NetSuite offers seamless functionality around managing intercompany transactions. Some of the key features are:

1.  Helps in creating well-established (Vendor-Customer) links between subsidiaries with just one click.
2. It gives us the automated process of consolidation and Elimination of Intercompany transactions at the time of period closing.
3. It offers different reports which help to find the flow of intercompany elimination transactions and their impact.
4. Separate accounts for intercompany transactions, so that they will not impact the balances of other accounts. And the best part of these accounts is We can utilize them for Non-Intercompany transactions as well.

Elimination Subsidiary

• The intercompany transaction (revenue or expense) needs to be eliminated at the consolidated level to remove the effect of these transactions.
• Elimination subsidiary helps you to create elimination journals that reverse the impact of an intercompany transaction at the consolidated level.
• Creating an elimination subsidiary is as simple as configuring a traditional subsidiary in NetSuite
• Elimination subsidiary can be configured by navigating to Setup > Company > Subsidiaries > New
• Make sure to check the elimination checkbox. It ensures that this subsidiary is accessible for the intercompany elimination process only.
• The currency of the elimination subsidiary should be the same as the base currency of the parent company.

– Note: We cannot use elimination subsidiaries in any other transactions except journal entries.

 

Intercompany Customer/ Vendor

To process transactions between two subsidiaries, it’s necessary to create the related intercompany customer and vendor records. There are two ways to create that in NetSuite:

1. Manual creation is just like we create normal customers and vendors in the system but with few changes. (Link is in additional resources)
2. Creating intercompany customers and vendors through automation.

To create intercompany customers and vendors with one click, you first need to enable these features in NetSuite ( Setup > Company > Enable Features): –

• OneWorld
• Multiple calendars
• Multiple Currencies
• Multi-subsidiary Customer
• Intercompany Framework
• Intercompany Preferences > Automatically Generate Representing Entities ( you can add a prefix to these subsidiaries)

After enabling these features, Go to Setup > Company > Subsidiaries and click on ‘Generate Representing Entities’. It will then automatically create representing entities (Intercompany Customer and Vendor) for the respective subsidiaries.

 

 

 

 

Reports for Intercompany Process

 

There are two pre-built reports that you can utilize for managing intercompany transactions:

Intercompany Elimination Report: This report provides insight into Intercompany Transactions for a specific period or date range. Using the Multi book accounting feature, you can run the Elimination Report for any accounting book enabled for consolidation.

 

 Intercompany Reconciliation Report: Use this report to identify unmatched or incorrectly matched intercompany transactions. This includes transactions that have not been paired with a corresponding transaction in another subsidiary and paired transactions that have different amounts or currencies.

 

 

The intercompany framework offers a few more phenomenal functionalities like Intercompany netting functionality,  which helps in settling mutual open balances across subsidiaries. It automatically generates settlements, and as a result, inaccuracy is reduced. These types of features make the process smooth in NetSuite. For more information please see the link below.

 

Additional Resources :-

1. https://docs.oracle.com/en/cloud/saas/netsuite/ns-online-help/section_N1490202.html

2. Save Time and Close Faster by Automating Financial Consolidation