Intercompany Sales

Overview

Using this feature, enterprises represented by several legal entities can share the same stock: one company can sell another company's goods.

It works as follows:

One company of a holding structure purchases goods to the warehouses.
Every company with a special permission (set up by the user) can sell goods of the purchasing company.
When selling goods to the end customer, the system checks whether the selling company is entitled to sell goods of the owner company.
Goods transfers between the purchasing and the selling company are generated based on the sales of goods to the end user.

Intercompany sales ensure:

Sale of goods of other companies.
Transfer of goods between companies including based on sales results.
Different options and rules of intercompany transfers for sales and consignment sale.
Intercompany returns including based on returns from customers.
Control of company stock balances taking into account the specified intercompany transaction rules.
Automatic filling of intercompany documents based on sales and returns data.
Registration of intercompany transaction contracts.
Selection of payment offset methods.
Registration of intercompany transactions via intermediary.

Setting up Intercompany

System settings

To enable the intercompany scheme in the system:

Go to Master data and settings.
Under Master data and sections, click Profitability & cost.
Under Goods accounting, select two checkboxes:

Control company stock balance.
Intercompany supply scheme.

Transfer price types

You can set up special prices for intercompany transfers. For that:

Go to CRM and Marketing > Settings and catalogs > Price types.
Open the required price type and select the Intercompany sales checkbox under Use in.

This price type will be available for selection when registering intercompany documents as the Transfer price. If the checkbox is selected for only one price type, it will be selected automatically.

Intercompany contracts

You can register intercompany contracts for intercompany sales.

To enable intercompany contracts:

Go to Master data and settings.
Under Master data and sections, click Profitability & cost.
Under Goods accounting, select the Intercompany contracts checkbox.

To create an intercompany contract:

Go to Profitability & cost.
Under Intercompany, click Intercompany contracts.
Click Create.
Select the required Type:

Purchase and sale contract – you can use this contract to register sales of goods to another company. The contract is concluded between the purchasing company and the selling company.
Cross-company sales contract – you can use this contract to register consignment goods transfer to another company. The contract is concluded between the consignor company and the consignee company.

5. Enter the contract Description and Print name.
6. Fill in the vendor and customer details: Company, Company account, and Cash flow item.
7. On the AR/AP settings tab, select an AR/AP item:

Contract for debt and prepayment. Prepayment and Payment by invoice will be assigned and cleared on the Contract level.
Invoice for debt, Payment for prepayment. Prepayment and Payment by invoice will be assigned and cleared on the Invoice level.

8. Select the default Currency for AR/AP transactions under the contract.
9. If the contract currency differs from the functional currency, select the Foreign currency transaction checkbox.
10. Select the VAT taxation option:

If you select the Determined by the specified value checkbox, you can select a single VAT taxation option for all the transactions under the contract.
If you select the Determined in orders and invoices checkbox, you can disable autofilling of the default value.

11. Specify a VAT rate for payments.
12. Click Save and close.

You can specify intercompany contracts in the following documents:

Goods transfer
Commission sales report — Intercompany
Commission write-off report — Intercompany
Goods return — Intercompany

Rules for registering intercompany transactions

To set up what companies are allowed to sell other company goods, use intercompany supply schemes. This includes both sales and consignment sales.

The data is displayed as cross-tables. The owner company is a company that owns the goods. The remaining columns contain the list of all companies in the holding structure. Table cells indicate the goods of which owner company this company can sell and how the transfer of goods between companies will be registered.

To set up intercompany supply schemes:

Go to Profitability & cost > Intercompany supply scheme.
Double-click the required cell, which originally says Not transferred.
Select the intercompany sales option:

Sale
Consignment sales
Not transferred. In this case, intercompany sales are not allowed at all.

4. If required, you can specify the intercompany Contract and Price type to be used by default.

When selling, balances of not only a seller's company, but also of other companies with enabled intercompany sales will be checked. If there is balance only for a company with the Not transferred option set for it, intercompany sales are prohibited and the document will be locked. In other cases, the sale will be successful, and later, according to the selected option, it will be possible to issue documents to transfer goods between companies.

Registering intercompany sales documents

General info

Selling goods to the customer on behalf of another company does not differ from selling own goods (the Customer invoice document is used). If the selling company does not have the required quantity, the system will automatically write off the missing goods from the company for which intercompany transactions are allowed in the intercompany supply scheme.

You can register intercompany sales documents in Profitability & cost > Intercompany sales documents (all). They include:

Customer invoice — Intercompany (Direct sale — Intercompany, Consignment sale — Intercompany)
Commission sales report — Intercompany
Commission write-off report — Intercompany
Goods return — Intercompany (Sales adjustment — Intercompany return delivery, Consignment goods pickup — Intercompany)

To create a new document, click Create and select the required one.

To set up what documents will be shown, click Set up. In this form, you can group documents By document kinds or By business transactions.

You can go to the following workplaces by clicking the relevant hyperlink:

Transfers – use this link to go to the Intercompany invoices to register workplace.
Commission reports – use this link to go to the Register consignment issue notifications workplace.

Customer invoice — Intercompany

To create a Customer invoice — Intercompany manually:

Go to Profitability & cost > Intercompany sales documents (all).
Click Create and select Customer invoice — Intercompany with one of the following operations: Direct sale — Intercompany or Consignment sale — Intercompany. It depends on which transfer method should be used when transferring goods between companies.
On the Goods tab, fill the goods that need to be transferred to another company, and the prices at which the goods are transferred.
On the More tab, you can additionally fill in all the necessary information on the delivery (for example, delivery address) and specify information about the payment date and type.
Click Post and close.

Transfer generation wizard

The wizard is designed for automatic batch generation of transfers of goods between companies and redemption of vendor-managed inventory by days or by months to cover the needs for previously sold goods under the intercompany sales scheme or VMI procurement scheme.

To open the wizard:

Go to Profitability & cost – Tools – Intercompany documents generation wizard
Go to Profitability & cost – Issue intercompany invoices – Transfer generation wizard

When generating documents by months, the total demand for goods sold per month is covered. Negative balances at the end of the day are allowed within the month, but this does not affect the correctness of cost calculation and month-end closing. If documents are generated by days, the demand for goods for each day is covered and there will be no negative balances at the end of the day.

There are three steps in the wizard:

At step 1, an analysis of intercompany sales and sales of received VMI for the specified period is performed. At this step, the document split mode is selected (by months or by days). Additionally, you can set the filter by product. As a result of the analysis, a list of receiving companies is displayed for which documents need to be generated. Further actions will be applied to the selected company and inventory type.

At step 2, you can specify which documents will be generated (only Intercompany invoices, only Intercompany VMI transfers, or both types of documents). If necessary, you can set priorities for selecting senders.

At step 3, transfer documents are created.

While generating documents, errors are controlled that may prevent documents from posting. For example, the absence of set prices for some items. Such items can be excluded from documents, or you can proceed to setting prices.

Commission sales report — Intercompany

The Commission sales report — Intercompany document is issued after the sale of consigned goods received from another company. If the intercompany sales scheme is set to Consignment sales, after the sale, the seller (the consignee company) must not only register the consignment goods transfer, but also report to the owner of the goods (the consignor company).

If you generate a new document based on another one, the list of goods sold or returned by the customer and other details are filled in automatically.

If the consignee company must pay the commission, specify the commission payment method on the Commission tab:

With separate payment. The actual commission payment is reflected in separate payment documents and is not deducted from the amount of revenue (sales). When using this method, you can do the following:
Offset a payment on the consignor's side or on the consignee's side.
Register payment documents (Incoming payments — Bank account, Outgoing payment — Bank account).
Deduct from revenue amount. The commission amount will be automatically deducted from the amount at which the consignee company sold the consignor's goods to the end customer. In this case, you do not need to enter payment documents for a commission.

Payments via intermediary

Settlements between companies can also be conducted through an intermediary. For that, select the Intermediary checkbox in the intercompany sales documents. When the checkbox is selected, you can specify an Intermediary and Contracts with an intermediary in the intercompany sales documents (the related fields become available). Contracts are selected from the list of Contracts with counterparty.

Registering transfers of money between companies

The application allows you to transfer money between cash and bank accounts of various companies. Cash transfer documents can be issued based on approved payment requests or without them.

Transfer of cash in cash accounts from one company to another is registered using two documents:

Outgoing payment — Cash account with the Intercompany payment transaction.
Incoming payment — Cash account with the Payment from another company transaction.

Debiting funds from a bank account of one company and crediting it to the bank account of another company is also registered using two documents:

Outgoing payment — Bank account with the Intercompany payment transaction.
Incoming payment — Bank account with the Payment from another company transaction.

The Outgoing payment — Bank account document is printed out as an outgoing payment request and transferred to the bank. In accordance with the data specified in the payment request, non-cash funds are debited from the payer's current account (the current account of one company). Once the money is paid, the responsible employee selects the Processed by bank checkbox in the Outgoing payment — Bank account document. Once the funds are credited to the current account of the recipient (another company), the responsible employee selects the Processed by bank checkbox in the Incoming payment — Bank account document.

Wizard of correcting company stock balance

The wizard corrects negative company goods amounts and detailed balance by inventory owner attributes and CCD numbers. To access the wizard, go to Profitability & cost – Tools – Wizard of correcting company stock balance. Correction is made for each month separately, starting from the first month that revealed such issues. Each month correction includes several steps:

Analyze and display detailed information on issues.
Register missing documents according to warehouse accounting data.
Rebuild reserves of negative balance.
Adjust detailed balance.
Generate an internal goods transfer without transfer settings.
Register goods recording as received.

Steps can be executed in arbitrary order. However, it is recommended that the steps are executed sequentially. Before proceeding to the next step, complete all the actions of the previous step.

Click Start to analyze the balance of all companies in all months. Analysis time depends on the data size and hardware performance. To complete the wizard operations, click Finish.

Analysis of intercompany sales

There are various reports to control balances of goods of various companies that are a part of one enterprise, as well as internal transfers between companies; analyze and control intercompany settlements; monitor the timeliness of paperwork for intercompany sales. You can find them in the Profitability & cost section: Warehouse stock by companies, Intercompany sales, Intercompany AR/AP open items, and Consignment stock. In addition, you can control the profit received from the resale of goods to another company and analyze the income and expenses of intercompany sales. For this purpose, use the Enterprise gross profit (Sales section) and Income and expenses, Financial results (Profitability & cost section) reports.

With the help of these reports, you can get answers to various questions about intercompany sales. Here are some examples.

Example: view the balance of goods available for sale on behalf of a specific company in the warehouses of the enterprise.

What to do:

Use the Company goods available for sale (option of the Warehouse stock by companies report).
In the report settings, select the Company checkbox and specify the company whose goods balances you want to control.

The Remaining stock column will show the number of items that are available for sale from various warehouses on behalf of a particular company. When calculating the number of goods, balances of other companies for which intercompany sales are allowed will also be taken into account.

Example: see how many products of a certain group were received by the company and on behalf of which company this product was sold.

What to do:

Use the Warehouse stock by companies report.
In the advanced report settings, select the checkbox in the Items field, specify the In group condition and then specify an item group in the Value column.

A list of items from the selected group will be displayed. For each receipt and expense of goods, the receiving company will be specified, and a list of companies on whose behalf the expense of goods from the warehouse was registered. In the quick report settings, you can set an additional filter by warehouse to analyze the movement of goods by company in a specific warehouse.

Example: display a list of items for which it is necessary to register Customer invoices — Intercompany.

What to do:

Use the Register goods transfers report (option of the Consignment stock report).

A list of items that were sold on behalf of another company in accordance with the configured Intercompany scheme will be displayed. The Balance to register field will show the number of items for which intercompany transfers have not been registered as of the end date of the period specified in the report. The Registered field will show the number of items for which intercompany transfers have already been registered for the period specified in the report.

Example: view a list of consignment goods handed over to another company, but the recipients have not reported yet.

What to do:

Select the Consignment notifications report (option of the Consignment stock report).

The information in the report is presented as a cross-table:

Vertically, there is a list of consignor companies who handed over consignment goods to another company. For each consignor, a list of goods that were handed over and sold by another company will be shown.
Horizontally, there is a list of companies that are consignees to whom consignment goods were handed over on behalf of another company.

The following information is shown in the cross-table columns for each product:

Consignment notifications to issue shows the information on what goods (both consigned and sold) the company has not yet issued consignment notifications.
Notifications issued – information on which goods the commission agent company has reported to the consignor company for the reporting period.

Example: see how many consigned goods are left in the company.

What to do:

Select the Consignment stock report.
in the Consignee field, select the company whose goods you want to view.

Example: analyze income and expenses received from the resale of goods between own companies.

What to do:

Select the Income and expenses report.
In the advanced report settings, on the Filters tab, set the Show sales parameter to Only internal sales.

The report will show the revenue and cost of sales based on the results of sales between own companies.

Example: analyze internal movement of funds between companies.

What to do:

Select the Cash transaction control report.
In the advanced report settings, on the Filters tab, add the filter by Control type and set it to Internal transfers.

The report will show information on the transfer of cash and non-cash funds between companies of an enterprise based on internal references.

Example: monitor the current state of settlements between companies.

Select the Intercompany AR/AP open items report.

The report is presented as a cross table. The intersection of the cells of the table shows the debt of one company in relation to another one. If settlements between companies are conducted in different currencies, the amount of debt for each currency will be shown separately.