Intercompany reconciliation is the matching of receivables and payables between companies of the same group so that they cancel out on consolidation. Each pair of companies compares the balance one records as receivable with the balance the other records as payable; differences come from timing, exchange rates, invoices posted on one side only and charges allocated differently.
Common causes of intercompany differences
- Invoice posted by the seller at month end, by the buyer next month.
- Different exchange rates: each company converts at its own rate or date.
- Management fees and cost allocations booked only on one side.
- Payments in transit between group bank accounts.
- Postings to the wrong intercompany partner code.
A monthly process that works
- Agree a cut-off date and a single transaction currency per pair of companies.
- Each company exports its intercompany open items by partner.
- Compare pair by pair in the transaction currency first, then explain FX differences separately.
- Agree corrections before close, not after consolidation.
- Keep a log of recurring differences and fix their root cause.
Frequently asked questions
Who owns intercompany differences?
Usually the selling (invoicing) company leads, but group policy should define it; disputes go to group finance.
Should FX differences be adjusted?
Compare in the transaction currency; differences in the reporting currency caused only by rates are explained and eliminated, not treated as missing items.
Start with one account. If the differences are not clearer than in your spreadsheet, you have lost nothing.
Start free trial →Last updated: November 14, 2026 · mutabakat.com