Use Case
When related entities within a multi-company organization sell products or services to one another, they use transfer pricing to determine how much to charge. Because transfer pricing involves interpretation and assumptions, the risks of calculating it incorrectly include penalties, double taxation and adjustments to taxable income.
Efficiency Gains
Eliminate guesswork entirely by automating calculations with scenario testing
Top-Line Growth
Enable smooth growth by ensuring that intra-company transactions are consistently compliant with tax laws
Bottom-Line Returns
Free up staff accountants from laborious spreadsheet work for higher-value duties
Business Problem
While transfer pricing can lead to tax savings for companies under common control, it’s also risky. Calculations span legal entities, national borders, business units and data sources, and involve factors such as tangible goods, intangibles, services and loans. Tax rules differ, and the process needs to adhere to principles like Arm’s Length and other standards. It can take days or weeks of work in spreadsheets to arrive at a single plausible scenario for a transfer price. Companies must be consistent in how they perform transfer pricing, and they must be able to document the process.
Alteryx Solution
Automated analytics use calculations with scenario testing to value the goods and services sold by related entities and arrive at optimal transfer prices. Working downstream, the analytics operate on source data without the risk of modifying it and they reduce days or weeks of work to a matter of minutes. By greatly shortening the calculation time, they enable accountants to analyze the impact of different prices, eliminating the guesswork that characterizes the process. The analytics add transparency by leaving in place a clear, defensible audit trail.
With Alteryx, you can:
- Package workflows into a user-friendly app and interface
- Produce outputs with corresponding journal entries
- Analyze results interactively using visualization software
- Generate invoices based on the calculated transfer prices
Alteryx Office of Finance Starter Kit Demo Video
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