Time Saving Tips Part 5: Intercompany Transactions in Dynamics 365 Finance and Operations

July 30, 2018 Diann Spencer

Intercompany transactions are common for many businesses, yet ERP systems don’t always make them easy. Microsoft Dynamics 365 does! Our fifth time-savings tips article will show you how to how to set up intercompany transactions in Dynamics 365 Finance and Operations. You can streamline intercompany operations, whether you have multiple companies, multiple regions, or more than one currency.

Perhaps your organization consists of several companies, but with only one accounting and administrative team. Dynamics 365 lets you do business with your subsidiary and internal partner organizations in the same way you engage with external vendors and customers. Simply enter intercompany transaction information once in the appropriate documents, and then enjoy automated intercompany transactions between multiple companies, regardless of location and currency.

With Dynamics 365 Finance and Operations, you can configure intercompany transactions to automatically send and receive between companies. Setting up intercompany transactions will simplify transactions and save time, minimize errors with single-entry of information and system-wide synchronization, and create a complete audit trail with full visibility into business activities and transaction histories. Once Dynamics 365 has been configured, the user does not have to be a senior accountant to post transactions that might trigger the need for intercompany accounting in order to balance.

 

Setting up seamless intercompany transactions
Click here to view the video demonstration

To set up intercompany functionality, go to General Ledger > Posting Setup > Intercompany Accounting

For each intercompany combination, create an intercompany relationship. Please note that the Destination Company Journal has to be created in the destination company before this setup can be completed. The two companies do not need to use the same chart of accounts.

Once you have created the relationship, simply click Create Reciprocal Relationship to activate the inverse relationship.

 

After the intercompany relationships are set up, any journal with lines for more than one company will automatically create the Due To/From transactions in both companies. The journal below is amortizing prepaid insurance from company = USMF to companies USMF and USRT. Note that the resulting intercompany entry in the destination company will be posted when the journal entry in the origination company is posted. The user will also need the appropriate rights in the destination company.

The resulting voucher in the source and destination companies are below.

 

As you can see, there are many benefits to intercompany functionality in Dynamics 365 for Finance and Operations, including:

  • Increased productivity as a result of faster and simpler transactions
  • Fewer errors with a one-time entry of information and system-wide, automated updates
  • Complete audit trail and full visibility into transaction histories
  • Efficient, cost-effective transactions with affiliate and subsidiary companies

Have questions about how your organization can realize these benefits and more? Western Computer is here to help you with Dynamics 365 and its many time-saving features. Contact us today for more information. 

About the Author

Diann Spencer

Diann Spencer, Western Computer’s Dynamics AX Finance Consultant, has been involved in many successful implementations of Dynamics AX in small, midmarket, and large companies across a variety of industries. Diann has over a decade of financial experience and she is a Certified Public Accountant.

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