About the IC Module 

The Intercompany module allows for automated recharging of the shared cost or management fees from one entity to another. This is done by linking the IC Debtor and IC creditor accounts via an API connection. 

This new module can be accessed in the sidenav:

Key Features of the new IC Module

Here are the new and enhanced features of our latest IC Module release:

• Streamlined IC Connection Setup: Option to create debtor and creditor accounts at the time of creating an IC connection or beforehand. 
• Separate IC Listing Grid:  All Intercompany accounts (debtors and creditors) are now hidden in the main Customers and Suppliers listings and are placed in the intercompany listing. (To see the IC accounts within the Customers or Suppliers listing grids use the option to clear the default filter.) The IC listing grid lets you view real-time IC balances between linked IC debtor/creditor accounts to identify and resolve out-of-balances as they occur, not just month end. In the Group Consolidation entity, you can view and manage company IC balances for all subsidiaries. 
• Enhanced Transactions: The IC module allows for both automated and manual recording of Management Charges, Intercompany Trade (this should cancel on Consolidation), and Payment/Funds between entities in the group. The new IC Bank Transfer lets you record IC bank transactions in both entities simultaneously and set up posting rules to auto-post and auto-reconcile IC funds transfers. 
• Enhanced Reporting: IC accounts are separate from sales and purchase reports for more precise analysis. “IC Matrix Reconciliation Report” can drill-down to IC transaction level making it easier for multi-entity companies to complete their close.

What types of Entity can use the IC Module?

IC transactions can be used between Group Subsidiary Companies, between Group Companies and Subsidiaries or other Group Companies, between Franchisor and Franchisees (and vice-versa) or even between independent non-related Companies that want to reduce re-keying of data between them. 

User Permissions

To use the features outlined in this article, check that you have the following permissions if relevant to your role.  These can all be found in the Menu tab of the Maintain Menu Profiles screen. See Create & Manage Users for more details.

• Add Connection: Have permission to set up IC Creditor and Debtor accounts and create a connection between them.
• Unprocessed Transactions: Users who do not have permissions to post invoices, credit notes or purchase debit/credit journals will be able to view but not post those transactions from the relevant screens. See Intercompany Transactions & Reporting.
• Intercompany Account Listing: Have permission to view the listing grid.

See:

Intercompany Transactions & Reporting 

Introduction to Intercompany module (13.0) - AIQ Academy

Creating Intercompany Connections (13.1) - AIQ Academy

Managing Intercompany Accounts (13.3) - AIQ Academy

How many IC Connections can I create?

You can create as many IC connections between two entities as needed to manage your IC activities. For example:

• Create only one connection if all your IC activities will be recorded against one account in each entity. 
• Create more than on connection, if different debtor and creditor accounts will be used to track specific activities, for example, one connection for re-charging costs with a specific debtor account, and another connection to track loans. 

What IC Accounts do I need to set up?

Control Accounts: These must be set up before a connection is created. Control accounts are used to eliminate intercompany balances at consolidation level by using their GL Category and Sub Category. They also keep IC account reporting separate from other sales and purchases. See Using Codes Maintenance for more on setting up control accounts. 

Set up as follows:

• One Way Connection: IC Debtor Control account in the originating company and IC Creditor Control account in the receiving company. 
• Two Way Connection: If the IC connection needs to go both ways, then IC Debtor and IC Creditor control accounts should be set up in both the sending and the receiving entities.

To create intercompany loans, you will need to create multiple control accounts.

Sending IC Debtor and Receiving IC Creditor Accounts: These can be set up before or during IC Connection creation. If you set them up before, this can be done from the IC listing grid, by going to the Create New and selecting Debtor or Creditor. The IC Control Account is selected by default so that the accounts will only appear in the IC listing grid. For full details on creating accounts, see Managing Customer Master Records  and Managing Supplier Master Records. 

Set up as follows:

• Intercompany debtor account for each company that will be sending charges.
• Intercompany creditor account for each company that will be receiving charges.

Are there any Currency Considerations?

As a rule of thumb when the Intercompany accounts are set up, the base currency of the local entity is used for the IC debtor. The IC creditor would then inherit the same currency. In cases when the local entity agrees to bear the cost of the currency fluctuation, the IC debtor account could be set up in foreign currency, i.e. in the base currency of the receiving entity.

Foreign currency revaluation journal must be run at the end of each financial period to align the currency rate for each entity before consolidating accounts and eliminating IC balances.

Creating an Intercompany Connection

First, ensure that the relevant control accounts (described above) have been set up.

1. Log into the entity that will send charges.
2. Go to Intercompany > Connections > New Connection to create connections with another entity to enable Intercompany Transactions. 
3. Select the company you want to connect to and whether it is a One-way, or Two-way connection.
4. Next you must map the customer/supplier relationship between this entity and the partner entity. Create or select the Sending IC Debtor and Receiving IC Creditor accounts. Note, you must create these accounts with the same base currency. 
   • If you already have designated IC accounts, select them from the Sending I/C Debtor Account and Receiving I/C creditor Account dropdowns. 
   • If you do not already have IC accounts, set them up. Click Create I/C Debtor and Creditor Accounts and complete the account creation process. This will be either two accounts for a one-way connection or four accounts for a two-way connection. 
     • Debtor/Creditor Accounts: The account codes and names will be preselected with the entity codes and names but can be changed. Dropdowns will show what is available in each entity being connected.
       • If you do not see an option, i.e. GL, control, or tax code, go to the relevant entity and create it there first, then return and complete the connection setup. Alternatively, select an option from the dropdown but change it as soon as the connection and accounts are created.
     • Posting Accounts: Ensure the GL Posting accounts are defaulted to either the IC clearing account, IC Sales, or IC Cost account.
     • Control Accounts: Select your designated IC control accounts.
     • Tax Code: Select the appropriate default tax code on both accounts to avoid mis-posting at the data processing stage.
     • Currency: Currency will be always dictated by the currency selected for the IC debtor account. The creditor's currency will be updated to ensure alignment between the IC debtor and creditor accounts and cannot be changed.  The currency used to set up the debtor and creditor accounts will determine which entity will bear the cost of foreign currency fluctuations.
     • Click Save.
       
5. Click Create to complete the connection process. 
6. In the IC screen refresh the grid and the connection will appear with the relevant Debtor and Creditor accounts created against each entity. If necessary, it can still be deleted if there are no associated transactions (see below). To check if the connection is live, in the IC listing grid, go to Actions > Recharge > Batch Invoice. Check if there is a notice in the footer stating that an IC transaction will be created if the invoice is processed.

Editing an Intercompany Account

1. In the IC listing grid, click on the code hyperlink.
2. The following can be edited: Account Name, default GL Code, tax code, payment terms and method, and currency. Note, if you edit the currency, you must also edit it manually in the linked company.
3. Click Save.

Deleting an IC Connection

Go to Actions > Delete Connection. It is possible to delete connections even if the related IC accounts have transactions. This could be necessary if the connection were set up in error. If the wrong accounts were linked, the connection can then be re-created with different accounts.