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Question

Managing intercompany eliminations for multiple master companies

  • 19 February 2022
  • 0 replies
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Hello,

I am curious if anyone has experience consolidating the same reporting company in multiple master companies which would result in different relationships for eliminations?  At the REPORTING Company level, we designate Customer Groups to map to specific GL accounts if it is a related customer and then at the MASTER company, we further control which GL accounts to eliminate in the intercompany elimination rules.  Since it is initially set up at the REPORTING company, I would like to know how this is managed when that same company rolls up into a 2nd, 3rd or even 4th master company. 

Issue: Customer Group (Related Party, External, etc.) relationship can change, depending on what Master Company it is rolling up to, but that the Customer Group is controlled at the REPORTING company.

For example, Corp A & B are related companies with same parent, Master Company (MC) #1.  In this example, B is a Customer Group 2 “Consolidated Member, Related Trade AR”.  When consolidations are run, the intercompany transactions  between A & B eliminate.

However, Corp B is also a customer of Corp C which has a different parent, MC #2. So when we run consolidations there, we would not want B & C transactions to eliminate at this level (because they have different parents).  QUESTION:  how do we keep the system from looking to eliminate B since Customer Group was already set up as ‘Consolidated Member’ at the REPORTING company level? Does the system disregard Customer Group as long as Corp B is not included as a Reporting Entity in MC #2? Is a different Cust Group or GL needed? What is best practice for handling this type of situation?

Additionally, at Master Company #3, A, B, & C are ALL wholly owned by this parent so would then all eliminate but the system may not ‘find’ it if the Customer Group was changed to External Customer, to keep from eliminating at Master Company #2, for example. 

We were told that having a separate master company is the only way that the system can automate intercompany eliminations.  So we have set up MULTIPLE master companies for our very complex structure. If there is a different way other companies are handling this, I would greatly appreciate any input/advice.

 

Best regards,

Lily

 

 

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