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Intercompany = Double work?

Written by Richard Smits on . Posted in Exact Globe

Companies with multiple divisions are having a big challenge to maintain their master data consistent and up-to-date, see my previous blog post. But next to master data, companies with multiple divisions also exchange transactions between each other.

• Sending a purchase order to your production facility, and they will create a sales order for their administration.
• Sending goods to your sales office abroad, means a receipt at the sales office
• Sending an sales invoice to another subsidiary, so a purchase invoice on their side.
• Headquarters orders and pays for an advertisement, all divisions have to pay a part of the costs.

Just some examples, there are much more (complex) scenario’s.  Although working at the same company, and (maybe) working with shared master data, entries need to be done twice. Next to the double entry, and the inconsistencies that can occur due to manual errors,  companies also wants reporting. Reporting like stock in the different subsidiaries, so you are able to see if the item you need is available at another subsidiary, or as a financial controller you want to see all outstanding financial intercompany transactions company-wide, etc.

Currently we are analyzing how Exact could provide/enhance a solution for companies facing this issue.
Do you (know companies) face this issue? How do you currently handle this, indeed entering your data twice or do you use other ways?

If you have any ideas/remarks, your comments will be highly appreciated!

Photo credit: Managementsite 

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Comments (8)

  • Henk


    The solution can be simple. When you can use à code in the entryline eg 0 for a ledger account 1 for debtor 2 for creditor entry you will create the entry in the current company. Using a 3 4 or 5 will lead to an entry om ledger account debtor or creditor in another company so the number for that company needs to be asked.


  • Jeff Standen


    This is a significant issue for us. Many of our customers are also suppliers and they are customers and suppliers of all of our group companies. When it comes to paying or receiving payment from these agents we have to clear transactions from multiple accounts from both ledgers in multiple countries. How we do this currently is to have an ‘intercompany bank’. The company paying the money makes a transfer from the real bank account into the intercompany bank and the company with the invoices to be matched makes a payment out of the intercompany bank into the ledgers. At the end of the month the amounts are swept into the GL intercompany account. It’s far from ideal but it’s the simplest way we have found of doing it so far.


  • Richard


    Don’t completely understand what you mean, could you mail me some more details.




  • Alexander


    @Jeff. Very interesting information.

    Would you please clarify your solution for the following situations:

    A. Company A has a customer, which at the same time a supplier of the company B. Company B has to pay to supplier and Company A is expecting a payment from the customer.

    B. Company A has a supplier the Company B must pay this supplier bills on behave of the Company A.

    C. Company A has outstanding invoices to the customer and the company B is expecting transfers from this customer.

    D. Companies A & B have the same supplier and must pay this supplier bills in share. Part of a bill is paid by A and another part – by B.

    E. Companies A and B have the same customer and receive money for the same invoices in share so part of the invoice is to be received to A; and another part – to B.

    Question: Do you use and how the intercompany bank in such situations?


  • Jeff Standen


    @Alexander. The company we pay from is our own choice, depending on where we have funds in the currency that most of the balance is denominated in at the time. When we receive cash, where we receive it is generally dependant on which of our companies they have the most business. In all cases, all receipts and payments though the intercompany bank are in the same currency as the original receipt or payment in the real bank.

    A. Assuming B owes 20 GBP and A is owed 10 GBP, and we are paying from B’s bank.
    Entries for company B:
    – payment of 20 from the real bank to the creditor.
    – receipt of 10 in the real bank to a holding account – bank transfer creditor
    -payment of 10 in the i/co bank to the holding account. This is because there appears to be no usable functionality to transfer money from one bank account to another.

    In company A:
    -receipt of 10 GBP in i/co bank to the customer.

    B. In company B:
    -payment from real bank to holding account
    -receipt in i/co bank to holding account

    In company A:
    -payment from i/co bank to supplier.

    C. I’m not sure what you mean by transfers in this context.

    D. We would not do this as it is always our choice where to pay from. If we did however, we would treat part as a normal supplier payment and part as in scenario B, as the bill would be wholly loaded as a cost in one or other company,

    E. Like D, an invoice cannot be issued by two companies so the sales invoice will be in one or the other. I you mean that part of the cash for an invoice is received in one company and part in another, this would be like scenario D, except the receipts would be payments and vice versa.

    Somewhat moving off track, the reason we don’t use the current intercompany solution is because it is limited by either having to have 1 intercompany GL for everything or a seperate intercompany GL for each intercompany pairing. What we want is to have 1 intercompany code for each company. For instance, in company A you would have the following intercompany codes:

    216201 Company B
    216202 Company C

    Wharas in B you would have

    216200 Company A
    216202 Company C

    That is what we have currently, although we actually have 3 codes for each company – sales, purchase and general ledger. The intercompany bank is seperate to these, but we sweep the balances into the intercompany G/L at the end of each month so the resulting balance is zero.


  • Mark Rabjohns


    I see this a lot with organisations who deploy globe across multiple divisions.

    One way of handling it may be to introduce a company code to the chart of accounts. Debits & Credits may balance across a journal, but be out of balance for company codes.

    In that case, a balancing inter-company entry could be automatically entered in the appropriate database(s).


    • D Patel


      I would like to see cross company posting for costs incurred by one group company being able to be posted in another group company, once posted it would also create a inter company balancing entry in both company !


  • D Patel


    has any one else experienced excel add in link to exact global dropping and or crashing ! if so – what is the solution



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