How to Use Agentic AI to Automate Your Intercompany Reconciliation

In the world of finance, dealing with intercompany reconciliation transactions can be a complex task. As the name implies, this discipline is the process of tracking financial activity between two entities of the same parent company. It’s important to make sure that the finances of the two entities, and most importantly, the larger parent company, are accurately documented and represented.  It’s like account reconciliation but with some significant differences:  

• Identification: Intercompany reconciliations require identifying all transactions using standardized terms for consistency.

• Data Parameters: Specific references such as currency rates, payment amounts, and the nature of the transaction are included to streamline the process.

• Master Data Management: Crucial for maintaining uniformity, accuracy, and consist-ency of data.

• Data Extraction: Requires a standardized method to extract data efficiently, which both entities in the transaction must use.

The process varies depending on company size and structure, and it brings additional challenges especially for large, multinational companies operating within numerous countries and tax jurisdictions. Challenges include regulatory compliance, maintaining audit trails to ensure transparency, and dealing with different transactions such as loans, and sales – each of which may have unique accounting treatments and tax implications. Other big challenges relate to foreign exchange issues and documents possibly being in multiple languages.  

On top of these challenges, every transaction can generate a lot of data. Centralizing then reconciliation process and having standard policies and procedures makes it easier to secure the data and reconcile the large data volumes. The manual processes for netting and settlements are often time consuming and prone to errors. Varying cutoff dates and the lack of a pre-close routine can also cause major complications.    

Enhancing Reconciliation with AI agents

Fortunately, the discipline of intercompany reconciliation can be significantly improved. Because it’s a relatively routine task that has specific rules and boundaries, automation makes it much easier and more efficient. AI agent based solutions such as Hypatos.ai can automate much of the data identification, extraction, validation and matching that needs to occur between related accounts payable and accounts receivable transactions within affiliated entities. They also minimize unnecessary manual intervention which results in increased accuracy as well as faster throughput for precise and reliable invoice matching outcomes.    

By combining Order-to-Cash (O2C) and Procure-to-Pay (P2P) automation, the financial close cycle can be accelerated and enhanced, resulting in a seamless flow of financial information and the potential for faster decision-making and more reliable, real-time data from which to make decisions. With an automated system using AI agents, companies can streamline the reconciliation process by quickly matching transactions such as bank statements and internal records and identifying and resolving discrepancies resulting in greater efficiency. By reducing the need for manual data entry and verification, errors can be minimized and resources more effectively assigned to work which has greater value such as strategic planning, making this type of solution more cost effective, too. And for large, multinational clients, one of the biggest benefits realized in working with Hypatos’ agentic AI platform is the ability for AI agents to recognize documents in multiple language, ensuring compliance with regulatory requirements, reducing the risk of costly penalties associated with any non-compliance.  

Intercompany reconciliation meets Agentic AI

To showcase how AI agents and automation software can significantly streamline the process of intercompany reconciliation and deliver tangible benefits, Hypatos has teamed up with EY. In this webinar, take the opportunity to hear about real-world automation examples and see firsthand how these solutions work by experiencing a demonstration of the Hypatos agentic AI platform in action. This live demonstration will showcase the user-friendly interface of the platform as well as a selection of the capabilities designed specifically for intercompany reconciliation. Finally, use this opportunity to engage in Q&A with the experts. Allow them to address your specific questions and learn how the Hypatos solutions can be tailored to fit your needs.

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