Processing Intercompany Transactions

The Accounts Payable module supports two methods for processing invoices containing intercompany transactions.

·     An entity may pay entire invoices for another entity.  In this case, the entire distribution of an invoice is made to the company/location designated as the distribution entity.  The liability to the vendor is recorded in an accounts payable control account on the books of the entity that will make payments to the vendor.  The distributing company/location is the same on all accounting distribution records for the invoice.

·     Alternatively, an individual invoice may be distributed to any number of entities.  In this case, each individual account distribution record may indicate a different distributing company location.

The data entry conversations, Invoice and Debit/Credit Memo Entry and Maintenance, and Recording Manual Payments, determine whether each combination of paying entity and distributing entity is authorized.  These conversations create an intercompany receivable on the books of the paying entity and an intercompany payable on the books of the distributing entity for every accounting transaction in which the paying entity and the distributing entity are different.  The conversations also assign the intercompany payable and receivable account numbers.

Where purchases by one entity are paid by another entity, the originating company/location field on the invoice should be completed.  This procedure allows payment selection processing to be limited by originating company/location for central-paying organizations that pay by grouping transactions by company/location.