- Do you have the reports you need for all your various business entities?
- Do you have a clear audit trail for compliance and regulatory guidelines?
- Do you have the visibility between entities to help you make the right decisions?
Without the proper tools, managing financial activities across multiple subsidiaries can be quite complex. Acumatica ERP has intercompany accounting to ensure accuracy, compliance, and efficiency within your organization. Let’s look closer at leveraging Acumatica’s intercompany accounting features, why it’s important, how to set it up, and some examples.
Why Intercompany Accounting is Important
Intercompany accounting involves recording financial transactions between various entities within a single parent company. Why is this important? Accurate financial records across multiple entities are essential to ensuring compliance with Generally Accepted Accounting Principles (GAAP) and for maintaining the integrity of your financial statements. Without a reliable system, discrepancies can multiply, leading to significant issues during audits and financial reviews.
Acumatica offers dedicated intercompany accounting functionalities designed to simplify and enhance this complicated process. It ensures that all intercompany transactions are recorded accurately, removing the need for error-prone manual entries. This feature is particularly beneficial for businesses operating across numerous branches, where financial transparency and accountability are paramount.
Acumatica’s Key Features for Intercompany Accounting
Accurate financial records are the backbone of any successful business and to have this, you need precision in all your reports. Acumatica has the tools you need. It automatically generates Due To and Due From entries, ensuring that every transaction is accounted for correctly. This automated process translates into more accurate financial reports, reflecting the actual financial status of your business without the common errors found in manual systems.
Spend less time (and experience fewer errors) managing intercompany transactions with Acumatica’s automation. For example, Acumatica reduces errors because it automatically generates the necessary journal entries, delivering a smoother, more efficient accounting process.
Audits can be daunting, but Acumatica simplifies this process by maintaining meticulous records of all intercompany transactions. With easily verifiable data at their disposal, auditors can complete their work more quickly and with greater accuracy, reducing the overall audit risk for your organization.
“With Acumatica we can charge items across branches and automatically track how much one entity owes the other. Before, we had to do multiple entries or cut multiple checks.”
–Matt Stoner, CFO, Dakota Red Corporation
Implementing Intercompany Accounting in Acumatica
- Enable the Feature
Start by enabling the intercompany accounting feature in Acumatica. Navigate to the Configuration screen and go into “Enable/Disable Features”. Here, check the box for Inter-Branch Transactions. This will allow Acumatica to record transactions between different entities. - Define Companies and Branches
Now you will define your companies and their respective branches. In the Configuration area, go into companies and branches screens and your details. Each branch represents a separate legal entity, so make sure all branches are defined accurately. - Set Up Intercompany Accounts
Next, you will set up your intercompany general ledger (GL) accounts. To do this, go to the Chart of Accounts screen. Create a Due To Related Entity Liability account and a Due From Related Entity Asset account. These accounts will facilitate clear tracking of transactions between branches. - Inter-Branch Account Mapping
Using the Inter-Branch Account Mapping form configure your business rules for balancing entries. Specify rules for each originating branch, including account ranges, offset accounts, and subaccounts for the balancing entry. This ensures seamless financial tracking between branches.
Real-life Intercompany Accounting Scenarios
Imagine you receive an AP bill from a technician who worked for multiple branches. You can enter the bill using the Bills and Adjustments form and divide the expenses among different branches. Acumatica will automatically post the balancing entries to the GL, streamlining the process.
If your entities buy and sell to each other, Acumatica handles these transactions efficiently. Extend your selling and purchasing branches as vendors or customers in the system. Use the Generate Intercompany Sales Order screen to automate the creation of sales orders and manage them easily.
Acumatica’s powerful reporting capabilities allow you to generate detailed intercompany transaction reports. The Transactions for Account report, for instance, lets you select a specific intercompany GL account to view transactions within a chosen period. Customize your reports using Acumatica’s Report Designer to gain deeper insights into your organization’s financial flows.
The Future of Intercompany Accounting with Acumatica
The future of financial management lies in such integrated systems that enhance efficiency and compliance. Experience the power of Acumatica ERP with improved accuracy, streamlined automations, simplified audits and boost your financial management practices.
Intercompany accounting in Acumatica ERP is not just about compliance—it’s about creating a seamless, efficient, and transparent financial ecosystem within your organization. Explore more about integrating Acumatica ERP into your business and take the first step towards optimized intercompany accounting today.
Learn More: Download the Intercompany Accounting Data Sheet.
By CAL Business Solutions, Inc., Acumatica ERP Partner
