Intercompany

5/5/2013

Intercompany has been one of my major tasks at J&J, recurring monthly with larger charge-outs on a quarterly basis. I work with my Management accountant manager to get these done and it involves  lot of communication between us and the people who need to get these charges out as well as between us and our intercompany partners in Manila who process these debit memo requests on our behalf. Intercompany charges refers to any charge that Janssen-Cilag has expensed for the purpose of another affiliate and hence the cost should not be borne by us and vice versa. Every month we have a deadline to send our team in Manila invoices to charge various affiliates and usually when someone in the business wants to charge another affiliate they came to me where I will draft a debit memo with the backup attached and send it to our intercompany team. If this deadline is missed then we make an accrual for it so our expenses will be correctly reflected in our books.

On a quarterly basis I will also charge out corporate expenses relating to people who do work for another affiliate but are working at Janssen and are in our payroll system. Each have their own cost centre and it involves me talking to that person’s assistant and agreeing upon the amount that is to be charged out and then approved by our Financial Director. Similarly charges that go out to the region are requested quarterly and are cross-checked with our regional partners in Belgium. The last component part of intercompany are Global Clinical Operations (GCO) charges which are expenses incurred for projects that have been undergone by Janssen. This is usually a large, significant amount and as I have learnt from doing this twice, it is of utmost importance that we have smooth communication between the finance team and the GCO team to ensure that the correct amounts are being charged out. We would have incorrectly reflected expenses and revenues for the month if these were not done properly and could have impacts on people hitting targets and performance levels. During this time, it is usually essential to have regular teleconferences with our intercompany team to identify any issues as soon as they arise and to deal with them quickly given the short time span we have to complete them. One of the skills I developed at this time was being aware of everyone’s availability and taking into account time differences between countries. When setting meetings I had to co-ordinate times between the two countries so that both teams could make it but at the same time make sure it did not clash with my manager’s calendar. One time I made it too early so it clashed with Manila’s lunch time and was these little things that I became more sensitive to. 

I also learned a lot about the process of charging another affiliate; to summarise we send intercompany a ‘Request to Charge an Affiliate’ with the appropriate backup. Our intercompany team raises a Sales Order on our behalf and sends the relevant affiliate a purchase order number for their approval. Once it is approved it is then recorded on both sides of our books. Likewise, when we receive charges from other affiliates we get sent a Purchase Order number and once it is approved by the relevant manager then that PO comes through.Some invoices can be seem deceivingly easy to draft up and send to intercompany as it requires approval from both parties and it is usually communicating the charge-out that takes the longest and occasionally makes the process very messy.

Another interesting issues that I came across when I was drafting corporate charges involves sensitive information. Many of those charges include confidential information such as the salary, bonuses and superannuation of the corporate person and this is more or less deducible from the debit memo. As a way of precaution because this invoice goes from many different sets of hands, amounts invoiced should only reflect total amounts which could include travel, entertainment and other various expenses relating to that person and we have to be careful that we do not explicitly say in the description of the invoice which portion of the invoice relate to salaries. In these cases I have learnt that it is vital to exercise prudence in your work and make sure personal information is not compromised.