ElringKlinger
nicetec insightpro - From tedious to effortless:
Transfer pricing at the touch of a button
About ElringKlinger
As an independent supplier with a global footprint, the ElringKlinger Group is a strong and reliable partner to the automotive industry. Whether passenger cars or commercial vehicles, electric motors, hybrid technology or combustion engines, the Group offers innovative product solutions for all types of drive systems, thus contributing to sustainable mobility. ElringKlinger positioned itself early on as a specialist in electromobility - with pioneering battery and fuel cell technology, electric drive units and associated components and assemblies, including plastic housings and metallic stamped and molded parts. Tailor-made lightweight construction concepts reduce vehicle weight, which increases the range of electric vehicles and reduces fuel consumption and CO2 emissions in diesel and petrol engines. The Group employs around 9,500 people at 45 locations worldwide.
ElringKlinger reduces manual effort and tax risks through automated intercompany clearing
Alternative drive technologies, lightweight construction concepts, sustainability and climate protection: the mobility revolution has rapidly gained momentum in recent years. Automotive suppliers in particular are feeling the effects of this. In order to survive in the long term, they need to fundamentally realign their business models.
This is not a problem for ElringKlinger AG. The globally positioned supplier recognized the signs of the times early on and positioned itself accordingly: Founded more than 140 years ago as a "trading company for technical products", the Group originally made a name for itself primarily as a top supplier of first-class gaskets for cylinder heads and the like, but ElringKlinger was quick to embrace the new technologies: the company built up its first fuel cell expertise 20 years ago. ElringKlinger has been a series supplier in battery technology for over 10 years. Customized lightweight components from ElringKlinger can be used in the entire vehicle. And that is by no means all. ElringKlinger is also heavily involved in other sectors: The Group's components and systems can be found in rail transportation as well as in aviation, energy supply and medical technology, and in chemical and apparatus engineering. Systems expertise means being a pioneer, creating freedom and achieving goals faster - these are key success factors for ElringKlinger.
From the "mother of all spreadsheets" to fully automated billing
Martin Lang and his colleagues used to do all of this with the help of manual processes and extensive Excel spreadsheets. "We called it the mother of all Excel spreadsheets," recalls Lang. "It took a lot of time and effort to keep track of everything." Editing was just as time-consuming: even small changes, such as adding a new figure or column, required an enormous amount of sensitivity, concentration and care. "In this respect, it was a huge amount of work to keep the allocation Excel sheet accurate and error-free at all times and, for example, to enter new services or cost centers," explains the tax consultant. In order to always meet the company's own quality standards, it also took a lot of time to test the necessary adjustments.
In its search for a standard solution that would map and automate the entire transfer pricing process for shared services, ElringKlinger found what it was looking for at nicetec. "The auditors from EY drew our attention to insightpro - and we were quickly convinced that this could be exactly the right software for us," recalls Lang. The nicetec solution not only consistently maps relevant value and information flows, but also presents calculation bases and other parameters transparently and, thanks to its great flexibility, enables changes to the organizational structure and accounting rules to be mapped at any time. "This makes it easy to track the results even years later," praises the billing expert. In addition, insightpro not only complies with German tax law, but also with international regulations and the guidelines of the Organization for Economic Cooperation and Development (OECD). When nicetec then presented an initial prototype that mapped ElringKlinger's accounting processes one-to-one, the die was cast.
Compliance violations in transfer pricing can be expensive
But it is not only on the store floor that ElringKlinger continuously demonstrates its innovative strength.
The
Group also has its finger on the pulse when it comes to internal processes.
At its core, the aim is to make processes more efficient and effective with the help of modern IT solutions.
One starting point for digitalization in the tax area is often the intra-group charging of services in transfer pricing. The compliant and comprehensible handling of transfer pricing has long since ceased to be an optional extra for internationally active companies and has become an obligation: those who fail to meet the statutory compliance requirements risk expensive tax penalties or worse. "The compliant charging of central service functions to our 40 or so international companies is also a highly complex process for us," explains Martin Lang, Transfer Pricing Tax Officer at ElringKlinger AG: "It is necessary to determine performance-related central expenses from accounting, logistics, marketing or IT in detail and to regularly invoice the beneficiary companies in Germany and abroad according to the principle of causation. "Specifically, we currently charge more than 80 internal services to 60 different cost centers. Added to this are the services from the regional service centers," he explains. And this is not the only challenge. After all, the billing principles must be continuously adapted to new legal framework conditions and changing Group structures. It is also important to keep pace with the constantly changing organization with new units and services.
Massive time savings in transfer pricing
The service billing project was launched at the beginning of 2022. In order to launch the new solution, the project team first had to overcome a number of challenges: the required master data had to be adapted, the course had to be set for automated delivery of the resulting costs and allocation keys, and the seamless interaction between insightpro and the SAP ERP system had to be enabled. "Thanks to the in-depth process knowledge and technical expertise of the nicetec consultants, we were able to launch the new solution within a few months without any significant incidents," praises the billing officer. Today, operational transfer pricing at ElringKlinger runs almost automatically: An automatic process from ElringKlinger determines the costs incurred in the controlling system for each cost center, processes them and automatically passes the results on to insightpro.
Using predefined distribution mechanisms and billing rules, insightpro processes the budget, forecast, projection and actual data supplied and transmits the final and approved billing results to SAP Accounting for settlement. "Every month, we create around 600 intercompany invoices at the touch of a button. Thanks to insightpro, manual intervention in shared service billing is now the absolute exception and no longer the rule," says Lang, pleased with the time saved: "A standard billing run used to take the billing department a good day, but now it takes just five minutes."
Further optimization potential targeted
However, this is not the only reason why the investment pays off in his view: "The solution can be operated intuitively, is independent of individuals and is completely transparent, from the creation of costs to the posting of transfer prices at the service recipient," points out Lang. This not only pays off during tax and company audits, but also facilitates coordination with the companies in the Group. "In the medium term, the central service units could also store their own transfer rules in the system via the web interface," says the transfer officer, looking to the future. Despite all the efficiency improvements already achieved, ElringKlinger still has further ideas for optimization - for example in the areas of reporting or interest billing. This does not cause Lang any headaches. "I am sure that with insightpro we will also be able to leverage further optimization potential with ease."
As an independent supplier with a global footprint, the ElringKlinger Group is a strong and reliable partner to the automotive industry. Whether passenger cars or commercial vehicles, electric motors, hybrid technology or combustion engines, the Group offers innovative product solutions for all types of drive systems and thus contributes to sustainable mobility. Read this case study to find out which challenges were solved and which goals were achieved in the project.
