Intercompany Balances

Companies that have transactions with other companies in the same group, report intercompany balances. The intercompany balances are reported on specific accounts, which are reconciled with each other according to one or more predefined control tables.

The reconciliation is shown in a standard report. The elimination of intercompany balances can be performed with manual or automatic journals. The journals can be stored on the company itself as company journals or as a group journal on an adjustment company. This you select per consolidation type.

In the control tables you define which intercompany accounts you want to reconcile with each other. For example:

  • Intercompany receivables/payables
  • Intercompany sales
  • Intercompany interests
  • Other internal incomes/expenses

When you run the reconciliation report, intercompany receivables are matched with intercompany payables, intercompany interest incomes are matched with intercompany interest expenses and so on, according to your control tables. When values do not match, differences arise. The difference can be divided into currency translation difference and real difference.

All companies must report their intercompany balances on accounts defined as intercompany accounts. You can define these accounts with code I or J in the account structure.

When you enter intercompany balances you always have to enter a counter company. Depending on the definition of the accounts and the configuration of the control tables, you sometimes enter the transaction currency, the transaction amount, dimensions and counter dimensions in addition to the local booked value.

For more information, see Account Structures.

Intercompany accounts that are reconciled against each other can be divided into dimensions. In that case, both accounts must have the same dimension level. You may run the reconciliation report for a higher dimension level than the dimension level applicable to the reported data.

Example: If the intercompany balances are reported at dimension 1 level 3, the reconciliation report can still be run for dimension 1 level 2.

For more information, see Reconcile Intercompany Balances.

You can let the system book the elimination of the intercompany balances automatically. You define per consolidation type if you want the journal or journals to be booked as group journals or as company journals. The journals are stored on the automatic journal type 35.