Intercompany Transactions with Microsoft Dynamics 365 Business Central

Using Dynamics 365 Business Central for Intercompany Transactions

Many organizations consist of more than one company, and these companies often engage in various intercompany transactions. It’s important for an organization to be able to track these transactions with ease, and Microsoft Dynamics 365 Business Central allows you to do just that. With Dynamics 365 Business Central, your organization can reduce errors, improve productivity, and post transactions across multiple subsidiary companies. Business Central makes it easy for your organization’s companies to engage with one another in the same way they would with external customers and vendors.

In this blog, we’ll look at how Dynamics 365 Business Central can help your organization track intercompany transactions, including:

• Creating a purchase invoice in “Company HQ”
• Logging in from “Company 1” to approve the transaction
• Posting the journal in “Company 1”
• Reviewing the transaction’s impact on the ledger in “Company 1”

Is it time for your organization to make the switch to Microsoft Dynamics 365? JourneyTEAM can help! Visit our Dynamics 365 Business Central page to learn more.

Creating a Purchase Invoice in Dynamics 365 Business Central 

Let’s start with a scenario. You’re working within your organization’s parent company “Company HQ,” and you receive a purchase invoice from a vendor. Some of these costs will be absorbed by the parent company, while others will be deferred to one of your organization’s subsidiary companies -- in this example, “Company 1.” How do we account for this in Dynamics 365?

First, log into Business Central as a business manager. From the dashboard, select Purchase Invoice. Choose the appropriate vendor, set your G/L Account as the line type, and choose the relevant item from Description/Comment. In this case, let’s say that a vendor has sent you an invoice for $1,750.00 in consulting fees. Of the total amount, Company HQ has incurred consulting fees in the amount of $1,000.00. Enter this amount as part of the line item, and set the quantity to 1.

Now, let’s imagine that another $750.00 in fees are connected to Company 1. Create another line item with the same information: G/L Account, Consulting Fees, and a quantity of 1. This time, however, enter $750.00 as the total amount. Choose G/L Account under Partner Ref. Type, and then select the appropriate Partner Code associated with the relevant company. Finally, post the transaction. If you click Navigate, you’ll also be able to see the transaction as part of your general ledger entries. This allows you to confirm that the appropriate accounts are being debited and credited.

Approving the Transaction

Now, it’s time to approve the transaction from within Company 1 in Business Central.

First, log out of Company HQ and into Company 1. Using the search menu, run a search for “Intercompany Inbox Transactions.” Select this item from the list of results, and you’ll see the relevant transaction displayed. You can open the transaction details to confirm that it’s the correct transaction. To approve the transaction, highlight it in your inbox and click Accept.

Posting the Transaction

At this point, we want to post the journal entry. While logged into Business Central as Company 1, use the search functionality to search for “Intercompany General Journal.” Open the general journal, select the relevant transaction, and click Post. It’s as simple as that!

Reviewing the Transaction

Lastly, we want to quickly review the transaction’s impact on your general ledger in Company 1.

From within Business Central, you can search for the appropriate account -- in this case, “Accounts Payable - Due to Company HQ” -- or you can set this account as one of your Favorite Accounts on the dashboard for easy access. In either case, click on the balance associated with the account in order to see the transaction in question. By selecting the transaction and clicking Navigate, you can see all of the ledger entries of the corresponding type (“Consulting Fees”) within your general ledger entries.

Dynamics 365 Business Central: Making Intercompany Transactions Easier

With the help of Dynamics 365 Business Central, it’s easy to track intercompany transactions. Dynamics 365 allows you to increase productivity by simplifying transactions, all while minimizing potential errors by eliminating the need for multiple line item entry.

Want to learn more about how Dynamics 365 can improve your organization’s efficiency and productivity? Contact JourneyTEAM today!

Article by: Dave Bollard - National Director of Marketing

JourneyTEAM is an award-winning consulting firm with proven technology and measurable results. They take Microsoft products; Dynamics 365, SharePoint intranet, Office 365, Azure, CRM, GP, NAV, SL, AX, and modify them to work for you. The team has expert level, Microsoft Gold certified consultants that dive deep into the dynamics of your organization and solve complex issues. They have solutions for sales, marketing, productivity, collaboration, analytics, accounting, security and more. www.journeyteam.com