14 Setting Up Intercompany Settlements

This chapter contains the following topics:

14.1 Understanding Intercompany Settlement Setup

This section provides overviews of the intercompany settlement constant, intercompany settlement accounts, and intercompany settlement automatic accounting instructions (AAIs).

14.1.1 Intercompany Settlement Constant

Use the Intercompany Settlements field in the General Accounting Constants to specify which one of these intercompany settlement methods that you want to use:

Method Description
Method 1 Use the hub method to create summarized journal entries for your intercompany settlements between a designated hub company and related companies.
Method 2 Use the detail method when you do not want to specify one company as the main company or headquarters company.
Method 3 Use the configured hub method when you need to designate more than one company as a hub company.
Method N (no intercompany transactions) Do not use intercompany settlements. The system does not post a batch that contains intercompany transactions.

If documents in a batch contain more than one company, but each company is in balance, the system will post the batch. It is not considered an intercompany settlement.

Method * (manual intercompany settlements) The system posts intercompany transactions but does not create balancing entries for the companies. You must manually create the balancing entries that show on the General Ledger Post Report.

Note:

When choosing a method of intercompany settlements, you must also consider which offset entry method to use for JD Edwards EnterpriseOne Accounts Payable and Accounts Receivable. The offset entry method is the method that the system uses when posting vouchers, payments, invoices, receipts, and drafts to the Account Ledger table (F0911). These offset entry methods are available:

For intercompany settlement method 1, use offset method B, S, or Y.

For intercompany settlement method 2, use offset method B, S, or Y.

For intercompany settlement method 3, use offset method S or Y.

14.1.2 Intercompany Settlement Accounts

Set up intercompany accounts using the Accounts by Object program (P0901). For the hub, detail, or configured hub method, set up one intercompany settlement account for each company:

  • Enter both a business unit and object account.

  • You can enter a subsidiary account, but this is not required.

It is recommended that you use:

  • A business unit number that is equal to the company number.

  • The same object account for all intercompany receivables and payables accounts to facilitate inquiry, reconciliation, and consolidation.

  • A posting edit code of M (machine-generated only).

    This posting edit code allows only entries that were created by the system and protects the integrity of the account.

14.1.2.1 Example: Intercompany Accounts

This example shows the recommended setup for each company and intercompany object account (hub or detail method):

Company Accounts(BU.Object) Posting Edit Code Level of Detail
00001 1.1291 M (machine only) 6
00200 200.1291 M (machine only) 6
00050 50.1291 M (machine only) 6

14.1.3 Intercompany Settlement AAIs

After you set up the intercompany settlement accounts for each company, you must assign the accounts to the intercompany AAIs. During the post, the system creates balancing entries for these accounts.

The two AAI items for intercompany settlements are ICCC and ICH. You use ICCC for all intercompany settlements. Additionally, you use ICH for the hub method.

14.1.3.1 AAIs for the Hub Method

For the hub method, you use both of the intercompany settlement AAIs:

  • ICH (Intercompany Hub).

    This item defines the hub company. Observe these guidelines when setting up AAI item the ICH:

    • Only one AAI item ICH can exist.

    • You must set up AAI item ICH for company 00000.

    • You must enter a business unit and an object account. The subsidiary account is optional.

  • ICCC (Intercompany Business Unit).

    This item defines the non-hub companies. Observe these guidelines when setting up AAI item the ICCC:

    • You must set up a separate AAI item ICCC for each non-hub company that exists in the F0010.

    • You do not need to set up an ICCC for the hub company.

    • You must enter a business unit and an object account. The subsidiary account is optional.

14.1.3.2 Example: AAIs for the Hub Method

This example shows the AAI items ICH and ICCC with separate items for ICCC:

Item Company Business Unit Object Subsidiary
ICH 00000 1 1291 (optional)
ICCC 00200 200 1291 (optional)
ICCC 00050 50 1291 (optional)

14.1.3.3 AAIs for the Detail and Configured Hub Methods

For the detail and configured hub methods, you use only AAI item ICCC. This item defines the intercompany account for each company. Observe these guidelines when setting up AAI item the ICCC:

  • You must set up a separate AAI item ICCC for each company in the F0010 table, even those that are not be involved in intercompany settlements.

  • You must enter a business unit and an object account. The subsidiary account is optional.

14.1.3.4 Example: AAIs for the Detail and Configured Hub Methods

This example shows the recommended AAI setup:

AAI Item Company Business Unit Object Subsidiary
ICCC 00001 1 1291 (optional)
ICCC 00200 200 1291 (optional)
ICCC 00050 50 1291 (optional)

14.2 Understanding Error Messages Caused By Incorrect Intercompany Setup

When you post intercompany settlement entries, you might receive error messages in the work center.

14.2.1 Error Message: Subledger X (Where X Equals the Company Number) Invalid

This table lists causes and resolutions for this error message:

Cause Resolution
The F0101 does not contain a record for this company. Create an address book record using the Address Book Revisions program (P01012) for Company X using the same number that is assigned in the Company Names & Numbers program (P0010). If this number has already been assigned, create an address book record using a different number, and then enter this number in the Company Address Number field on the Company Setup form.
The address book record for the company noted in the error message has the Subledger Inactive Code check box selected. Locate the address book record for the company that is noted in the error message using the Address Book Revisions program. Select the Additional 1 tab on the Address Book Revision form and clear the Subledger Inactive Code check box.

14.2.2 Error Message: Intercompany Settlement AAI Error

This table lists a cause and resolutions for this error message:

Cause Resolution
The F0012 table does not contain AAI item ICCC or ICH for this company. If you use the Detail or Configured Hub method, you must set up AAI item ICCC for every company in the F0010 table. Use the F0012 table to determine which company does not have an AAI item ICCC and create the missing AAI.

If you use the Hub method, you must set up AAI item ICH AAI for the hub company and AAI item ICCC for every non-hub company. Use the Automatic Accounting Instructions program (P0012) to determine whether you are missing the AAI item ICH or ICCC and create the missing AAI.


14.2.3 Error Message: Interco Settlement Acct Error

This table lists the causes and resolutions for this error message:

Cause Resolution
The F0901 does not contain the intercompany settlement account that is assigned to the intercompany AAIs for one or more companies in this batch. Create the missing intercompany settlement account for the company using the Accounts by Business Unit program (P0901).
The company number on AAI item ICCC or ICH does not match the company number for the account that is assigned to the AAI. Change the company number on the AAI to match the company number on the account.
The business unit of the account that is assigned to AAI item ICCC or ICH is a model or nonposting business unit. If the business unit is a model, you cannot change it to a non-model business unit. You must change the business unit assigned to the AAI.

If the business unit is a nonposting business unit, use the Review and Revise Business Units program (P0006) to change the posting edit code of the business unit.

The account that is assigned to AAI item ICCC or ICH belongs to a model business unit or is a nonposting account. Change the account that is assigned to AAI item ICCC or ICH to a non-model account or to an account that allows posting.

14.2.4 Error Message: Incompatible Posting Methods

This table lists a cause and resolutions for this error message:

Cause Resolution
The offset method constant in either Accounts Payable Constants or Accounts Receivable Constants is set to B; but the intercompany settlement constant is set to 3. Either change the intercompany settlement method to 1 or 2 or change the offset method for AP or AR to S or Y. Use these guidelines when choosing the intercompany settlement method and the offset method:
  • For method 1, use offset method B, S, or Y.

  • For method 2, use offset method B, S, or Y.

  • For method 3, use offset method S or Y.


14.3 Prerequisite

Before you complete the tasks in this section, you must decide whether you want to use the hub, detail, or configured hub method.

14.4 Setting Up Companies for Intercompany Settlements

For all three intercompany settlement methods, the system uses subledgers with subledger type A (address book) when creating intercompany settlement entries. Therefore, all companies in the F0010 table must be set up in the address book (even those that do not use intercompany settlements). If any companies in the F0010 table are not set up in the address book, the Post General Journal program (R09801) generates an error message and does not post your batch.

It is recommended that when you set up a company using the Address Book Revisions program (P01012), you use the same number that is assigned to the company in the Company Names & Numbers program (P0010). If you are unable to use the same number, you must create a cross-reference between the two different numbers by entering the address book number in the Company Address Number field on the Company Setup form. If you leave this field blank, the system assumes that the address book number is the same as the company number and it uses it as the subledger for the intercompany settlement.

For example, assume that company number 50 has an address book number of 30 and you have not created a cross-reference between the two numbers. One of these situations occurs:

  • If address book number 50 exists, the system uses it as the subledger for the intercompany account when you post an intercompany batch, which is not the desired result.

  • If address book number 50 does not exist and you attempt to post an intercompany batch, the Post General Journal program generates an error message

14.5 Setting Up Configured Hub Relationships

Before you can use configured hubs to settle intercompany transactions, you must set up the configured hub relationships for your organization. The system uses these relationships to process intercompany settlements.

This section provides an overview of configured hub setup and discusses how to:

  • Add companies to configured hubs.

  • Verify configured hubs.

14.5.1 Understanding Configured Hub Setup

You must set up the name of each configured hub in UDC table 09/HB. Each name can be up to six characters in length. Configured hub names do not have to be actual company names in your organization. For example, set up UDC code AMER to represent a hub for companies in America. The description might be Hub Company Group - America.

After you set up configured hubs in UDC table 09/HB, you set up the configured hubs. For each company that exists in the Company Constants table (F0010), you must designate the company as either the hub company or a member company of the hub in the Configured Hub Companies program (P09190).

The system maintains configured hub information in the F09190 table.

14.5.1.1 Guidelines for Configured Hubs

Observe these guidelines for configured hubs:

  • You can create multiple configured hubs.

  • Within a configured hub, you can set up only one hub company, but a hub company is not required.

    All other non-hub companies within the hub should be set up as member companies. You can assign a company to only one hub.

    If you do not designate each company as either a hub or a member company, you receive the message, Error: Base CO xxxxx Not Found in F09190 when you post transactions for the company.

  • A hub company can settle with a member company of the same hub or exclusively with other hub companies.

    An intercompany settlement between two member companies goes through the hub company.

  • A member company can settle only with the hub company or another member company of the same hub.

If you do not designate a company as the hub company, observe these guidelines:

  • The member companies can settle only with other companies of the same hub.

  • When you enter a journal entry, the company that is on the first line of the journal entry becomes the designated hub for that transaction.

  • When you are entering vouchers or invoices, the company on the header of the voucher or invoice becomes the designated hub for that transaction.

14.5.1.2 Configured Hub Verification

You can run the Configured Hub Integrity report (R091901) to verify that you have assigned every company to a hub. The system compares the hub information in the F09190 table with the company information in the F0010 table.

You should run this report periodically to ensure that no new companies are added to the F0010 table without being added to a hub. Running this report periodically prevents users from receiving errors that indicate that a company has not been assigned to a hub when transactions are entered.

The Configured Hub Integrity report shows:

  • For each configured hub, the companies that are assigned to the hub and whether a company is a member company or a hub company.

  • For each configured hub, if the hub company is not designated.

  • Companies that are assigned to configured hubs but do not exist in the F0010 table.

  • Companies in the F0010 table that are not assigned to a configured hub in the F09190 table.

This report does not have any processing options.

14.5.2 Forms Used to Set Up Configured Hubs

Form Name FormID Navigation Usage
Work with Configured Hubs W09190A Configured Hub Intercompany Setup (G094115), Configured Hub Companies

To set up UDCs for configured hubs, select HUB UDC's from the Form menu on the Work with Configured Hubs form.

Review a list of configured hubs or access the UDC table 09/HB to set up codes for configured hubs.
Configured Hub Members W09190B On the Work with Configured Hubs form, select a hub and select REV Hub Members from the Row menu. Add companies to configured hubs.

14.5.3 Adding Companies to Configured Hubs

Access the Configured Hub Members form.

Hub Designator

Enter 1 for the hub company or 2 for a member company.

14.5.4 Verifying Configured Hubs

Select Configured Hub Intercompany Setup (G094115), Configured Hub Integrity Report.