If your intercompany reconciliation never balances on the first pass, that’s not a sign you’re doing it badly — it’s close to universal, and usually traceable to two or three recurring causes rather than one big mistake.
The most common intercompany break isn’t a wrong number, it’s a right number recorded in different periods — Entity A books a management fee in the current month, Entity B doesn’t book the corresponding expense until the invoice arrives the following month. Reconciling by matching amounts misses this; reconciling by matching transaction pairs catches it.
Entity A might book an intercompany invoice at the rate on the invoice date, Entity B might book it at the rate on the payment date — a small, explainable gap that looks alarming until you know to check for it.
Many groups track intercompany balances in a side spreadsheet that isn’t reconciled back to each entity’s actual GL balance regularly — the spreadsheet and the GL quietly diverge over several months before anyone notices.
Identifying which transactions are intercompany is a detection problem. Actually adjusting the consolidated figures to remove them is a separate elimination step — conflating the two is a common source of confusion in smaller finance teams doing this manually for the first time.
Most of this is solvable with a consistent monthly cadence and a single source of truth for the intercompany ledger — the tooling matters less than doing it the same way, every month, without drift. See how multi-entity groups get intercompany reconciliation as a named deliverable →