Intercompany Payables Transaction



Recently I faced a question: Can we enter Intercompany Transactions in Sales & Purchasing, and if yes, how.

I knew for sure that there is no provision for Intercompany Transactions in Sales (I believe I am correct, in case I am wrong please do correct me). And I also knew there is certainly a provision in Payables which denotes a transaction being an Intercompany Transaction. But it did not strike my mind at that time. I felt bad that I could not remember such an easy point. I went back to my machine and did some GP surfing. Below is the gist of what needs to be done to enter an Intercompany Payables Transaction.

1. Make sure that the Intercompany Setup is complete for the Destination Company, with Due to / Due From Accounts setup. Also make sure that the option “Enter Corresponding Company ID” is selected. This will allow us to modify the Company ID in PM Transaction Distribution.
2. While entering the PM Transaction, make sure that as soon as you entered Voucher Number, you have selected the option “Intercompany”. This will tell the system that this transaction is an Intercompany Transaction.
3. The destination company distributions must be of types PURCH, FNCHG, FREIGHT, MISC or UNIT. Others are not supported.
4. You cannot post an Intercompany Transaction directly. Any IC Transaction must be saved in a batch. If the transaction is of the same currency, then it can be stored in either Single Use PM batch or Recurring PM Batch. If the transaction is of different currency from that of the destination company (Multi-Currency Transaction), then we should save the transaction only on Single Use PM batch.
5. On posting the Intercompany PM Transaction, a General Ledger batch will be created in each company. This batch must be posted to become a permanent part of the records of the company.

I guess I have covered all important points with respect to PM IC Transaction. Please do add/change/remove the points if it is needed.

Now, I may be silly in asking this, I would like to understand “why logically an Intercompany Sales cannot happen”. And I would love to understand Intercompany Transactions more from Business & Functionality point of view.

Vaidy

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2 thoughts on “Intercompany Payables Transaction

  1. Vaidhy,Sales should not support such a feature because you do not want to use your subsidary company as a customer.Usually when transactions occur between companies it is in terms of GL transactions.(Adjustments, Fund transfers and payables transactions).Intercompany transactions are like any other transactions in the system, with the following exceptions:They contain distributions to more than one company. Try answering these to understand better:You cant account for sales in your company and have an inventory of another company? but you can if it is treated as your warehouse. You cant account for sales in your company and have receivables for other company?

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