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The Nightmare Before Christmas: preparing for financial year end is here again

The arrival of the financial year-end can often feel like a nightmare for many accounting teams. As December 31st looms, the tasks pile up, and the process of closing the books becomes a source of dread. But what if things could be different? What if this period could transform from something resembling “The Nightmare Before Christmas” into a smooth transition into the new year? It can — read on to find out how.


The Fear of Year-End Close

For accounting teams, the year-end is not just a date on the calendar — it's a period of intense activity, fraught with potential pitfalls and pressures.  

The fear is real, and the buildup can create a palpable sense of dread. The challenges are numerous, from ensuring all financial records are accurate to reconciling transactions and preparing reports, and all of these need to be done against the clock.


Typical Year-End Problems

Within the accounting function, intercompany is just one aspect, but it’s one that plays an outsize role. And, of all the challenges that financial teams face during this period, among the most significant is the intercompany reconciliation process. When intercompany accounts do not balance at the end of the year, these discrepancies must be investigated thoroughly — a time-consuming process that adds to the year-end stress.

In fact, a survey by BPM International showed that 72% of the companies involved said they spend significant time clearing IC differences, and 31% identified the processes as a significant barrier to year end close. 

An important consideration is to prevent duplicate entries, but this is often hampered by manual processes which, unlike automated reconciliation processes, often lead to errors and delays. 

Another significant issue is the management of intercompany recharges. For multinational companies, IC recharges for transfer pricing, tax agreements, or advanced pricing arrangements are complex. Without a robust policy underpinned by automation technology, handling these can be a slow and error-prone process that lacks the rigorous evidence-base demanded by auditors and regulators.

Finally, the staff that have to execute year-end close do not always have the authority to ensure that policy is being adhered to. The result is that competent employees waste lots of time and get frustrated in the process, which is no good for morale, job satisfaction, or overall process efficiency.


What Causes Year End Challenges?

Some of the main factors that make intercompany accounting so difficult — especially at year-end — are: 


  • Different subsidiaries using different ERP systems that are not connected. In fact, Deloitte conducted a poll of 3,800 accounting and finance professionals, and 21.4% of them stated this as the biggest challenge in IC accounting
  • Different year-end deadlines for different subsidiaries
  • Asynchronous entry recording
  • Different entities using varying materiality thresholds for their transactions
  • Out of balance conditions that are time-consuming to fix
  • Inconsistent accounting structures
  • The lack of a dedicated intercompany accounting tool to centralize and standardize processes and data


The Importance of a Successful Year-End Close

As dreaded as year-end is, executing things correctly is absolutely vital; as we’ve mentioned before, companies with annual revenues of USD $10 billion can potentially save $1-2 million each year by correcting poor IC accounting processes.


Financial Accuracy

Intercompany transactions, if not accurately accounted, can lead to misstatements. Therefore, a well-executed close is vital for providing an accurate picture of the company’s financial position and performance. This picture can easily be skewed when accounts receivable and accounts payable entries are not recorded in the correct accounting period, for example. 

Accuracy in year-end statements is critical for stakeholders like investors and creditors that rely on this information to make decisions. Inaccuracies can erode their trust and affect investment and credit decisions.


Effective Decision Making

Accurate financial data is crucial for management to make informed strategic decisions relating to cash flow management and budgeting. Accurately recording the timing of transactions is key in this regard.



Accurate year-end closing ensures compliance with accounting standards and legal regulations, reducing the risk of problems down the line. 

The complex structure of multinational organisations — and the volume of transactions that take place — makes it all the more important to ensure accuracy here. (13.1% of the professionals in the poll mentioned above said transfer pricing compliance was the biggest challenge in IC accounting.)

In fact, when an organisation operates in multiple jurisdictions, the tax authorities are likely to pay more attention to the activity among subsidiaries, so it’s never worth taking any risks when it comes to maintaining accurate processes.


The Solution: Intercompany Accounting Automation

Intercompany accounting platforms can transform the nightmare of year-end close into a manageable, automated process. 

In fact, they enable you to automate the full intercompany lifecycle each and every period, and research has found that companies with highly automated intercompany processes have 75% less full time staff

How does Virtual Trader help our customers achieve such results? Here’s an overview:

  • VT functions across numerous ERP systems — having disparate systems no longer has to be the cause of hell-like conditions at year end
  • The system automatically posts entries back to the ERP of each legal entity
  • VT pre-reconciles every item and reduces duplicate entries, vastly minimising bottlenecks at year-end
  • Entries are created for all parties at the same time, in the same place, for the same amount — with a common reference
  • Easy reconfiguration in line with regulatory and business changes — no coding required
  • Easy access to data on transactions and business rules, making audits seamless 
  • VT handles complex transfer pricing agreements and calculations in a centralised manner, including the production of invoices for transfer pricing 
  • The solution easily handles multiple currencies, making it convenient to adapt OTP calculations in line with regulatory or business changes 
  • VT helps you to scale your tax strategy globally 


Automated systems significantly reduce the time spent on reconciling and managing IC transactions. They reduce the risk of human error, ensuring more accurate records, and that all transactions are compliant with relevant accounting standards and regulations. Simplifying and streamlining these processes reduces the stress and pressure associated with year-end.



A well-executed year-end close is key in ensuring accurate statements. In turn, this supports accurate decision making and stakeholder appraisal, and ensures compliance. 

However, multinationals are plagued by the likes of reconciliation and recharges — dread-inspiring, time-consuming activities if you don’t have the right tools in place. 

But it doesn’t always have to be like this. So, as we approach the end of the financial year, it's time to rethink the traditional approach.


Ready to turn your year-end close from a nightmare into a dream? Learn more about how Virtual Trader can streamline your financial processes.