Intercompany netting journal?

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Posted on by ON-16052045-0

Hello,

I have encountered a process for which I am seeking to improve.

Currently the organization has one head office and multiple country offices. The head office allocates funds for the country offices, these funds need to be used for certain project during the year. A lump sum is credited yearly in the Country office, thus creating a liability for the Country office toward the regional office.

Each month the country offices debit this liability account with the corresponding amount that they put toward eligible projects and credit an IC account. The head office needs to mirror this in their GL, they debit the IC account but they credit an asset account.

Is there a way to use IC accounting to manage this without posting separate journals in each LE. Perhaps there are ways to manage this "mirrored" transaction despite containing different accounts (Liablities on one side, assets on the other) in one single journal or through some form of allocation that can be run automatically each month.

Kind regards,
O

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Ramit Paul 22,799 Most Valuable Professional on at

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Hi,

Please check this MS docs for the intercompany netting process.

https://learn.microsoft.com/en-us/dynamics365/finance/cash-bank-management/net-customer-and-vendor-balances#intercompany-netting

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ON-16052045-0 92 on at

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Perhaps intercompany netting was a an incorrect choice of vernacular. I am not looking to net vendor/customer balances. I am looking to reflect a general journal entry in another legal entity, except the accounts are different as per the image provided in the initial post. It would be some kind of intercompany accounting but I am not sure it is possible to set up.

I was thinking of perhaps doing and IC allocation on monthly, but allocation causes the balances in the source LE to be incorrect as we are posting extra transactions.

Any other suggestions?

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ON-16052045-0 92 on at

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Commenting again for visibility.

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ON-16052045-0 92 on at

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We solved this by simply creating one Intercompany journal from the originating LE (Country office). Where the IC accounting setup was to set the Intercompany account for Country office to correspond to intercompany account in Head office

LE 1 Debit/credit for IC account = LE 2 Credit/debit for IC account

Then we make an IC journal with 1 line - Debiting liabilities in Country office and crediting assets in Head office.

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