You’d think it would be easy for big companies to keep track of the money its various divisions pay each other. You’d be wrong.
A major accounting company has launched a new blockchain-based solution for tracking intercompany transactions—a common cause of “fraud, manual errors, unnecessary bureaucracy and wasted time.”
Grant Thornton said financial dealings between the entities within a company are estimated to account for up to 40% of the global economy, a figure that amounts to $40 trillion a year. But, the firm said, these transfers often become a black hole—frequently causing firms to go through the embarrassment of restating their finances when the numbers don’t add up.
The inter.x platform does this in two basic ways: it makes it easy to view and track transactions, and it flags transactions that don’t meet company policy. Then it puts them all on an immutable blockchain.
The problem many companies face, according to Grant Thornton, is that existing systems don’t do a good job of talking to each other.
Instead, the professional services firm painted a picture of financial departments depending on a myriad of Excel files and emails—methods that stop information from being shared seamlessly, and cause questionable payments to slip through the cracks.
A blockchain mousetrap
Grant Thornton said it’s inter.x blockchain platform has the potential to help businesses adjust to a rapidly evolving supply chain—speeding up cash flow and increasing liquidity in an uncertain climate.
The idea behind inter.x was rooted in how few corporations dedicate enough resources to managing intercompany transactions. Executives can often believe that properly monitoring the sheer volume of payments being made is impossible, and that it would involve dramatically ramping up staffing in human resources departments.
Grant Thornton says the opposite is true as the platform provides “an automated management-by-exception model that can proactively handle intercompany transactions using the same, or fewer, human resources.”
What it said was a user-friendly dashboard provides a real-time look at transactions, allowing better compliance tracking, without waiting for monthly or annual audits. And it makes those audits easier, as all of the data is stored on a permanent and unforgeable record of everything that’s been going on.
Chief transformation officer Jamie Fowler said: “Grant Thornton designed inter.x to provide a simple user experience that can red-flag missed opportunities tied to intercompany transactions and identify instances when transactions may have fallen short of company policies.”
His colleague Steven Wrappe added that the platform can also enable businesses to shift their priorities—pivoting from enforcing in-house spending policies to taking a big-picture look at “whether those policies make sense.”