How to create intercompany journal entries 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 OneWorld account with the subsidiaries, base currencies and intercompany accounts already set up.
• Automated Intercompany Management enabled, and intercompany (due to and due from) accounts flagged to eliminate.
• Permission to post journals in both subsidiaries, or the Advanced Intercompany Journal Entry permission.

Steps

1. Open the intercompany journal screen. Go to Transactions > Financial > Make Intercompany Journal Entries (or Make Advanced Intercompany Journal Entries for many subsidiaries at once). The intercompany screen, not an ordinary journal, is what carries the counterparty subsidiary and eliminate flag.
2. Set the originating and receiving subsidiaries. Choose the From (originating) subsidiary and, on the lines, the To (receiving) subsidiary. A standard intercompany journal handles two subsidiaries; the advanced version handles several in one entry.
3. Use the intercompany due to and due from accounts. Post the offsetting lines to the paired intercompany accounts (intercompany receivable and payable, or loan accounts) that are flagged Eliminate Intercompany Transactions, so consolidation can net them.
4. Balance each subsidiary and set currency. The entry must balance within each subsidiary, not just overall. Set the currency and exchange rate; cross-currency intercompany entries convert each side to its subsidiary base currency.
5. Save, review, then eliminate at close. Save the entry and review the postings in both subsidiaries. At period close, run Eliminate Intercompany Transactions so the intercompany balances net to zero on consolidated reports.

Gotchas

• An ordinary journal entry between subsidiaries does not carry the eliminate flag or counterparty - use the intercompany journal screen, or the balances will not eliminate.
• Each subsidiary side must balance on its own; an entry that only balances in total will not save.
• Cross-currency intercompany entries depend on correct exchange rates; a wrong rate leaves a residual that surfaces as a CTA difference at consolidation.
• Advanced Intercompany Journal Entries need the feature and permission enabled; without them only the two-subsidiary standard form is available.

Where this bites in an implementation

This bites when finance books a quick journal between entities as an ordinary journal entry to fix an intercompany balance. It posts, but carries no eliminate flag, so at month-end the intercompany receivable and payable do not net and the consolidated balance sheet is overstated. Use the intercompany journal screen from the start, and reserve ordinary journals for within-subsidiary postings.

Frequently asked questions

What is the difference between a standard and an advanced intercompany journal entry?

A standard intercompany journal entry posts between two subsidiaries; the advanced intercompany journal entry posts across several subsidiaries in one balanced entry. The advanced form needs the feature and permission enabled, and is used where one adjustment spans more than two entities.

Why will my intercompany journal not save?

Most often it does not balance within each subsidiary - intercompany entries must balance per subsidiary, not just in total. Check the debits and credits for each entity, and confirm the currency, rate and that you are using intercompany due to and due from accounts.

Do intercompany journals eliminate automatically?

No. They are tagged for elimination, but the netting happens when you run Eliminate Intercompany Transactions in the period close checklist. That generates the elimination journals in the elimination subsidiary so consolidated reports net to zero.