, classifying the reason for each difference, sending the missing side its document and proposed entry, and keeping differences moving during the month instead of at the deadline.
Which exchange rate does it use?
The rate your group policy specifies, taken from the group rate table for the relevant date. It compares both sides at that rate and treats anything within your rounding tolerance as agreed. Larger differences caused purely by rates are classified as exchange differences and reported separately, so they are not confused with genuine disputes or missing entries.
Does it settle intercompany balances?
No. Netting and settlement are decisions for your treasury team, and moving money between entities is outside what the agent does. Once balances are agreed, the matrix it produces can serve as the starting point for your netting run, because each pair's agreed balance is shown with the transactions behind it.
What if an entity disputes a recharge?
The agent classifies it as a dispute, attaches the recharge calculation and the entries on both sides, and sends it to the named owners in each entity. It does not decide who is right. If the dispute is still open at your cut-off, it appears on the group controller's report with its age and value.
Want this agent on your process?
Tell us about your version of this process — volumes, systems, what goes wrong. A person answers with an approach and a price, usually within two working days, or tells you it is the wrong project.