How to run intercompany elimination and consolidation in NetSuite OneWorld

Prerequisites

These steps assume the Administrator role with Use Classic Interface enabled. NetSuite menu paths are role- and centre-dependent, so a custom role may surface different navigation.

• A NetSuite OneWorld account with the subsidiary hierarchy, base currencies and nexus already set up.
• Intercompany customer and vendor records that represent the counterparty subsidiaries, so intercompany transactions are tagged entity-to-entity.
• Agreement on which account pairs are intercompany (AR/AP, revenue/expense, loans) before any balances build up in them.

Steps

1. Create the elimination subsidiaries first. Go to Setup > Company > Subsidiaries > New and create a subsidiary with the Elimination box checked, as a child of each parent whose children trade with each other. The Elimination flag can only be set when the subsidiary is created — an ordinary subsidiary cannot be converted later — so create elimination subsidiaries when you build the hierarchy, before turning on the intercompany features.
2. Enable Automated Intercompany Management. Go to Setup > Company > Enable Features, open the Accounting subtab, and enable Automated Intercompany Management in the Advanced Features group. This gates the paired intercompany transaction flows and the Eliminate Intercompany Transactions task in the period close checklist.
3. Flag the intercompany accounts. On each intercompany account in the chart of accounts (intercompany receivable, payable, revenue, expense and loan accounts), tick Eliminate Intercompany Transactions. Only balances in flagged accounts are picked up by the elimination run.
4. Post intercompany activity with the eliminate flag. Enter intercompany activity through the intercompany features — intercompany journal entries, or paired intercompany sales orders and purchase orders between the representing entities — so each line carries the counterparty subsidiary and the Eliminate flag.
5. Review consolidated exchange rates. Go to Lists > Accounting > Consolidated Exchange Rates and review the period's rates for each child-to-parent pair. NetSuite applies the Current rate to balance sheet accounts, the Average rate to income statement accounts, and the Historical rate to equity, so consolidation accuracy depends on these rates being right.
6. Run intercompany elimination at period close. In the period close checklist (Setup > Accounting > Manage Accounting Periods), complete Eliminate Intercompany Transactions as the last task before closing, after revaluation. NetSuite generates elimination journal entries in the elimination subsidiary, dated the period end; review them before closing the period.

Gotchas

• Create elimination subsidiaries before you turn on Automated Intercompany Management: the Elimination checkbox exists only at creation, and discovering this at the first month-end means restructuring the hierarchy mid-close.
• Manual journals between subsidiaries that skip the intercompany screens (no eliminate flag, or an unflagged account) leave residual intercompany balances on consolidated reports — the most common cause of 'elimination ran but the balances are still there'.
• Elimination subsidiaries are reserved for system-generated elimination journals — do not post ordinary transactions to them or map them to operational records.
• Exchange-rate differences between transaction dates and consolidation rates post to the cumulative translation adjustment-elimination (CTA-E) account; a growing CTA-E balance usually means rate setup, not a booking error.

Where this bites in an implementation

This bites at the first month-end after go-live. If elimination subsidiaries were not created when the hierarchy was built, or intercompany accounts were never flagged, the consolidated trial balance shows inflated revenue and receivables that should have netted to zero — and the fix lands in the middle of a close. In an implementation, design the elimination structure with the subsidiary hierarchy, not as a close-week afterthought.

Frequently asked questions

Do I need a separate elimination subsidiary for every parent?

You need one elimination subsidiary under each parent whose children transact with each other, because eliminations post at the consolidation level where the intercompany activity nets out. A single-level hierarchy usually needs just one; multi-level hierarchies with trading at several levels need one per consolidating parent.

Why do intercompany balances still appear on consolidated reports after the elimination run?

Almost always missing flags: the account is not marked Eliminate Intercompany Transactions, or the journal lines were posted outside the intercompany screens without the eliminate flag and counterparty subsidiary. Find the unflagged activity, reverse and re-post it through the intercompany features, then rerun the elimination task.

When should the elimination run happen in the close?

Run Eliminate Intercompany Transactions as the final task in the period close checklist, after currency revaluation, so eliminations are calculated on revalued balances. The generated journals are dated the last day of the period being closed.