How it works
When one subsidiary sells to another, or a parent charges subsidiaries for shared services, each entity books its side: a receivable and revenue in one, a payable and expense in the other. Both sides must agree. At consolidation the pair is eliminated, because a group cannot earn revenue from itself. Mismatched intercompany balances are a classic cause of slow closes.
Example
The UK entity invoices the US entity $50,000 for software development. The UK books revenue and a receivable; the US books an expense and a payable. Consolidation removes both.
In integrations
Intercompany data is only useful when both sides can be read together. The Unify ERP API is designed to preserve intercompany links and entity ids on transactions, so a consolidation or close tool can match pairs across subsidiaries and across different ERPs. Mismatched intercompany balances are a frequent reason group closes run late. Tools that can see both sides at once help finance teams fix differences before the close instead of after it.