Managing accounting for multinational companies is a complex job. This is because data is often stored in different systems and formats. This means that professionals in charge of closings have to spend hours tracking information or reviewing spreadsheets. Despite this arduous work, errors are common.
How to avoid accounting errors for multinational companies?
To avoid financial errors in the management of multinational companies, there are certain accounting practices that should be considered. These are the most important ones.
Automate the creation of different books
In order to perform good accounting for companies doing business in different countries, it is important to create multiple sets of books with different rules that will address a wide variety of financial, administrative, and tax needs. For example, a company based in Europe with a Latin American subsidiary will need to apply accounting rules in both regions, depending on which financial reports the transactions will be included in.
Consolidate financial reports
It is also considered a good accounting management practice for multinational companies to consolidate financial reports. For this, it is fundamental to have a system that supports multicurrency management to eliminate the need for manual conversions. Thus, with automatic currency conversion, it is possible to optimally manage an international business, as the currency realignment makes it easier to consolidate financial reporting across all business units.
Capability to apply multiple consistent standards
Proper accounting management in multinational companies also depends on having support for multiple accounting standards and tax rules, with the ability to apply different accounting formulas to the same transaction. This streamlines the closing and consolidation process and allows for more accurate reporting that complies with international accounting standards such as IFRS or GAAP.
To generate accounting in multinational companies that meets international standards and the particular needs of the institution, it is necessary to implement these practices. A way to achieve this is with specialized software such as NetSuite, which allows to automate intercompany consolidation to run global businesses more efficiently.
If you want to implement this solution in your business, Fusionworks can help you. We offer you the advice and the necessary steps to use this Oracle software in your company. Contact us!