Intercompany Transactions

In a multi-company environment, transactions between the logistic companies and between financial companies create the need to balance the accounts through intercompany transactions.

Intercompany transactions occur, for example, if the enterprise units of the sales office and the purchase office, work center, or warehouse involved in a logistic transaction are linked to different financial companies, or belong to different logistic companies.

These types of intercompany transactions exist:

Multi-finance intercompany transactions

Intercompany transactions between the financial companies in a multi-finance company structure.

Intercompany settlement transactions

Settlement transactions between the logistic companies in a multi-logistic/single finance company structure.

Intergroup transactions

Financial transaction between financial groups in a multi-finance company structure with multiple financial groups.

Multi-finance intercompany transactions

Intercompany transactions are financial transactions that LN automatically creates between financial companies that belong to the same financial group. The transactions are posted to intercompany ledger accounts. For details, refer to Example of intercompany transactions.

You can set up intercompany transactions as described in to set up intercompany transactions.

Purely financial intercompany transactions are:

Single line journal vouchers

Cash transactions (direct debits)

Manually entered cost invoices in Accounts Payable

Manually entered cost invoices in Accounts Receivable

To generate these types of financial intercompany transactions, you must define the intercompany relations between the financial companies. You do not need to define the companies as business partners.

Financial intercompany transactions can also result from these logistic transactions:

WIP transfer

Inventory transfer

For WIP transfers and inventory transfers, you must define the entities as internal business partners. Sales/purchase transactions between such business partners result in intercompany transactions if these conditions are met:

The entities are linked to different financial companies.

You set up intercompany relations between the financial companies involved.

You do not set up intercompany settlements for the entities involved.

Note

If you have set up intercompany transactions, LN automatically creates the intercompany transactions when you finalize the transactions. You do not need to run any additional sessions.

Intercompany settlement transactions

Intercompany settlement transactions are a specific type of intercompany transactions that only applies to purchase and sales transactions between logistic companies in a multi-logistic/single-financial company structure.

Intercompany settlement transactions generate less than half the number of postings (10) of a regular invoicing procedure (24). Therefore, if no invoices are required, you can use intercompany settlement transactions to considerably reduce the number of postings in your ledger accounts.

Intercompany settlement transactions in a single financial company structure are automatically posted financial transactions in one financial company to intercompany accounts. Instead of generating open entries for sales transactions and purchase transactions between the logistic companies, the amounts are posted to intercompany billing accounts and clearing accounts. Such intercompany accounts must be of the Balance Sheet type, not of the Intercompany type.

The sales and purchase transactions can concern:

WIP transfer

Inventory transfer

To create intercompany settlement transactions for purchase/sales transactions between logistic companies of a multi-company structure, you must define the logistic companies as affiliated company business partners.

You can set up intercompany settlement as described in Intercompany settlement transactions – setup.

Note

If you have set up intercompany settlement transactions, LN automatically creates the settlement transactions when you finalize the transactions. You do not need to run any additional sessions.

Intercompany settlement reconciliation report

You can use the Intercompany Buy / Sell Reconciliation Report (cisli2445m000) session to generate a report of the intercompany settlement transactions between affiliated companies. LN generates the report based on the sales information in the central invoicing tables. For each sales order line, LN retrieves the corresponding purchase information for the report.

Intergroup transactions

Intergroup transactions only occur in a multi-company structure with more than one financial company group.

Intergroup transactions are financial transactions that LN automatically creates between financial companies that belong to different financial groups. The transactions are posted to intercompany ledger accounts. For details, refer to Example of intergroup transactions.

You can set up and process intergroup transactions as described in to set up intergroup transactions.

Intergroup transactions can only be created for single line journal vouchers.

Base company

Intergroup transactions are temporarily stored in one of the group companies. For this purpose, you must assign one of the group companies as the base company. The intergroup transactions posting data is temporarily stored in the base company.

To create the intergroup transactions, you must process the intergroup transactions as described in To set up intergroup transactions.