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My organization has multiple legal entities currently 8 with one of these entities making vendor payments on behalf of the other 7 entities. The Chart of accounts is shared across all entities and Intercompany accounting has been set up with two main accounts 1 for intercompany payable and 1 for intercompany receivable.
This all works fine in so far as it is possible to create vendor payment journals for multiple entities and the corresponding entries are created in the intercompany accounts.
For example: -
Company A pays Vendor invoice $100 on behalf of Company B and the entries created are as follows: -
Vendor Payment journal entries in Company A
Legal entity financial dimension
Intercompany journal created in Company B
As you can see the Account structure contains a financial dimension for the legal entity one of the purposes being to identify the source company for the intercompany entry. The problem is that in the scenario above the dimension values for legal entity for the intercompany accounting entries are not as intended. What the intended entries are as follows:-
Desired outcome for Vendor payment journal in company A
Desired outcome for Intercompany journal created in Company B
I can achieve this for the intercompany payable account by adding a default legal entity dimension of A for each of the 7 entities that company A pays invoices on behalf of. But for the intercompany receivables account this is not possible because of the many to 1 relationship.
The only solution I can see is to have multiple intercompany payable and receivable accounts for each entity. Unless any one else has encountered the same issue and has a better solution?
The fact that the system provides little or no control over the dimensions for these types of system generated journal entries seems to be a gap in the design.
The IC posting logic was created long before Microsoft introduced the legal entity as possible backing end dimension value.
I have seen implementations where mainly there was a separate main accounts per entity. As there are only 8 legal entities, I would personally choose for a main account per legal entity. An alternative would be a customization, but I wouldn't go into this area.
Inheriting findims across companies in IC transactions is often problematic.
I would follow Andre's suggestion creating separate accounts for incorporating the different IC transactions / relationships.
Making an adjustment to the standard accounting engine might be possible but difficult. I would personally not do that.
thanks for your reply it confirms my thinking of using multiple main accounts
Thanks Ludwig it looks unanimous that multiple main accounts for IC transactions is the way to go
So there is no way for the dimensions on an intercompany journal to follow the dimensions on the original posting
Debit company 100 expense-BU-DEP-CC
Debit company 200 expense- BU-DEP-CC
Credit Company 100 liability
Debit Expense BU-DEP-CC
Credit Due to Company 100 Interco-BU-DEP-CC
I have never seen this but just checking
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