Intercompany System Options

Define intercompany system options to set up intercompany processing rules at the enterprise level, based on your specific business needs. It is a good thing.

To maintain consistency throughout an enterprise, intercompany transaction processing rules should be defined at the enterprise level. By standardizing these rules, an enterprise can minimize disputes, decrease processing time, and cut administrative costs.

Before setting up intercompany system options, you must determine how to process your intercompany transactions. For example, to:

• Enforce an enterprise-wide currency or allow intercompany transactions in local currencies.

• Allow receivers to reject intercompany transactions.

• Determine the minimum transaction amount that is processed.

System Options

Changing and saving a system option has no effect on intercompany transactions already in progress. Intercompany system options only affect new intercompany transactions, and are not retroactive to any transactions previously entered.

The system options are:

• Intercompany Batch Numbering

  The intercompany batch numbering option defines whether to use system generated or manual transaction batch numbering. Choose one of the following options to create intercompany batch numbers:

  • System Generated: Generates intercompany batch numbers.

  • Manual: Lets you manually enter the batch number.

• Intercompany Currency

  Standardize transaction processing by selecting an intercompany currency. Intercompany transactions created in the Intercompany module are always entered in this currency. This simplifies transaction processing, and eliminates foreign conversion rate fluctuation risks. If you select an Intercompany currency, that currency is defaulted into the Minimum Transaction Currency field. It overwrites any other currency in that field and the field cannot be updated.

• Minimum Transaction Amount

  The minimum transaction amount represents a minimum threshold intercompany transaction amount. This amount prevents the submission of immaterial transactions for small amounts that do not add value. To implement this rule, you must first select an Intercompany currency. That currency is defaulted into the minimum transaction currency for processing intercompany transactions. These two system options ensure that when comparing a transaction amount to the minimum transaction amount, the two numbers are entered in the same currency, allowing for an accurate comparison.

• Conversion Rate Type

  Select a conversion rate type that is used when transferring foreign currency intercompany transactions to General Ledger, Receivables and Payables.

  Note: The foreign currency intercompany transactions are not stored in the ledger currency in the Intercompany module.

• Allow Receiver to Reject Transaction

  Use this system option to determine if receivers of intercompany transactions can reject transactions or not. For example, if your company policy requires intercompany transactions be approved, but does not allow receivers to reject the transactions, then you can set this system option to No.

• Intercompany Calendar and Period Type

  You can have an intercompany calendar that is separate from the general ledger calendar. This ensures that the opening and closing of intercompany periods can be controlled separately from the general ledger calendar. You can limit the creation of intercompany transactions by using the intercompany calendar to close periods by transaction type. For example, you can prevent users from creating intercompany sales transactions beyond the 20th of each month by closing the period for that transaction type on the 20th, but keep the period open for the other transaction types until the 25th of the month..

  Select a calendar from the available general ledger calendars in the list of values.

  To update the intercompany calendar to use a different general ledger accounting calendar, the intercompany period status for all intercompany transaction types must either be Never Opened or Closed.

  The Period Type value is predefined from the selected accounting calendar and cannot be updated. It indicates the type of period defined for that calendar.

• Default Transaction Type

  Select a transaction type that will default when new intercompany batches are created.

• Summarize Distributions for Receivables Invoicing

  Specify this option while setting up the Intercompany System Options by selecting a Yes or No. When you select Yes, the provider distribution lines are summarized to generate one receivables invoice line. Intercompany passes the Transaction description to the receivables invoice line. Note that the accounting of the receivables invoice still shows each provider line separately.

  When you select No for the Summarize Distribution for Receivables Invoicing option, each provider distribution line is passed to Receivables to be generated as a separate receivables invoice line. In this case, Intercompany passes each Provider Line description to the receivables invoice line.