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Do you issue sales invoices and/or vendor bills from one subsidiary to multiple subsidiaries for services whereby you need to allocate costs and collect money? Are you using NetSuite OneWorld? Have you discovered that the native functionality in NetSuite is limited to transaction records being specific to one subsidiary, whereby you cannot allocate transactions from one subsidiary to several other subsidiaries at the same time? If your answer to these questions is yes, then Sikich has a solution for you!
Solution 1:
NetSuite Manual Intercompany Journal Entry
After entering a customer invoice, credit memo, vendor bill or vendor credit transaction, costs can be re-allocated by creating an intercompany journal entry per subsidiary.
Many companies like the straightforwardness outlined in Solution 1, where there is a journal entry for each transaction line that must be allocated. However, creating these journal entries can be cumbersome, so the Sikich Systems NetSuite Team developed a solution to automate this process. The process is outlined below:
Solution 2a:
For Sales Invoices and/or Credit Memos – Automate the creation of intercompany journal entries when a sales invoice/credit memo is created.
- When entering a sales invoice transaction that must be allocated to multiple subsidiaries and related locations/departments, you would use a generic customer (like “Administration Fee”, which indicates what the invoice is for) and specify the intercompany subsidiary, intercompany department and/or intercompany location in custom fields to which the line must be allocated. For example, the PMR subsidiary is issuing a sales invoice to Administration Fee customer for the administration fee item to be allocated to the WRHS, PCA and PMP subsidiaries and various locations and departments within each subsidiary.
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- Save the sales invoice transaction. Upon saving the transaction, intercompany journal entries (#2260, #2261, and #2262) are created per subsidiary and a credit memo (#CR5051) is created as well. A link to the intercompany journal entries is placed on a custom tab of the transaction from which they are created, and the credit memo appears under the related records tab of the transaction.
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- The credit memo is applied to the sales invoice, thereby, negating the GL impact of the sales invoice in the originating subsidiary (PMR), essentially reversing the non-intercompany AR and sale in the general ledger. The intercompany journal entries record the Intercompany AR and sale in the originating subsidiary (PMR) and record the Intercompany AP and expense in the subsidiaries of the custom fields on the originating sales invoice transaction (WRHS, PCA, PMP).
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- Not only are the GL entries recorded correctly, but the intercompany payable/receivable balances are coded to a vendor and customer record. For example, this transaction will show up in the A/P aging reports, reporting the balance as due to the intercompany vendor that represents PMR. This detailed general ledger impact allows PMR to view the receivables from WRHS, PCA and PMP on the A/R register, while WRHS, PCA and PMP each have a payable to PMR on their A/P registers.
- The customization outlined above can be used when entering a credit memo transaction that must be allocated to other subsidiaries and related locations/departments as well.
Solution 2b:
For Vendor Bills and/or Vendor Credits – Automate the creation of intercompany journal entries when a vendor bill/vendor credit is created.
Many companies like the automation outlined above in Solution 2a for Customer Invoices and Credit Memos. Therefore, Sikich NetSuite Application Development and Implementation Team developed a similar solution for Vendor Bills and Vendor Credits. This solution is most helpful when one subsidiary is “acting as a Pay Master” for other subsidiaries within your NetSuite OneWorld account. For example, Subsidiary A may pay the telephone bill for all subsidiaries, yet costs need to be allocated to and money collected from Subsidiary B and Subsidiary C. Our custom solution, similar to the Customer Invoice/Credit Memo solution above, can automate this for you.
Solving multi-subsidiary intercompany allocation issues can be time-consuming. As indicated in the solutions shown above, which reflect a customization that Sikich Systems would like to share with you, the entire process can be automated. This allows companies to free up their accounting staff to concentrate on other areas of the business.
If you are experiencing issues in NetSuite OneWorld with recording multi-subsidiary intercompany sales and expenses, and you’d like automation of simple business processes, please contact Sikich Systems’ team of NetSuite-certified, Application Developers, Business Consultants, CPAs, CRM and E-Commerce experts to set up an initial meeting.
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