Jul 27 2017
Posted By : aecc
There is a powerful feature in NetSuite that can manage the intercompany sales transactions between different subsidiaries and be able to automatically generate elimination journal entries. In this way, the user has no need to manually create and track intercompany transactions and manually create and post elimination journal entries.
To enable this feature, go to Setup — Company — Enable feature — Accounting and check the box “Automated Intercompany Management”.
Then the NetSuite Will automatically add some fields on the transaction record.
The next Step is to create intercompany accounts, intercompany customer, and intercompany vendor.
To designate an account as an intercompany account, check the box ELIMINATE INTERCOMPANY TRANSACTIONS, as shown below:
To create intercompany vendor or customer, we must have intercompany Accounts Receivable and intercompany Accounts Payable accounts.
The next step, I will use an example to demonstrate how to create the intercompany vendor and customer.
Support subsidiary US-EAST want to buy some production from US-WEST
We should set up the intercompany customer as the following:
Subsidiary = US – WEST
Represents Subsidiary = US – EAST
And for Vendor record:
Subsidiary = US – EAST
Represents Subsidiary =US – WEST
Up to now, all the basic settings are done, we can create the intercompany Purchase Order and then create a linked Sales Order. The intercompany transactions workflow is similar to the usual sales and purchases workflow. Let’s create a purchase order that represents the subsidiary US-EAST want to buy something from US-WEST subsidiary.
As we choose the intercompany Vendor, the subsidiary is automatically set to US-EAST, Intercompany Status is in pending and the Paired Intercompany Transaction field is empty because we haven’t generated the intercompany Sales Order yet. Next, let’s go to transaction — sales — Manage Intercompany Orders.
As we choose the vendor we entered in the Purchase Order previously, the unlinked purchase order will be listed. We can select the Purchase Order we want to generate the Sales Order and click “Generate Sales Order” button. The Sales Order will be Generated automatically.
The Intercompany Status on Sales Order is Paired and the Paired Intercompany Transaction is the Purchase Order We just created. If we go back to the Purchase Order, we can find this Purchase Order is also Updated accordingly.
The Intercompany Transactions also follows standard Sales and Purchases Workflow, User can create Item Fulfillment/Item Receipt for the Sales Orders/Purchase Orders, and also the Invoices/Vendor Bill.
For the G/L Impact of these Posting Transactions, please consult the Help topic “Intercompany Inventory Transfer Examples” in NetSuite.
The Intercompany Transaction also support Drop Shipping. In general, if the Advanced Shipping and Receiving function is enabled in NetSuite, the Fulfill/Receiving processes can be separated from billing process with those task can be performed by different department.
The Intercompany Transaction for drop shipping, however, is used when one subsidiary sells an inventory item to an external customer, but the fulfill process is performed by another subsidiary.
For example, there is a Warehouse Subsidiary and Sales Subsidiary in the company, the Sales Subsidiary creates Sales Orders from external customers, then an Intercompany Purchase Order is created accordingly and send to the Warehouse Subsidiary, the Warehouse subsidiary fulfill the Intercompany Sales Order and ship the item to the external customers.
Then the Sales Subsidiary create Vendor Bill for the Warehouse Subsidiary and Invoice to the external customers.
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