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Within a group composed of several entities or subsidiaries, preserving margins involves savings achieved by eliminating hidden costs, particularly those related to intra-group operations (intercompany transactions).
This terminology encompasses all financial transactions between two subsidiaries of the same group, whether they involve purchases or sales of goods, services, or fixed assets, reciprocal financing, or dividend distributions. If these transactions are not clearly identified as intra-group operations, they can obscure the group's liabilities, revenues, and expenses, leading to inaccuracies in the presentation of the group's consolidated financial statements.
However, financial transactions between subsidiaries have no impact on the group's consolidated revenue, since the sum of the transactions between the entities is zero. Furthermore, the administrative management of these transactions generates costs (invoices/payments/collections) that increase if they require external financing or involve multiple currencies.
Implementing an intra-group netting system increases the reliability of the group's consolidated figures, eliminates superfluous financial movements and reduces related administrative costs.
To learn more, visit the page dedicated to the Netting .
