Overview of Intercompany Balancing Rules

Intercompany balancing rules are used to generate the accounts needed to balance journals that are out of balance by legal entity or primary balancing segment values.

You specify the intercompany receivables and intercompany payables accounts that you want to use as the template for building the intercompany receivables and intercompany payables accounts. The intercompany balancing feature then uses these rules to generate the accounts of the balancing lines it creates.

Journals lines are first summarized by the legal entity and are balanced by the legal entity. Since a legal entity can have many primary balancing segment values, it's possible that a journal could have multiple lines for a legal entity with different primary balancing segment values. In that case, when intercompany balancing is done, the lowest primary balancing segment value within each legal entity in the journal is used. After this, balancing occurs across balancing segment values within each legal entity.

These same rules are also used to generate the intercompany receivables account and intercompany payables account of transactions entered in the Intercompany module.

The intercompany balancing rules are also used to generate the intercompany receivables account for the provider side of an intercompany transaction. The balancing rules also used to generate the intercompany payables account for the receiver side of an intercompany transaction.