A family group ran an import trading company, a local distribution arm, and a small service company, all sharing one office, one warehouse, and a bookkeeper who had been there for 16 years. Every month, the external accountant spent nine working days producing three profit-and-loss statements and then a fourth “combined” version that never quite matched because money moved between the companies informally. The owner could not tell you, on the 10th of any month, whether the group was actually making money.
The float that hid the real damage
One of the companies had been paying for the warehouse renovation, but the cost had been booked as an expense rather than a loan to the shared entity. Another company’s employees routinely worked on the service company’s projects, but their hours were never transferred, so the service business looked far less profitable than it was. The family members had been making decisions using numbers that were off by enough to delay a new hire for months.
ERPNext Consulting started by mapping how money and work actually moved between the three legal entities. Every intercompany transfer, from a shared forklift to an employee’s week of work, needed a price and a paper trail. Business managers hate this at first because it feels like charging your own family for a favor.
One shared master list instead of three separate worlds
The core fix had two parts. First, all three companies use the same chart structure for master data, so a supplier record lives once and is shared, with a label for which legal entity buys from it. Second, intercompany charges are created automatically each month from actual usage rather than from the bookkeeper’s memory.
The monthly routine looks like this:
- By the second working day, each warehouse manager confirms cycle counts and posts any missing stock adjustments.
- By the fourth working day, the bookkeeper runs a reconciliation of the intercompany accounts. Any difference above $500 gets investigated before the close.
- On the fifth working day, the accountant produces consolidated group numbers, with intercompany loans and sales eliminated automatically.
Three days, not nine — and one surprise
Within two months, the close went from nine days to three. The actual surprise was bigger: during cleanup, they discovered a $240,000 intercompany cash advance that was sitting on the books of the wrong entity, making one company look desperate and another look idle. When multiple entities share staff and money, the loan ledger is where clarity goes to die.
If you run more than one company, stop reviewing each company’s profit in isolation. Review the intercompany balances first, because they are usually the biggest distortion in the whole group. ERPNext Consulting built a simple monthly report that lists every uncleared transaction between the entities, and the rule is simple: nothing closes until that list is either settled or explained.