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Trade models

Multi-party trade chains

Multi-party trade chains are the model in which several group entities and external counterparties buy and sell in a chain, with goods shipped once directly while invoices pass step by step. Tranexio models the four flows of goods, invoices, cash and profit, with support for transfer pricing, intercompany reconciliation and BEPS self-checks.

Key points

  • Four flows, kept separate

    Goods ship once directly, invoices pass along the chain step by step, cash flows back in reverse, and profit is allocated between entities by transfer pricing rules.

  • A master trade-chain record

    One trade chain links the purchase and sales orders at every step. The chain must be continuous, and a change at any step is flagged upstream and downstream.

  • Transfer pricing rules

    Five methods are supported: comparable uncontrolled price, resale price, cost plus, transactional net margin and profit split. Profit at each step must be non-negative.

  • Intercompany reconciliation

    Receivables and payables between entities on the chain are matched automatically, differences are traced to the step and document, and cross-entity transactions are flagged as related-party transactions.

  • BEPS self-check

    A compliance self-check against transfer pricing rules and the distribution of profit across steps produces a list of findings for tax and internal control to review.

The problem

When a group runs multi-party trade through several entities in China and abroad, one lot of goods involves multiple contracts, invoices and payments. If each entity keeps its own books, broken links in the chain, unjustified profit shifting and unreconciled intercompany balances are the norm, and the pricing basis is hard to explain in a tax audit.

What the platform does

Flow Direction How Tranexio handles it
Goods Shipped once, directly One shipment, one set of logistics documents
Invoices Passed step by step Purchase and sales orders and invoices generated automatically at each step
Cash Flows in reverse Receipts and payments at each step paired along the chain
Profit Allocated by rule Transfer pricing rules set the price and profit at each step

Key controls

  • Chain continuity: any missing step or quantity mismatch is flagged.
  • Profit at each step must be non-negative, and unusual prices require approval.
  • Chain hedges are matched to physical exposure to avoid double hedging.
  • Intercompany balances are reconciled automatically and related-party transactions flagged automatically.

The trade chain module is fully featured. Before go-live it is configured and validated in each project against the group’s chain, entities and tax arrangements; no general guarantee is given.

Frequently asked questions

How is multi-party trade different from ordinary purchase–sales matching?

Ordinary matching happens within one legal entity. Multi-party trade spans several group entities: the goods move only once, but contracts, invoices and cash must pass between every entity, and profit at each step must comply with transfer pricing rules, which is why the four flows are modelled separately.

How is each entity’s profit on the chain determined?

It is calculated by the transfer pricing rules configured for the chain, using comparable uncontrolled price, resale price, cost plus, transactional net margin or profit split. The system checks that profit at each step is non-negative and carries the results into order P&L and related-party flags.

Can a trade chain be hedged?

Yes. Hedge relationships can be attached at a designated entity on the chain, matching hedge positions to the chain’s physical exposure and avoiding double hedging or gaps across entities.

Is this module available now?

The trade chain module has been fully developed, providing the master trade-chain record, separation of the four flows, transfer pricing, intercompany reconciliation and BEPS self-checks. Because chain structures and tax arrangements vary widely between groups, it is configured and validated in each project against the company’s actual chain.

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Updated 2026-10-06