At least 50 MNCs of the Forbes Global 2000 list are employing their enterprise blockchain solutions to process intercompany transactions.
With many subsidiaries operating in different jurisdictions, intercompany transactions of MNCs require high accuracy and reliability over a long time. Building a system that allows smooth transactions and provides sufficient information for the rigorous audit process is a big challenge for MNCs. Leveraging the transparent, immutable storage capabilities of enterprise blockchain solutions to process intercompany transactions is a trending movement in many MNCs.
Difficulty in managing intercompany transactions of MNCs
An MNC’s business network generally includes the following types of stakeholders: Subsidiaries, shared service centres, regulators, suppliers and customers in different jurisdictions.
Operating in the global market requires MNCs to ensure a balance between the regulations, the company’s inherent modes of operation and the specific rules and legal requirements of each particular jurisdiction.
Managing compliance with various regulations in distributed locations while maintaining mutual control is a challenge for any MNCs company.
Besides, the history of an MNC company includes many expansions, mergers and acquisitions that took place at different times and conditions. These individual activities lead to the fact that an existing MNC company may consist of separate financial, accounting and human resource management systems, which are asynchronous and differ in the operation rules.
This structure increases the complexity of business processes because proof of compliance in business processes is fragmented over time, rather than becoming seamless.
Using a shared service centre to support operations is a solution to manage transactions at these subsidiaries. However, using an intermediary service also poses a high risk of data leakage or loss.
On the other hand, performing audits for these local subsidiaries is also a complicated activity. Specifically, the timing of the audit at these subsidiaries may vary from place to place. The risks for the companies may include the left of the responsible employees, and the changing system lost information.
Meanwhile, the audit activity requires much information and evidence for a transaction. Fragmented information and poor data security can lead to huge penalties for the company.
Building a distributed ledger data system is one of the enterprise blockchain solutions that help MNCs to tackle these challenges.
Data system solution using blockchain and smart contract
This enterprise blockchain solutions allows MNCs to transact less friction with greater confidence while offering more potential to transform global business operations across multiple industries.
Specifically, blockchain creates a straightforward, and immutable method of data storage that allows quick response to changes in local compliance requirements.
Based on a distributed structure, a mutual ledge with member nodes that store reliable copies of data will help improve data control and ensure security requirements.
Each subsidiary will be a member node, jointly contributing and storing transaction data. The data type and access rights will be company-specific. Auditors may have their portal to access and lookup required information and evidence without “touching” other details.
Blockchain forms the single language base for key stakeholders based on the business logic performed by smart contracts. Business processes are designed with a shared understanding of users, analysts, and developers.
At least 50 MNCs of the Forbes Global 2000 list in many sectors are using this solution. Take the example of FedEx – a company operating in the field of Logistics. FedEx’s board said they saw better visibility to parties by using blockchain. The world’s largest shipping company has developed an enterprise blockchain solution to share shipment information between suppliers – FedEx – retailers, and determine what data needs to be stored in the perpetual ledger to reduce customer disputes.
With its ability to store data transparently, blockchain is helping MNCs to process complex intercompany transactions and simplifying the audit process efficiently.
While building and implementing a blockchain-based information system project for its clients, akaChain has been well aware of the complexity of handling intercompany transactions. We have to manage local business regulations and compliance with chaincode-based business logic to make the simplest operations possible.
Compliance regulations are changing day by day, and efficiency in transaction information management is critical for the smooth running of multi-partner businesses. MNCs that want to thrive further need information management solutions that keep pace with the changing and evolving environments around them.
There are still a lot of problems that need to be solved to deploy blockchain projects effectively. Learn more about enterprise blockchain with us at https://blog.akachain.io.
akaChain is backed by FPT Software, a globally leading technology, and IT services provider. It is an end-to-end, permissioned, multi-chain network based on the Hyperledger Fabric. Since Establishment in September 2018, akaChain’s product has assisted many enterprises, from SMEs to Fortune 500 firms, to transform with distributed ledger technology. The company provides a broad range of permissioned blockchain-based products and services in multiple sectors, including retail, supply chain, banking and finance, insurance, shopping mall management, etc. to transform with its distributed ledger technology. For more information, please visit https://blog.akachain.io/.
Contact us for more information:
Phone: +84 90 1133883
Addresses: FLC Twin Towers, 265 Cau Giay street, Dich Vong Hau ward, Cau Giay district, Hanoi, Vietnam.