Invoice Order and Intercompany Payables
Huntington Group offers accurate and efficient invoice order and intercompany payables solutions, allowing you to operate your business free of time-consuming manual processes.
Intercompany payables arise when one department or division of an entity has a transaction with another division within the same entity. Many companies can enhance efficiency by taking advantage of intercompany transfer pricing and other related party transactions. Intercompany payables can be an essential aspect of minimizing the allocation of income and deductions. Intercompany payables can include transactions between:
- Two departments
- Two divisions
- Parent company and subsidiary
- Two subsidiaries
Direct vs Indirect Intercompany Transfers
Intercompany payables are divided into two basic categories: direct intercompany transfers and indirect intercompany transfers.
Direct Intercompany Transfers – intercompany transactions between different departments within the same company. Direct intercompany transfers include payables and receivables, interest expenses, and revenues.
Indirect Intercompany Transfers – Indirect intercompany transfers occur when a division of one company acquires the debt or assets issued to an unrelated company through another division in the original company. This process is used to eliminate the interest expense on retired debt, to create a gain or loss for early debt retirement, or to remove investment in interest and bond revenue.
Since many companies and legal entities are divided into separate units, divisions, and departments, it is important to have an efficient and effective intercompany invoicing process. Huntington Group can help your business keep track of incoming invoices whether they are from external parties or intercompany transactions. This process can be time-consuming, and even the smallest errors can have large financial and legal implications. It’s important to ensure that you have a qualified financial expert maintaining a detailed and accurate report of all invoice orders.
Maintaining a detailed intercompany invoicing process is essential to the success of an efficient transfer pricing process. It provides a direct paper trail to show that all tax laws are being followed and that payments for goods and services apply withholdings and are compliant with all local and regional tax laws.
The Huntington Group Invoicing and Intercompany Transaction Management
Whether you are a well-established corporation or a locally owned business, there will certainly be times when intercompany transfers and transactions will occur. It is imperative that you have a certified and experienced financial manager ensuring the accuracy and timeliness of every instance of intercompany transactions and invoicing. Drop us a line to find out how we can help your business with invoicing and intercompany payables.