4Intercompany Transactions

This chapter contains the following:

The receivables (AR) and payables (AP) accounts for manual intercompany transactions are generated automatically by Oracle Fusion Intercompany. Enter distributions for the transaction and intercompany generates the receivables and payables accounts, based on the intercompany balancing rules setup.

Intercompany uses the transaction type, provider legal entity, receiver legal entity, primary balancing segment value of the first provider distribution and the primary balancing segment value of the first receiver distribution to ascertain which rule to apply. Intercompany then uses the rule, and the balancing segment values of the first provider distribution to build the intercompany receivable account combination for the provider side of the transaction. Similarly, intercompany builds the intercompany payables account for the receiver side of the transaction, based on the first receiver distribution account.

Intercompany will evaluate the rules in the following order.

  1. Primary balancing segment rules

  2. Legal entity level rules

  3. Ledger level rules

  4. Chart of accounts rules

If there is no matching rule at the lower levels, then intercompany will use the chart of accounts rule. It is therefore recommended that you set up a chart of accounts rule for every chart of accounts structure you have. This will ensure that intercompany will always find a rule to use to generate the intercompany receivables and intercompany payables accounts for transactions.

Intercompany will then evaluate the transaction type in determining which rule to use to generate the receivables or payables account. A rule with a specific transaction type takes precedence over a rule defined for the All Other transaction type.

Example

In this scenario you choose to track your intercompany sales for the farming and textile companies separately from other intercompany activities. Separate intercompany accounts are used for these two companies. A chart of accounts rule is created for all other intercompany activity.

Setup

InFusion USA Chart of Accounts as shown in the following table.

Segment Qualifier Primary Balancing Segment Balancing Segment 2 Segment Segment Intercompany Segment

Segment Name

Company

(CO)

Cost Center

(CC)

Product

(PROD)

Account

(ACCT)

Intercompany

(IC)

Ledger, Legal Entity, and Primary Balancing Segment Value Assignments as shown in the following table.

Ledger Legal Entity Primary Balancing Segment Value

InFusion USA

InFusion Farms

3100, 3200, 3300, 3400, 3500

InFusion USA

InFusion Textiles

4000

InFusion USA

InFusion Production

5000

InFusion USA

 

1000, 9000

Chart of Accounts Rule

Rule No. 1 as shown in the following table.

  • Chart of Accounts: InFusion USA

  • Source: None

  • Category: None

  • Transaction Type: All Other

IC Account CO CC PROD ACCT IC

AR Account

1000

000

0000

13020

0000

AP Account

1000

000

000

21020

000

Legal Entity Rules.

Rule No. 2 as shown in the following table.

  • From Ledger and To Ledger: InFusion USA

  • From Legal Entity: InFusion Farms

  • To Legal Entity: InFusion Textiles

  • Source: None

  • Category: None

  • Transaction Type: Intercompany (IC) Sales

IC Account CO CC PROD ACCT IC

AR Account

1000

000

0000

13011

0000

AP Account

1000

000

0000

21011

0000

Rule No. 3 as shown in the following table.

  • From Ledger and To Ledger: InFusion USA

  • From Legal Entity: InFusion Farms

  • To Legal Entity: InFusion Production

  • Source: None

  • Category: None

  • Transaction Type: Intercompany (IC) Sales

IC Account CO CC PROD ACCT IC

AR Account

1000

000

0000

13012

0000

AP Account

1000

000

0000

21012

0000

Rule No. 4 as shown in the following table.

  • From Ledger and To Ledger: InFusion USA

  • From Legal Entity: InFusion Textiles

  • To Legal Entity: InFusion Farms

  • Source: None

  • Category: None

  • Transaction Type: Intercompany (IC) Sales

IC Account CO CC PROD ACCT IC

AR Account

1000

000

0000

13013

0000

AP Account

1000

000

0000

21013

0000

Rule No. 5 as shown in the following table.

  • From Ledger and To Ledger: InFusion USA

  • From Legal Entity: InFusion Textiles

  • To Legal Entity: InFusion Production

  • Source: None

  • Category: None

  • Transaction Type: Intercompany (IC) Sales

IC Account CO CC PROD ACCT IC

AR Account

1000

000

0000

13014

0000

AP Account

1000

000

0000

21014

0000

Intercompany Accounts Generated for Intercompany Debit Transactions

Provider Distribution and Intercompany Receivable Account

This table displays the Provider side of the transaction.

Transaction Transaction Type Provider LE Receiver LE Provider Distribution Provider AR Account Generated Uses Rule No.

1

IC Sales

InFusion Farms

InFusion Textiles

3100- 100- 1200- 52330- 0000

3100- 100- 0000- 13011- 4000

2

2

IC Adjustments

InFusion Farms

InFusion Textiles

3100- 100- 1200- 52330- 0000

3100- 100- 0000- 13020- 4000

1

3

IC Sales

InFusion Production

InFusion Farms

5000- 120- 1300- 52345- 0000

5000- 120- 0000- 13020- 3200

1

Receiver Distribution and Intercompany Payable Account

This table displays the Receiver side of the transaction.

Transaction Transaction Type Receiver LE Provider LE Receiver Distribution Receiver AR Account Generated Uses

1

IC Sales

InFusion Textiles

InFusion Farms

4000- 110- 1200- 41111- 0000

4000- 110- 0000- 21013- 3100

4

2

IC Adjustments

InFusion Textiles

InFusion Farms

4000- 110- 1200- 41111- 0000

4000- 110- 0000- 21020- 3100

1

3

IC Sales

InFusion Farms

InFusion Production

3200- 130- 1200- 41112- 0000

3200- 130- 0000- 21012- 5000

3

Intercompany Accounts Generated for Intercompany Credit Transactions as shown in the following table.

Provider Distribution and Intercompany Receivable Account

Transaction Transaction Type Provider LE Receiver LE Provider Distribution Provider AR Account Generated Uses Rule No.

4

IC Sales

InFusion Farms

InFusion Textiles

3100- 100- 0000- 52330- 0000

3100- 100- 0000- 13011- 4000

2

5

IC Adjustments

InFusion Farms

InFusion Textiles

3100- 100- 1200- 52330- 0000

3100- 100- 0000- 13020- 4000

1

6

IC Sales

InFusion Production

InFusion Farms

5000- 120- 1300- 52345- 0000

5000- 120- 0000- 13020- 3200

1

Receiver Distribution and Intercompany Payable Account

This table displays the Receiver side of the transaction.

Transaction Transaction Type Receiver LE Provider LE Receiver Distribution Receiver AP Account Generated Uses Rule No.

4

IC Sales

InFusion Textiles

InFusion Farms

4000- 100- 1200- 41111- 0000

4000- 100- 0000- 21013- 3100

4

5

IC Adjustments

InFusion Textiles

InFusion Farms

4000- 100- 1200- 41111- 0000

4000- 100- 0000- 21020- 3100

1

6

IC Sales

InFusion Farms

InFusion Production

3200- 130- 1200- 41112- 0000

3200- 130- 0000- 21012- 5000

3

The withdraw intercompany transaction process recalls individual transactions or entire batches. You can withdraw a transaction from the Intercompany Transactions Overview page and from the Edit Intercompany Batch page. Withdraw an entire batch from the Manage Outbound page. You must have the update privilege for the specific intercompany provider organization to be able to withdraw its transactions.

Note: The Withdraw button is enabled only after you submit the batch.

Process to Withdraw a Batch

Following are the steps to recall a batch:

  1. Navigate to the Manage Outbound page.

  2. Search for the relevant batch. Batches in a Submitted status with all transactions in either Received or Sent status are eligible to be withdrawn.

  3. Click the Withdraw button. The batch status is reset to New.

Process to Withdraw a Transaction

Following are the steps to recall a transaction from the Intercompany Transactions Overview page:

  1. Navigate to the Overview page.

  2. Click the Pending Approval from Others tab.

  3. Locate the transaction you want to recall and click the Withdraw button. Transactions in a Received or Sent status are eligible to be withdrawn.

  4. Batch and transaction statuses are changed when they are withdrawn.

    • If the withdrawn transaction is the only transaction in the batch or all transactions in the batch have been withdrawn, the status of all transactions and the status of the batch is set to New.

    • If the selected transaction is not the only transaction in a batch, the status of the withdrawn transaction is set to Rejected. If the status of the other transactions in the batch is either Complete or Rejected , the status of the batch is set to Complete, otherwise the batch remains in status Submitted.

Intercompany Descriptive Flexfields

Use descriptive flexfields to define and store additional information for intercompany transactions. You have the capability to retrieve the information from descriptive flexfields in the Advanced Search panel.

There are two descriptive flexfields available for search on the intercompany pages, in the following regions:

  • Intercompany Transaction Outbound Transactions

  • Intercompany Transaction Inbound Transactions

You can search using global and context segments, and both are available from the Advanced Search panel. After adding the context segment, a value for the context segment is selected and a list of context sensitive segments become available in the Add Fields.

Use intercompany transactions import to either import data from external systems or historical data from your previous accounting system.

Note: Use predefined templates and the Load Interface File for Import scheduled process to load data to interface tables. For more information about file-based data import, see the File Based Data Import guide for your cloud services.

This is how you can easily find the template:

  1. From Oracle Help Center, open the File-Based Data Import for Oracle Financials Cloud guide.

  2. Navigate to Financials Common Module > Intercompany Transaction Import.

  3. In the File Links section, click the link to the Excel template.

To prepare your data in the worksheet, follow these guidelines:

  • Enter the required information for each column. Check the tool tips on each column header for detailed instructions.

  • Don't change the order of the columns in the template.

  • If you don't use a column, hide or skip them, but don't delete them.

Settings That Affect Intercompany Import

The Intercompany import template contains the Instructions tab and five additional tabs that represent the tables where the data is loaded:

Spreadsheet Tab Description

Instructions and CSV Generation

Contains instruction information about preparing and loading data, the format of the template, submitting the Import Intercompany Transactions process, and correcting import errors.

FUN_INTERFACE_CONTROLS

Groups the data imported in each run.

FUN_INTERFACE_BATCHES

Stores batch information.

FUN_INTERFACE_HEADERS

Stores information about the transaction header for each recipient.

FUN_INTERFACE_DIST_LINES

Stores distributions for provider and receiver.

FUN_INTERFACE_BATCHDISTS

Stores the percentages that should be allocated in the FUN_INTERFACE_BATCHDISTS.

Configure these settings before you run the Import Intercompany process:

  • Set up your intercompany system options, transaction types, and intercompany organizations. It is recommended that you also set up intercompany balancing rules so that when transactions are submitted, the application can generate the intercompany receivables and intercompany payables accounts.

  • If you're using an intercompany calendar set the intercompany period status to open.

  • Export data from your external systems and populate the Oracle Fusion Intercompany interface tables.

How Intercompany Import Data Is Processed

Here's what you do to import the Intercompany data.

  • Import the transaction data from both Oracle Fusion applications and legacy systems into the Intercompany interface tables.

  • Run the Import Intercompany Transactions process to create intercompany transactions from intercompany interface table. The import program also rejects the records that have insufficient or invalid data and generates a report listing the intercompany transactions that aren't imported.

  • Review the report, correct the data, and load only the corrected data into the interface tables.

  • Resubmit the Import Intercompany Transactions process.

  • After the intercompany transactions are created, review for any errors from the Intercompany dashboard and the Manage Outbound Transactions page. If required, correct the errors and submit them again.

  • Approve transactions that require manual approval. Once the transactions are in the approved status, run the appropriate transfer processes:

    • Transfer Intercompany Transactions to General Ledger process for transactions that don't require invoicing, and select to run Journal Import. To complete this flow, post the journals in General Ledger.

    • Transfer Intercompany Transactions to Receivables' process for transactions that require invoicing and choose the option to run the Receivables Invoice Import. Then run the Transfer Intercompany Transactions to Payables process and choose the option to run the Payables Invoice Import. To complete this flow, run the Create Accounting process in Receivables and Payables and select the option to transfer and post to General Ledger.

Transaction and Batch Status

This topic explains intercompany transaction and batch status.

Transaction and Batch Status with Available Status

An intercompany batch has one or more intercompany transactions. As the transactions are processed, the transaction status and batch status get updated. This table describes the batch and transaction status and helps you determine what actions to perform for each status.

Transaction Status Batch Status Tab Displayed Can the period be closed? Can the transaction be moved to the next period? Included in the open transaction count? Actions Available (from Action list, buttons, and processes) Next available transaction status Next available batch status

New

New

New

Yes

No

No

1. Save

2. Submit

Sent, Received, Error

Submitted, Error

Sent

Submitted

Pending Approval from Others

No

Yes

Yes

None

Received

Submitted

Received

Submitted

1. Pending Approval from Others

2. Requiring Attention

No

Yes

Yes

1. Approve

2. Reject

3. Withdraw

1. Approve

2. Reject

3. New

1. Submitted

2. Submitted

3. New

Rejected

Complete

Requiring Attention

Yes

No

No

Copy

1. Rejection Reviewed

1. Rejected

Complete

Rejection Reviewed

Complete

Not Applicable

Yes

No

No

None

Rejection Reviewed

Complete

Approved

Submitted

Requiring Attention

No

No

Yes

Transfer process (all transactions in batch must be approved for the transfer process to pick up the batch for transfer)

Complete

Complete

Transferred to provider general ledger

Submitted

Requiring Attention

No

No

Yes

Batch can be transferred to receiver General Ledger. Only the approved transactions in a batch are transferred.

Complete

Complete (The batch status is set to Complete once all transactions in a batch are in one of these statuses: Complete, Rejected, or Rejection Reviewed.)

Transferred to receiver general ledger

Submitted

Requiring Attention

No

No

Yes

Batch can be transferred to initiator General Ledger. Only the approved transactions in a batch are transferred.

Complete

Complete (The batch status is set to Complete once all transactions in a batch are in one of these statuses: Complete, Rejected, or Rejection Reviewed.)

Transferred to Receivables

Submitted

Requiring Attention

No

No

Yes

Batch can be transferred to Payables. Only the approved transactions in a batch are transferred.

Complete

Complete (The batch status is set to Complete once all transactions in a batch are in one of these statuses: Complete, Rejected, or Rejection Reviewed.)

Error

Error

Requiring Attention

No

Yes

Yes

1. After fix, batch can be resubmitted

2. Delete

1. Approved, Rejected

2. Null

Complete

Complete

Complete

Not Applicable

Yes

No

No

1. Reverse Batch (allowed only if all transactions in the batch are completed; batch hasn't been previously reversed; batch hasn't been created out of a reversal)

2. Reverse Action

Complete

Reversal transaction > New

Complete

Reversal batch=New

Example of Setting Up Transaction Account Definition for Intercompany

This example describes how Transaction Account Definition (TAD) rules can be defined to automatically generate distribution accounts for an intercompany transaction.

Transaction Account Definition (TAD) rules are called to default provider or receiver distribution accounts or both for each transaction.

In this example, we will generate distribution accounts based on specific account combinations for the provider and receiver. These accounts will act as the default accounts but we will also override the intercompany segment value (the last segment) of each account with the trading partner company value.

Before you can automatically generate distributions accounts, you must complete the following setup tasks:

  1. Creating an Account Rule for the Provider Distribution: Create an account rule for the provider distribution that always generates a constant account combination 3111-531-3611-1511-41110-1121-1311-0000.

  2. Creating an Account Rule for the Receiver Distribution: Create an account rule for the receiver distribution that always generates a constant account combination 3211-542-3611-1511-52231-1121-1311-0000.

  3. Creating a Mapping Set of Provider Organizations: Create a mapping set that maps intercompany provider organizations to specific company segment values. This mapping set is used in the account rule that overrides the intercompany segment of the receiver distribution. For example, map the intercompany provider organization Vision Foods USA Ltd to value 3111.

  4. Creating a Mapping Set of Receiver Organizations: Create a mapping set that maps intercompany receiver organizations to specific company segment values. This mapping set will be used in the account rule that will override the intercompany segment of the provider distribution. For example, map the intercompany receiver organization Vision Farms Ltd to the value 3211.

  5. Creating a Provider Intercompany Segment Account Rule: Create a rule for the provider intercompany segment that uses the mapping set created in step 3. This rule overrides the intercompany segment value of the account combination generated in step 1.

  6. Creating a Receiver Intercompany Segment Account Rule: Create a rule for the receiver intercompany segment that uses the mapping set created in step 4. This rule overrides the intercompany segment value of the account combination generated in step 2.

  7. Creating the Transaction Account Definition: Create the transaction account definition to map the account rules previously created.

  8. Assigning the Transaction Account Definition to a Ledger: Assign the transaction account definition to your ledger.

Creating Account Rules

1. Creating an Account Rule for the Provider Distribution

Create an account rule that will generate the provider distribution account. This is a constant value with a specific account combination, as illustrated in the following image.This image shows creating an account rule for the
provider distribution.
  1. Navigate to Setup: Financials > Intercompany > Manage Account Rules.

  2. Click the Add icon.

  3. Enter the name and short name for the rule.

  4. Select the chart of accounts.

  5. In the Rules section, click the Add icon.

  6. Add a rule by selecting the value type as Constant.

  7. Select the value as an account combination that you want to default to. In this example, we enter 3111-531-3611-1511-41110-1121-1311-0000.

  8. Save the rule.

2. Creating an Account Rule for the Receiver Distribution

Similarly, we create a receiver distribution account with a specific account combination as illustrated in the following image. This image shows creating an account rule for the
receiver distribution.
  1. Navigate to Setup: Financials > Intercompany > Manage Account Rules.

  2. Click the Add icon.

  3. Enter the name and short name for the rule.

  4. Enter the chart of accounts.

  5. In the Rules section, click the Add icon.

  6. Add a rule by selecting value type as Constant.

  7. Select the value as an account combination that you want to default to. For this example, we enter 3211-542-3611-1511-52231-1121-1311-0000.

  8. Save the rule.

Creating Mapping Sets

3. Creating a Mapping Set of Provider Organizations

The mapping set to override the intercompany segment of the receiver distribution is based on the provider organization. For example, if the provider organization is Vision Foods USA Ltd., then we use intercompany segment, 3111.The image illustrates how to create a mapping set
for the receiver distribution.
  1. Navigate to Setup: Financials > Intercompany > Manage Mapping Sets.

  2. Enter the name and short name for the mapping set.

  3. In the Output Type field, select Segment.

  4. In the Input Sources section, click Select and Add.

  5. In the Source field, select Intercompany Provider Organization.

  6. In the Chart of Accounts section, click the Add icon.

  7. Select the chart of accounts.

  8. In the Segment field, select Intercompany.

  9. In the Mappings section, click the Add icon.

  10. In the Intercompany Provider Organization, select Vision Foods USA Ltd.

  11. In the Intercompany field, select 3111.

  12. Add more provider organization and segment values as required.

4. Creating a Mapping Set of Receiver Organizations

Similarly, create a mapping set of receiver organizations.

The following image illustrates how to create a mapping of receiver organizations.

The image illustrates how to create a mapping set
for the provider distribution.
  1. Navigate to Setup: Financials > Intercompany > Manage Mapping Sets.

  2. Follow the same steps as described in the Creating a Mapping Set of Provider Organizations section and create a mapping set of the receiver organizations.

Creating Rules for the Intercompany Segment

5. Creating a Provider Intercompany Segment Account Rule

Now, we create an account rule for the provider intercompany segment that will use the receiver organizations mapping set.

The following image illustrates how to create an accounting rule for the intercompany segment for the provider distribution.

The image illustrates how to create an accounting
rule for the intercompany segment for the provider.
  1. Navigate to Setup: Financials > Intercompany > Manage Account Rules page.

  2. Enter a name and short name for the rule.

  3. Select the chart of accounts.

  4. In the Rule Type field, select segment.

  5. Select Intercompany in the list after Rule Type.

  6. In the Rules section, click the Add icon.

  7. In the Value Type field, select Mapping Set.

  8. Select the receiver mapping set that you created.

  9. Click Save and Close.

  10. Save the rule.

6. Creating a Receiver Intercompany Segment Account Rule

Similarly, create an account rule for the receiver intercompany segment that uses the provider organizations mapping set.

The following image illustrates how to create an accounting rule for the intercompany segment for the receiver distribution.

The image illustrates how to create an accounting
rule for the intercompany segment for the receiver.
  1. Navigate to Setup: Financials > Intercompany > Manage Account Rules page.

  2. Follow the steps described in the Creating a Provider Intercompany Segment Account Rule section and create an intercompany rule for the receiver.

7. Creating the Transaction Account Definition

For the distributions to be automatically created for the intercompany transactions, we have to create a transaction account definition that uses the account combination rules and the intercompany segment rules we created earlier. The image illustrates how to create a transaction
account definition.
  1. Navigate to Setup: Financials > Intercompany > Manage Transaction Account Definitions.

  2. Click the Add icon.

  3. Enter the name and short name of the Transaction Account Definition (TAD).

  4. Select the chart of accounts.

  5. In the Account Combination Rule for the provider distribution account, select the provider account rule and select the account rule to override the intercompany segment. Similarly, select the account combination rule and the intercompany segment rule for the receiver distribution account.

  6. Click Activate to activate the transaction account definition.

8. Assigning the Transaction Account Definition to a Ledger

For the transaction account definition rule to work, you must assign the transaction account definition to a ledger as shown in the following image.The image illustrates how to assign a transaction
account definition to a ledger.
  1. Navigate to the Setup: Financials > Intercompany>Manage Subledger Accounting Options page.

  2. Search for the ledger.

  3. Expand the ledger.

  4. Select Financials Common Module and click the Edit Accounting Options icon.

  5. Select the Transaction Account Definition you defined.

  6. Select the Transaction Account Definition that you created earlier.

  7. Save the updated accounting options.

  8. Now the Transaction Account Definition is assigned to the ledger.

Creating Transaction Account Definition Enabled Transactions

Now, when we create transactions, the distributions are automatically created as illustrated in the following image.The image illustrates creating transaction account
definition enabled transactions.
  1. Navigate to Intercompany Accounting > Transactions.

  2. Click the Tasks Panel tab > Create Transactions.

  3. Enter a batch number.

  4. Select a provider, for example, Vision Foods USA Ltd.

  5. In the Transactions section, click the Add Row icon.

  6. Select the receiver organization and enter a debit amount. For example, $200.

  7. Click Assign Distributions. This will automatically assign the provider and receiver distribution accounts.

  8. In the Transactions 1: Distributions region, click the Provider tab to check the provider distribution. Since the provider legal entity is associated with the ledger that has the transaction account definition assigned to it, the distribution is automatically generated.

  9. Similarly, since the receiver legal entity is associated with the ledger that has the transaction account definition assigned to it, the distribution will be automatically generated.

    Automatic distributions are only created when you create a transaction associated to a ledger that has a transaction account definition assigned to it.

You can use Intercompany reconciliation reports to assist you with reconciling your intercompany receivables and intercompany payables accounts and identifying differences.

The goal of the reports is to identify either the receiver side or provider side of a transaction that are posted to the intercompany receivables or intercompany payables account.

The reports show these intercompany lines:

  • Intercompany receivables and intercompany payables lines generated by the intercompany balancing feature.

  • Intercompany receivables and intercompany payables lines generated for the provider and receiver of each intercompany transaction.

These aren't included on the intercompany reconciliation reports:

Reconciliation Reports

The reconciliation reports show the entered or the transaction amount of the accounting entries booked to the intercompany receivables and payables accounts for a pair of provider and receiver legal entities. The accounted amounts may be different when the conversion rates used for the intercompany receivables and intercompany payables are different. You can select to run the reports using an additional currency and conversion rate that converts all amounts into a common currency for comparison.

The intercompany reconciliation process starts with running the Prepare Intercompany Reconciliation Reporting Information process. Select parameters to determine what data appears on your reports. For example, select the provider legal entity and receiver legal entity.

Once the Prepare Intercompany Reconciliation Reporting Information process has completed successfully. Click the Refresh icon to view the Reconciliation Period Summary report. This report displays the intercompany receivables and intercompany payables balances in summary for a period, and any differences between them. Drill down on the links to view the balances by source and then by journal lines. You have full drill-down capabilities to the general ledger journal, subledger accounting entry, and source receivables or payables transaction.

Generate the Reconciliation Report

To generate the Reconciliation Report, follow these steps:

  1. Navigate to Intercompany > Reconciliation.

  2. Click Actions > Run.

  3. Select the report parameters.

  4. Click Submit and note the process ID.

  5. Click the Refresh icon until the report is displayed.

  6. The Period Summary report is displayed.

  7. Click one of the Entered Amount Difference in Transaction Currency value to view the Summary by Source report.

  8. Review the Intercompany Receivables and Payables balances.

  9. You can further drill down to any line by clicking the line. This displays the Journal Lines report.

  10. Click the Journal Name to review the journal details.

Prepare Intercompany Reconciliation Reporting Information

This process extracts data used to generate reports that can be viewed and utilized to assist with reconciliation.

Prepare Intercompany Reconciliation Reporting Information Parameters

Provider Ledger

Ledger associated with the provider organization. Exclude secondary and reporting currency ledgers.

Provider Legal Entity

Legal entity of the provider organization.

Provider Accounting Period

Accounting period of the provider ledger.

Receiver Ledger

Ledger associated with the receiver organization.

Receiver Legal Entity

Legal entity of the receiver organization.

Receiver Accounting Period

Accounting period of the receiver ledger.

Additional Currency

Currency for converting the accounted amount.

Note: We recommend that you always specify an additional currency. Intercompany Reconciliation Infolets are populated only if the additional currency matches the ledger currency of the ledger in context of the accounting infolets.
Conversion Rate Type

Conversion rate type for the additional currency.

Conversion Date

Conversion rate date for the additional currency.

Cross-Ledger Allocations

Journals can be for a single ledger or multiple ledgers within a ledger set. When you create cross-ledger allocations, they must have only one debit or one credit line. The other side of the journal can have as many lines as you need. The process adds an intercompany receivables or intercompany payables line to each ledger's journal so it can be posted. The intercompany receivables and payables accounts are generated based on the intercompany balancing rules.

Settings That Affect Allocations

General Ledger Allocations

For the Generate General Ledger Allocations process, set the parameters listed in the following table to create allocation journals:

Parameter Description

Rule or Rule set

Select the rule or rule set to create allocation lines.

Post Allocations

Select to automatically post allocation journals after they have been imported.

Intercompany Allocations

For the Generate Intercompany Allocations process, set the parameters listed in the following table to create intercompany allocations:

Parameter Description

Rule or Rule set

Select the rule or rule set to create allocation calculations.

Intercompany Transaction Type

Select the transaction type to be used to create the intercompany transactions.

How Allocations are Processed Using the Generate General Ledger Allocations Process

The Generate General Ledger Allocations process creates journals from the allocation lines generated by the rule or rule set.

Journals can be for a single ledger or multiple ledgers. If the allocation lines span multiple ledgers each journal is balanced using the intercompany balancing rules. When you create cross-ledger allocation rules each rule must only result in either one debit line or one credit line with as many lines on the other side as you need. The process then adds intercompany receivables or intercompany payables lines to cross-ledger journals so they can be imported into the relevant ledger.

How Allocations are Processed Using the Generate Intercompany Allocations Process

The Generate Intercompany Allocations process creates an intercompany batch, transactions, provider distributions and receiver distributions from the allocation lines generated by the rule or rule set. The process creates intercompany transactions in the entered currency of the allocation lines.

The Intercompany uses the primary balancing segment values, the balancing segment to legal entity assignments and the intercompany organizations set up to create transactions from your allocation.

You can create intercompany transactions from either single ledger or cross-ledger allocation lines. To successfully process cross-ledger allocations you must have either one debit line or one credit line per allocation but as many lines as required for the other side. The single debit or single credit line forms the provider side of the transaction and the lines on the other side form the receiver side of the transaction.

Examples of Cross-Ledger Allocations

You can process cross-ledger allocations by choosing to create them as general ledger journals or intercompany transactions. Choose to generate journals from an allocation rule or rule set by submitting the Generate General Ledger Allocations process. This process provides options to balance any cross-ledger journal with a receivables or payables line.

You can also choose to create intercompany transactions from an allocation rule or rule set by submitting the Generate Intercompany Allocations process. This creates intercompany transactions that optionally can be routed to Receivables for invoice generation.

The following scenario illustrates generating balancing journal entries as well as intercompany transactions for cross-ledger allocations.

Intercompany Allocation Entries

At month end the accountant allocates a portion of any centrally incurred expenses across all organization units that contribute to, or benefit from, that expenditure, based upon a calculation that represents a reasonable allocation of how that expense should be split. By doing this allocation, the Income Statement or Profit and Loss statement for each of those organization units shows a fair representation of its share of operational costs.

In many cases, allocations only take place between departments within one subsidiary, but there may be other costs that are shared between subsidiaries on a regular basis.

For example, marketing expense is incurred within a central corporate ledger, and is allocated to the United States (US), Canadian (CA), and United Kingdom (UK) organizations based on sales volume. These organizations are separate legal entities with their own separate ledgers. The US organization bears 50% of the cost and the CA and UK organizations each bear 25% of the cost.

The Marketing Costs allocation rule is set up to generate the allocation lines listed in the following table.

Ledger Account Debit Credit Description

InFusion USA

3111-110-0000-41110-0000

 

USD 500

Allocation Line

InFusion UK

3411-000-0000-52330-0000

USD 250

 

Allocation Line

InFusion Canada

3511-120-0000-52330-0000

USD 250

 

Allocation Line

The intercompany balancing rules are set up to use the following accounts.

  • Receivables Account: 3000-000-0000-13011-0000

  • Payables Account: 3000-000-0000-21081-0000

Generate General Ledger Allocations Using Intercompany Accounts

Submit the Generate General Ledger Allocations process and choose your Rule or Rule Set. Select Process Cross-Ledger Allocations and Use Intercompany Accounts options to use intercompany balancing rules to generate the receivables and payables accounts required to balance cross-ledger allocation journal lines.

The following journals are created for the Marketing Costs allocation rule.

The following table described the InFusion USA journal after cross-ledger balancing:

Ledger Account Debit Credit Description

InFusion USA

3111-110-0000-41110-0000

 

USD 500

Allocation Line

InFusion USA

3111-110-0000-13011-3411

USD 250

 

Cross-Ledger Intercompany Allocation with Ledger InFusion UK

InFusion USA

3111-110-0000-13011-3511

USD 250

 

Cross-Ledger Intercompany Allocation with Ledger InFusion Canada

The following table described the InFusion UK journal after cross-ledger balancing:

Ledger Account Debit Credit Description

InFusion UK

3411-000-0000-52330-0000

USD 250

 

Allocation Line

InFusion UK

3411-000-0000-21081-3111

 

USD 250

Cross-Ledger Intercompany Allocation with Ledger InFusion USA

The following table described the InFusion Canada journal after cross-ledger balancing:

Ledger Account Debit Credit Description

InFusion Canada

3511-120-0000-52330-0000

USD 250

 

Allocation Line

InFusion Canada

3511-120-0000-21081-3111

 

USD 250

Cross-Ledger Intercompany Allocation with Ledger InFusion USA

Generate Intercompany Allocations

Submit the Generate Intercompany Allocations process to create intercompany transactions. If you need invoices for your allocations choose an intercompany transaction type that requires invoicing so the intercompany transactions get routed to Receivables for invoice generation.

Ledger, Legal Entity, and Primary Balancing Segment assignments are set up as shown in the following table:

Ledger Legal Entity Primary Balancing Segment

InFusion USA

USA Corp

3111

InFusion UK

UK Corp

3411

InFusion Canada

Canada Corp

3511

Intercompany organizations are set up as listed in the following table.

Intercompany Organization Legal Entity

USA Sales

USA Corp

UK Sales

UK Corp

Canada Sales

Canada Corp

The following table lists the provider intercompany transactions that are created for the Marketing Costs allocation rule.

Batch 101:

Provider Transaction Number Distribution Number Distribution account Debit Credit

USA Sales

1

1

3111-110-0000-41110-0000

 

USD 250

 

 

2

3111-110-0000-13011-3411

USD 250

 

 

2

1

3111-110-0000-41110-0000

 

USD 250

 

 

2

3111-110-0000-13011-3511

USD 250

 

The following table lists the receiver intercompany transactions that are created for the Marketing Costs allocation rule.

Receiver Transaction Number Distribution Number Distribution account Debit Credit

UK Sales

1

1

3411-000-0000-52330-0000

USD 250

 

 

 

2

3411-000-0000-21081-3111

 

USD 250

Canada Sales

2

1

3511-120-0000-52330-0000

USD 250

 

 

 

2

3511-120-0000-21081-3111

 

USD 250

FAQs for Intercompany Transactions

Use the social feature on the Intercompany Transactions work area to invite others to share information.

Here's how you use the social feature:

  1. Navigate to the Intercompany Transactions work area.

  2. Search for the intercompany transaction.

  3. Click Social and then click Share. Optionally, click Join to join an existing conversation.

  4. Create a related conversation. And invite other cost center owners to join the conversation.

  5. Upload the allocation spreadsheet for them to review.

As cost center owners, you can post questions. And other cost center owners can see responses to the questions because they're owners.

Each cost center owner can validate their intercompany allocation in the conversation itself. This creates a lasting record.

How do I enter provider and receiver distributions for intercompany transactions?

Enter provider and receiver distributions, and make sure that the net amount is equal to the transaction amount. When you submit the batch for processing, Intercompany creates a receivable line for the provider side and a payables line for the receiver side.

The intercompany receivables line and payables line are based on these:

  • the primary balancing segment value of the first provider distribution and the intercompany balancing rules.

  • the primary balancing segment value of the first receiver distribution and the intercompany balancing rules.

Transaction amount = $100 debit.

This table shows the Provider distributions for a Debit transaction.

Distribution Line Entry Debit Credit

User enters this line.

 

$100

And Intercompany adds the Intercompany Receivable line.

$100

 

This table shows the Receiver distributions for a Debit transaction.

Transaction amount = $100 debit.

Distribution Line Entry Debit Credit

User enters this line.

$110

User enters this line.

$210

Intercompany adds the Intercompany Payables line.

$100

This table shows the Provider distributions for a Credit transaction.

Transaction Amount = $100 credit

Distribution Line Entry Debit Credit

User enters this line.

$110

User enters this line.

$210

Intercompany adds the Intercompany Receivable line.

$100

This table shows the Receiver distributions for a Credit transaction.

Transaction Amount = $100 credit

Distribution Line Entry Debit Credit

User enters this line.

$100

Intercompany adds the Intercompany Payables line.

$100

How can I resubmit rejected intercompany transactions?

You can't resubmit rejected intercompany transactions. However, you can copy, edit, and resubmit them in a new batch.

  1. Select the rejected transaction amount on the Transactions Overview page.

  2. Copy the rejected transaction amount.

  3. After you copy the rejected transaction to a new batch, the transaction status changes from Rejected to Rejection Reviewed.