What intercompany elimination is
Intercompany elimination is the removal of transactions and balances between related entities when their financial results are consolidated into one set of group accounts. Within a group, entities often trade with each other: one company sells to another, one lends to another, one charges a management fee to a third. Those transactions are real for each entity on its own, but from the group's point of view they are internal. Consolidating without removing them would show the group as trading with itself, overstating revenue, expenses or balances.
Elimination is the step that fixes this. When the separate entities' figures are combined, the intercompany sales, charges and balances are stripped out so the consolidated accounts show only what the group did with the outside world. The difficulty grows with the number of entities and the volume of intercompany activity, because each pair of related transactions has to be matched and removed. Doing it by hand at the end of a period is slow and error-prone, which is why groups want consolidation that handles eliminations as part of the process.
Intercompany elimination in the Cohiva platform
Cohiva Crunch is a full-stack ERP with AI financial intelligence. It handles multi-entity consolidation, intercompany eliminations and a shared chart of accounts, with real-time profit and loss across entities. Because the entities share one platform and one chart of accounts, intercompany activity can be matched and eliminated as part of consolidation rather than reconstructed in a spreadsheet at period end.
For mid-market finance teams running several entities, that turns group consolidation from a manual exercise into a live view. To see how it works, explore Crunch or read the franchises solution.