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WS: 03: 04: 09: Understanding and Setting Up Intercompany Settlement Methods (Doc ID 1409029.1)

Last updated on APRIL 22, 2019

Applies to:

JD Edwards World General Ledger - Version A7.3 cume 4 and later
JD Edwards World Accounts Payable - Version A7.3 cume 4 and later
JD Edwards World Accounts Receivable - Version A7.3 cume 4 and later
Information in this document applies to any platform.

Purpose

When your business generates transactions between companies connected through common ownership or control, the companies will be out of balance unless settlement entries are created to balance each company's net position. For example, if company XYZ purchases a widget for a sister company, company ABC, an intercompany association exists in the general ledger where company ABC has an intercompany payable to organization XYZ and, conversely, company XYZ has an intercompany receivable from company ABC. You create intercompany settlements to ensure that each company's due-to and due-from relationship is clearly recorded and that each company has general ledger entries that balance to zero (that is, debits equal credits). 

JD Edwards World provides a simple process to create the intercompany settlement transactions automatically as you post transactions. You choose the method of intercompany settlements to use. The system provides six methods for creating intercompany settlements that are grouped accordingly:

IMPORTANT! In A9.4 you can't specify 'Y' for Intercompany Settlements and also 'Y' for Multi-Currency. See WS: FIN: NEW Post Program (P09870) in A9.4 (Doc ID 2005572.1) for additional information. You must use a Detail (D and 2) or Configured Hub (C and 3) method if you are performing intercompany settlements and have activated multicurrency processing in the General Accounting Constants (P000909). Issues can occur if the set up is not correct.  "Please reference <Bug 11049000> (INTERCO METHOD = Y W/CURRENCY - SAR: 8969047) for additional information.

Using the intercompany settlements process provides additional benefits, such as an audit trail between the companies transacting business, which provides for easy reconciliation, and integrity reports to ensure transactions are properly generated. The Intercompany Settlements process also follows these guidelines:

The following information provides details of each intercompany settlement method, and also provides examples of the automatic entries the system creates for intercompany settlements based on the method you choose. Each method states whether there is a requirement for a standard or flexible chart of accounts, which is dictated by the account structure setup:

This document describes how each intercompany method works and how to set up the system for each intercompany method. This document does not discuss multicurrency intercompany settlements or cross-environment intercompany settlements. For detailed information about using those features, review Intercompany Settlements (all chapters) in the Advanced and Technical section of the JD Edwards World General Accounting 1 guide.  In addition, this document does not discuss using the value of asterisk (*) in the Intercompany Settlements field to post out of balance.

 

Scope

This document is intended for the financial management team.

Details

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In this Document
Purpose
Scope
Details
 Overview to Intercompany Settlement Methods
 Hub Methods: Y and 1
 Example: Hub Method Y
 Detail Methods: D and 2
 Example 1: Detail Method D
 Example 2: Detail Method D
 Configured Hub Methods: C and 3 (Releases A8.1, A9.x)
 Setting Up the System for Intercompany Settlements
 Setting Up the Intercompany Account in the Chart of Accounts
 All Methods Except Hub Method Y
 Hub Method Y Only
 Setting up Automatic Accounting Instructions (AAIs)
 Setting up the Address Book Records for Each Company
 Setting Up Configured Hubs (Releases A8.1 and A9.x)
 Setting up the Intercompany Hub UDC Table (09/HB)
 Setting up Configured Hub Companies
 Setting the General Accounting Constant
References

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