This chapter contains these topics:
To keep Payroll journal entries in balance by the companies in your organization
You use intercompany settlements if your organization consists of multiple companies and if your employees sometimes work in companies other than their home companies. When an employee works in a company other than the home company, you typically expense the labor to the other company and the associated liabilities to the home company. This situation creates journal entries that are out of balance by company.
To keep the payroll journal entries for each company in balance by document type, you can set up your system to generate intercompany settlements. Intercompany settlements create offsetting journal entries that ensure that each company's net balance equals zero that is its debits equal its credits.
To generate intercompany settlements for payroll transactions, your Payroll system must be integrated with the JD Edwards World General Accounting system. You can set up either of these systems to generate intercompany settlements for payroll transactions. You can choose the method that works best for your environment.
When you use the General Accounting system to generate intercompany settlements, the system processes all balancing journal entries through a single hub (main) company. The hub company is the same for all employees. You can designate the hub company in the intercompany constants for the General Accounting system. If you do not designate a hub company, the post program uses the first company it encounters as the hub company. Therefore, the hub company might not be the employee's home company.
When you use the Payroll system to generate intercompany settlements for payroll transactions, the system creates the balancing entries before journal entries are posted to the general ledger. The Payroll system ignores the intercompany constants for the General Accounting system and designates the employee's home company as the hub (main) company for processing balancing entries.
Intercompany settlements in the Payroll system apply to document types T1, T2, T3, T4, and T6. They do not apply to document types T5 and T7.