Dynamics 365 Bitesize Content – Intercompany

Find out how intercompany transactions in Business Central can help you streamline processes and transactions across several business entities.

Dynamics 365 Bitesize Content – Intercompany

Find out how intercompany transactions in Business Central can help you streamline processes and transactions across several business entities.

p>The intercompany transactions capabilities are designed for users who control more than one legal business entity and have set up multiple companies to separate the accounting functions of each of these entities. This broad description applies to many users, especially those operating in international markets or regions with widely disparate business cultures and regulatory environments. Your organization may consist of several companies but might not have the equivalent number of accounting and administrative teams. Intercompany transactions let you simplify and streamline business processes and transactions between all of these entities. Intercompany transactions functionality focuses on supporting intercompany transactions with sales and purchasing documents, and with General Journal lines. Within this area, intercompany transactions allows intercompany transactions between multiple Business Central databases, for example, in different countries/regions, as well as multiple currencies, different charts of accounts, different dimensions, and different item numbering. Intercompany transactions use a number of entries and documents in intercompany transactions:

  • General Journal entries
  • Purchase and sales orders
  • Purchase and sales invoices
  • Credit memos
  • Return orders

When you enter a transaction, you do not need to specify the accounts for an individual set of books, but simply give the ID of the partner company. The Intercompany functionality creates general journal lines that result in the balancing of the books of both companies involved in a transaction. In receivables and payables, you assign an intercompany partner code to any customer or vendor. From that moment on, all orders and invoices generated pertaining to transactions with these companies will produce corresponding documents in the partner company, resulting in correct balancing of the accounts.

  • Intercompany General Journal

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  • Purchase Invoice

Dynamics 365 Bitesize Content – Intercompany Transactions - 2 When you post an intercompany journal or document, or send an intercompany order confirmation, the transactions are sent to your intercompany outbox. For them to be sent on to your intercompany partners, you must open the outbox and process them. All the intercompany transactions that you receive from your intercompany partners are listed in the intercompany Inbox.

  • Intercompany Inbox Transactions

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  • Intercompany Outbox Transactions

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Managing your Intercompany Transactions

Business Central provides several features and functionality to manage the process:

  • Organising the Inbox/ Outbox - You can use the filter fields at the top of the inbox/outbox page to determine which transactions are shown on the page.
  • Manage Inbox transactions – Accept, reject (Return to partner) or cancel the transaction (Delete the transaction but do not return it to your partner).
  • Manage Outbox transactions - Send to Intercompany Partner (action will be sent to the relevant partner's inbox), Return to Inbox (action will be moved to the inbox where you can then accept them to create documents or journal lines in your company) or Cancel (the transaction and post correction to the original transaction posted in your company).
  • Recreate Inbox/Outbox Entries – Occasionally, you may want to re-create a transaction in the inbox or outbox. For example, if you accepted a transaction in your inbox but then deleted the document or journal instead of posting it, you can re-create the inbox entry and accept it again.
  • Import intercompany transactions from a file - If you have an intercompany partner that is not in the same database as your company, you can receive intercompany transactions from that partner in an .xml file.

When you use intercompany postings to transfer documents between partner companies, the VAT-related settings assigned to the customer or supplier accounts (associated with the Intercompany Partner) control whether, and how, VAT is calculated and registered. You can also do cost distributions directly from a journal and purchase documents to partner companies. For example, if you register a purchase invoice from an external supplier and you want to distribute some or all the costs to one or more intercompany partners. You can allocate costs to one or more intercompany partners using the following:

  • Intercompany General Journals - These journals are useful when a service is purchased. For example, when a parent company hires a service to set up computer systems in two subsidiaries. The invoice is sent to the parent company, but the costs are allocated to the intercompany partners.
  • Purchase Orders and Invoices - Using purchase documents is useful when the purchasing functions of, for example, operating expenses, are centralized in one company and then allocated to the intercompany partners.

Benefits of having Intercompany Transactions capabilities

There are four major benefits to using the Intercompany functionality:

  • Increased productivity as a result of time saved and simplified transactions.
  • Minimized error potential with one-time entry of information and system-wide, automated updates.
  • Complete audit trail and full visibility into business activities and transaction histories.
  • Efficient, cost-effective transactions with affiliate and subsidiary companies.

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Dynamics 365 Bitesize Content - Intercompany Transactions