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 connecting the IC Debtor and IC Creditor accounts. 

The Intercompany module can be accessed in the sidenav:

Key Features of the IC Module

• 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, and Payment/Funds between entities in the group. The 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. 

• Sales and Purchases Permissions: Users who do not have permissions to post invoices, credit notes, purchase debit/credit journals, refunds, Sales Orders, or Receipts & Allocations will be able to view but not post those transactions in the IC module. 
• Add Connection: Have permission to set up IC Creditor and Debtor accounts and create a connection between them.
• Unprocessed Transactions: Allows users to view and manage unprocessed IC transactions. See Intercompany Transactions & Reporting.
• Intercompany Account Listing: Have permission to view the listing grid.

See:

Intercompany Transactions & Reporting 

Intercompany Scenarios 

Introduction to Intercompany module (13.0) - AIQ Academy

Creating Intercompany Connections (13.1) - AIQ Academy

Managing Intercompany Accounts (13.3) - AIQ Academy

IC Connections

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 one 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. 

IC 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 Create & Manage Entity GL Accounts and Using Codes Maintenance for more on setting up control accounts. 

Set up as follows:

• One-way Connection: IC Debtor Control account in the sending company (the company that raises a transaction) and IC Creditor Control account in the receiving company (the company that settles a transaction). 
• 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.

IC Creditor and IC Debtor Accounts

These can be set up during IC Connection creation as outlined in the next section. 

Alternatively, create them beforehand as follows in the IC listing grid. Go to Create New and select 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 Create & Manage Customers and Create & Manage Suppliers. 

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.

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.

A 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 IC Debtor Account and Receiving IC Creditor Account dropdowns. 
   • If you do not already have IC accounts, set them up. Click Create IC 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 default 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 always be 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, click on the Refresh Grid icon, and the connection will appear with the relevant Debtor and Creditor accounts created against each entity. If necessary, the IC Account can still be deleted if there are no associated transactions. (The IC Connection can be deleted regardless of whether its linked companies have transactions, see the section “Editing & Deleting IC Connections”.)
7. 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 update the currency in an IC Account, you must also update it manually in the linked IC Account. See Create & Manage Customers and Create & Manage Suppliers for more on accounts.
3. Click Save.

Deleting an IC Connection

Go to Actions > Delete Connection. It is possible to delete IC connections even if the connected 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.

Deleting an IC Connection does not delete the IC Accounts. The IC Accounts themselves can only be deleted if they have no associated transactions. Otherwise, unneeded accounts with transactions can be deactivated. See Create & Manage Customers or Create & Manage Suppliers for details.