Many companies have multiple subsidiaries and each subsidiary is regarded as a separate legal entity. These distinctions are mostly created for legal and regulatory reasons. However, some companies also create this distinction to simply have a clear separation of their business entities so that they have financial reporting. With this, there’s a translation of multiple company codes within the companies ERP system. Activities carried out between these internal companies codes are referred to as inter-company.
The complications arise when they try to organize and maintain the costs in the appropriate company. In these cases, inter-company billing becomes an essential component. Many companies have various entities representing their business on either a vertical or horizontal market. In order to facilitate the lending and borrowing resources across the organization, an inter-company billing process becomes a prerequisite.
Microsoft Dynamics GP is aimed at the middle market and organization in the space are often comprised of multiple legal entities as explained above, which means that they are set up in Dynamics GP as separate companies and exist and in separate databases. If the entities transact with one another, we need to have a way to record the inter-company entries. One option is to treat them the same we would any other transaction with a business partner. For example, if Entity A pays a portion of a vendor invoice on behalf of Entity B, the portion paid on behalf of Entity B could be recorded as a receivable in Entity A and a payable in Entity B. That works, but it’s a lot of entries. This typically becomes an agitating and time-consuming task for the accounting department to trace the numerous activities carried out and then create an accurate report on the different business units in a consolidated statement. Thankfully, there are far more automated options that exist through a solution of DBSync.
The first option is the use of the Microsoft Dynamics and SQL server solution of DBsync. This feature allows you to set up the relationship between various entities, enter a transaction in one entity (the originating entity) and have it automatically send the transaction to any or all other entities. The setup is simple. For each combination of originating and destination companies, one has to map the fields Dueto and Due From accounts that will be used on transactions between the companies. In the example below, the originating and destination company accounts are the same, however, that isn’t a requirement.
Once the Setup within DBSync is complete, one has to enter transactions between entities by first making the inter-company checkbox in the transaction entry window in Dynamics GP. Making the checkbox enables the Co.Id field in the distribution entry window. Then, if we enter a destination company ID on a distribution line, we are able to select and enter accounts from the destination company charts of accounts. The Block diagram below provides an example of an inter-company with multiple instances of Dynamics GP via DBSync.
This is when the automation kicks in. As soon as the entry is saved in Dynamics GP, the DBSync adds the distribution lines to the entry to keep each entity in balance. We can see the DBSync generated distribution lines in the “Console Window ”. When an entry is posted to the instance, DBSync posts balanced entries in both the originating company and the destination company, and as a result, this saves time and effort required.
While that is an ideal solution, DBsync’s inter-company feature has a significant impact on the users of Microsoft Dynamics GP who are in need of Inter-company transactions.