Intercompany postings are useful when you manage multiple companies at the same time and those companies do transactions between them (that is, a subsidiary company buys or sells products or services to another subsidiary company).
The intercompany functionality allows you to define the mapping between the items and chart of accounts of company A and the items and chart of accounts of company B. When company A wants to buy items from company B, company A creates a purchase order and then sends it electronically to company B. In company B, a sales order is automatically created with the appropriate items or G/L accounts. This way, the information is introduced only once and carried to the corresponding companies in the corresponding way.
Intercompany postings use a number of entries and documents for the relevant transactions:
- General journal entries
- Purchase and sales orders
- Purchase and sales invoices
- Credit memos
- Return orders
To set up Intercompany postings, the company must create a list of IC partners and an IC chart of accounts:
- Intercompany (IC) partners: Set up customers and vendors as business partners and assign them IC partner codes. This permits exchange of IC purchase and sales documents, including items and item charges. You can do this by navigating to Departments | Administration | Application Setup | Financial Management | Intercompany Postings | IC Partners:
- IC chart of accounts: Before IC partners can begin to transfer IC transactions electronically, each company must set up the IC chart of accounts in their company. You can do this by navigating to Departments | Administration | Application Setup | Financial Management | Intercompany Postings | IC Chart of Accounts:
- IC journals: These are used to post transactions with your intercompany partners. When you post an intercompany journal, a corresponding journal is created in your IC outbox that you can transfer to your partner. Your partner can then post the journal in their company, without having to re-enter the data:
- In the search box, enter
IC General Journal, and/or you can navigate to Departments | Financial Management | General Ledger | IC General Journal. - Enter the details as follows:
- In the Account Type field, select IC Partner. In the Account No. field, select the IC partner code that you will send the transaction to.
- In the IC Partner G/L Acc. No. field, enter the IC general ledger account that the amount will be posted to in your partner's company.
- After filling in the fields, post the journal.
- In the search box, enter
