Intercompany Processing in Dynamics GP

Intercompany Processing in Dynamics GP is a great tool to assist ­users when tracking entries in one company that must also be recorded in another company.

For example, if you are creating an invoice in Company A, where the expense or a portion of the expense belongs to Company B, Intercompany Processing allows you to create the whole entry in Company A without having to go into Company B to manually create that portion of the entry.

Intercompany Processing will automatically use the ‘Due To’ and ‘Due From’ accounts in both the Originating and the Destination Companies, ensuring that these accounts consistently match between the two entities.

Set Up

It is simple to setup the functionality of Intercompany Processing.

Once the Chart of Accounts is setup, navigate to Tools->Setup->System->Intercompany Setup and populate the Intercompany Setup window with corresponding ‘Due To’ and ‘Due From’ accounts.

Screenshot of the Intercompany Setup window in Dynamics GP.

You must select the Originating Company and then highlight the Destination Company. Once you have done that, you can select the Due To/Due From accounts for each of the companies.

Note: you can only specify one Due To/Due From account for each company.

In this example, I used the same account for both the Due To and the Due From accounts, but they could be different accounts if that suits your accounting process. Additionally, they could be different accounts in each company; however, using the same main accounts might make it easier for reporting purposes.

Follow a Transaction Entry

Note: if you are not using Multicurrency Management, Originating and Destination Companies must have the same functional currency.

If you are using Multicurrency Management, then both the Originating and the Destination Company must have access to the same currencies and exchange rates. See this Microsoft Learn article for more information on how to setup Multicurrency for Intercompany transactions.

Intercompany Processing can enter distributions from two locations within the Originating Company:

  • Payables Management Transaction Entry (which will create a Journal Entry in the Originating Company), or
  • Directly in the General Ledger Transactions

Once you post an Intercompany transaction from the GL in the Originating Company, a matching Journal Entry will be created in the Destination Company.

Payable Transactions

A Payables Transaction Entry is the most frequently used entry, allowing us to enter a full vendor invoice in one company, the Originating Company, and record the expenses to the Destination Company.

Be sure to mark the Intercompany box next to the Voucher No. field.

Screenshot of the Payables Transaction Entry window highlighting the "Intercompany" button checked off.

The Distribution Window will assign the Company ID and Account Number.

Screenshot of the Payables Transaction Entry Distribution window.

Once you select “Intercompany” in the Payables Transaction Entry window, you will have the option to select the Co. ID in the Distribution window. You can select the Co. ID and the Account for the Destination Company, then distribute all or a portion of the expense to this company.

Once Posted in AP and GL, the transaction will create a Journal entry in the Destination Company, which will wait in the GL until you post it.

Note: You will not see the Intercompany accounts in the distribution window, but once you save the transaction and print the Edit List, you will see the following balanced entry for both the Originating Company and the Destination Company.

Screenshot of the General Ledger Distribution window.

Once this transaction is posted, you can log into the Destination Company and see the Journal Entry that now needs to be posted in the Destination Company.

Screenshot in the Transaction Entry window. Screenshot in the Transaction Entry Window highlighting the Transaction name "Tes" and the Batch ID.

Notice that in the Destination Company, the Batch ID appears as “ICTRX.”

Screenshot of the General Posting Journal window, highlighting the Transaction Entry name "Test" and the Batch Comment: PMTRX00000102, TWO.

The Batch Comment refers to the Audit Trail code back to the originating AP Journal Entry.

Corrections

If corrections are required, you can Void an Intercompany AP entry in the Originating Company. Posting the Void will void the transaction in AP and create a reversing journal entry in the Originating Company. Posting the void Journal Entry in the Originating Company will also create a reversing Journal Entry in the Destination Company.

You can also use the GL Backout and Correct to correct an Intercompany Journal Entry.

  • In the Originating Company, the Backout and Correct will make the correction in the Originating Company as well as the Destination Company.
  • If the Backout and Correct is created in the Destination Company, then it will post only to the Destination Company.

Inquiries and Drill Down

In the Originating Company, a drill down on the posted GL transaction for the Due To/From account allows you to see the Transaction Entry Zoom with Batch ID that is the same as the Batch Comment in the Destination Company posting journal.

Use the drill down on the Source Document to view the original AP entry.

Screenshot of the Detail Inquiry window on the left, highlighting the Audit Trial Code. Screenshot of the Transaction Entry Zoom window on the right, highlighting the Batch ID and the Intercompany button. Screenshot of the Purchasing Zoom window on the left, highlighting "Voucher/Payment Number". Screenshot of the Payables Transaction Entry Zoom on the right.

In the Destination Company, using the Journal Entry Inquiry window, you can also use the Intercompany button to review the originating transaction with the Originating Company ID, corresponding journal entry, and Audit Trail Code.

Screenshot of the Journal Entry Inquiry window on the left. Screenshot of the Intercompany Journal Entry Inquiry on the right, highlighting the Company ID and the Journal Entry value.

As you can see, there are good cross reference points to identify the Intercompany transactions between companies.

Intercompany Processing is a useful tool to help you streamline entries between companies and maintain correct and balanced Due To and Due From accounts.

For more information on how to leverage this tool in Dynamics GP, please contact us.

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