This article explains how to handle common intercompany transactions in AccountsIQ.

About IC Sales Trading Transactions

Intercompany Sales / Trading occurs when one company in a group sells goods or services to another company in the same group.

Even though both companies are part of the same group, each transaction must still be recorded separately for VAT, accounting, and audit purposes. When you consolidate the group accounts, these intercompany transactions can be eliminated using dedicated IC Categories (See Consolidation Considerations below).

Recording IC Sales / Trading transactions

1. From the sending company, go to Intercompany > Actions > Recharge > Sales Batch Invoice. Creating a recharge sales invoice will automatically create a matching purchase invoice in the connected company.
2. In the connected company, go to Intercompany > Unprocessed Transactions and accept the purchase invoice.

Example

Company A issues an intercompany sales invoice to Company B, and then records the receipt of payment from Company B.

Consolidation Considerations

To make sure intercompany balances cancel out in consolidation, map all Intercompany Control and Intercompany Posting GL accounts to a dedicated Intercompany Category/s in the Consolidation Entity. 

The Control Accounts are typically Balance Sheet accounts:

• If the Posting Account is also a Balance Sheet, create one Category assigned to the Balance Sheet.
•  If the Posting Account is P&L, create both a Category assigned to the Balance Sheet and one assigned to the P&L.

In addition, you can use two sub-categories:

• One for IC Control GLs (e.g. debtors/creditors control)
• One for IC Posting GLs (e.g. income/expense posting accounts)

This separation makes it easier to analyse and report on IC balances independently from normal trading activity.

For more information, see Managing General Ledger Group Data.

About IC Recharges

Intercompany recharges happen when one company pays for goods or services on behalf of another or provides a centralised service that benefits multiple group entities. For example, Company A might pay for an IT system or insurance that covers several companies, then recharge each company its share of the cost.

Rather than leaving all the costs sitting in one entity, they are recharged or allocated to the appropriate subsidiaries. This ensures the following:

• Each company’s profit and loss shows its fair share of costs.
• The group’s intercompany balances stay reconciled.
• The consolidated accounts correctly eliminate internal transactions.

Recording recharges in AccountsIQ

There are two ways to record recharges:

Option 1: Recharge Debit Journal

• Automatically creates a mirror entry in the connected company.
• Can be used if VAT is not relevant.

Option 2: Recharge Sales Batch Invoice

• Creates a standard invoice, including VAT it needs to be tracked.
• Creates a matching purchase invoice in the connected company.

Example

Scenario: Company A receives a £1,000 supplier invoice for insurance.

• £600 is for Company A.
• £400 should be recharged to Company B.

In the instance that Company B doesn't actually pay Company A, for example, no physical bank transfers are made, the control accounts will need to be cleared.

Consolidation Considerations

To make sure intercompany balances cancel out in consolidation, map all Intercompany Control and Intercompany Posting GL accounts to a dedicated Intercompany Category in the Consolidation Entity

In addition, you can use two sub-categories:

• One for IC Control GLs (e.g. debtors/creditors control)
• One for IC Posting GLs (e.g. income/expense posting accounts)

This separation makes it easier to analyse and report on IC balances independently from normal trading activity.

For more information, see Managing General Ledger Group Data.

Intercompany loans or funding transactions occur when one group company lends money or transfers funds to another.

These transactions are common in multi-entity or group structures where internal cash management, capital allocation, or temporary financing is required.

Method 1: Use Intercompany Supplier / Customer

This method treats intercompany settlements as AP/AR transactions.

Prerequisites:

• An IC Supplier in the receiving entity
• An IC Customer in the lending entity

Example:

1. Company A records a Customer Refund (SD). This automatically drafts a Purchase Credit Journal in Company B via the IC module.
2. Company B processes that Purchase Credit Journal.

Pros:

• Supports multi-currency transactions as each transaction can have a second (foreign) currency.

Cons:

• Two separate control accounts in consolidation. IC balances will sit in IC Debtors and IC Creditors control GLs, so on consolidation you’ll have offsetting balances. However, they can be mapped to the same GL category/subcategory, so they net to zero in consolidation.

Method 2: Use Sundry Bank Transactions

This method records the funding directly between the bank and intercompany GL accounts using sundry bank transactions instead of customer/supplier accounts.

Pros:

• Simplifies reconciliation as each intercompany pair has its own posting GL.

Cons:

• Results in more GL accounts (one for each intercompany relationship) making it harder to manage the chart of accounts for larger groups.
• Does not support multi-currency.