Issue/Symptom/Question

We are adding a new company to Penta and would like to utilize Penta's  Inter-Company Functionality.  The new company will be its own Balance Sheet and Legal Entity, but will act as a child to another (existing) OU.

Applies To

Organizational Units Screen
Finance and Accounting> Setup> Organizational Units> Organizational Units

Chart of Accounts Screen
Finance and Accounting> Setup>Accounts> Chart of Accounts

Vendor Information Screen
Accounts Payable> Vendors> Vendor Information

Customer Information Screen
Accounts Receivable> Customers> Customers

Intercompany Functionality

Parent- Child Organizational Units

Parent- Subsidiary Organizational Units

Resolution/Fix/Answer

Note: In all screenshots, OU 5100 is the acting Parent OU and OU 4700 is the acting Child OU.

Step 1 Create the Inter-Company OU
This process is very similar to the creation of a new non-balance sheet OU. The only difference will be the Parent OU Id field.

1. Navigate to the Organizational Units Screen
   
2. Enter the ID and Name of the new OU 
3. Enter the respective OU Type Code (Most cases this will be COM)
4. Enter OU ID of the acting Parent in the "Parent OU Id" field
   Note: This will automatically define the new OU's Balance Sheet and Legal entity as that of the parent, this is not correct and will need to be changed.
5. Change Legal Entity OU Id from from the Parent's Id to the Child's Id
6. Change the Balance Sheet OU Id from the Parent's Id to the Child's Id
7. The end result should look similar to the below screenshot where the Parent is defined, but the Child OU remains its own Legal Entity and Balance Sheet

Note: You may be prompted to fill in other fields on the Organizational Units screen, these fields are not Inter-Company Specific and not covered in this article.

Step 2 Create Inter Company Vendors

In every Inter-Company transaction each transacting Balance Sheet OU will act as either a Vendor or a Customer. To facilitate these transactions, special Inter-Company Vendors and Inter-Company Customers need to be set up and assigned to all Balance Sheet OUs. In this step you will create two vendors: one to represent the Parent and one to represent the Child.

1. Navigate to the Vendor Information screen
2. Enter the Id and Name of the 1st Vendor
   Note: If your company auto assigns Vendor Ids, you will not be able enter anything in the "Vendor Id" Field. In these instances simply enter the Name and the Id will auto populate.
   Note: The actual names of these vendors are inconsequential, however most companies opt to name the Vendor after the Org Unit.
3. Change the "Type" field from the default "C" to "I" (this represents the Vendor as an Inter-Company Vendor, rather than a Corporate Vendor)
4. Optionally change the "Vendor Class" field to Inter-Company.
   Note: This field is only used for custom reporting purposes and is not required to affect any Inter-Company functionality
5. Enter the appropriate Address information
   Note: This is typically the same address is defined on the Organizational Unit Screen
6. Repeat this step for the second  Vendor

Step 3 Create Inter Company Customers
In every Inter-Company transaction each transacting Balance Sheet OU will act as either a Vendor or a Customer. To facilitate these transactions, special Inter-Company Vendors and Inter-Company Customers need to be set up and assigned to all Balance Sheet OUs. In this step you will create two customers: one to represent the Parent and one to represent the Child.

1. Navigate to the Customer Information screen
2. Enter the Id and Name of the 1st Customer
   Note: If your company auto assigns Customer Ids, you will not be able enter anything in the "Customer Id" Field. In these instances simply enter the Name and the Id will auto populate.
   Note: The actual names of these Customers are inconsequential, however most companies opt to name the Customer after the Org Unit.
3. Change the "Customer Type Code" field from the default "Regular Customer" to "Intercompany Customer"
4. Enter the appropriate Location information
   Note: This is typically the same address is defined on the Organizational Unit Screen
5. Repeat the above steps for the second Customer

Step 4 Create Inter-Company Accounts Payable and Accounts Receivable account
In every Inter-Company transaction an Inter-Company Payable and Receivable is created. Only one AP and AR account is needed for Inter-Company transactions, but these accounts need to be edit rule accounts and should be used only for Inter-Company purposes. In this step you will create one new AP Edit rule account and one new AR Edit rule account.

1. Navigate to the Chart of Accounts screen
2. Enter the Account # and Name
   Note: The Account # will need to be determined by whoever maintains your company's Chart of Accounts
   Note: The Name is inconsequential, but is typically denoted as "Inter-Company AP" or "Inter-Company AR"
3. Enter the appropriate "Class Code"
   Note: If you are creating an Inter-Company Payable account, the account code will be L (Liability)
   Note: If you are creating an Inter-Company Receivable account, the account code will be A (Asset) 
4. Enter the appropriate "Edit Rule Code"
   Note: This will either be "AP" or "AR"

Step 5 Assign the Vendor/Customer/Inter-Company AP Acct/Inter-Company AR Acct
Now that all the pre-requisite data exists, each transacting OU will need to be configured. This will be done in the Organizational Unit screen and need to be done for both Parent and Child.

1. Navigate to the Organizational Unit Screen
2. Query back Parent Organizational Unit
3. Enter the Parent Vendor Id (created in Step 2) in the "Vendor Id" field
4. Enter the Parent Customer Id (Created in Step 3) in the "Customer Id" field
   Note: These fields can be found on the "Setup/Address" tab under the "Balance Sheet OU Id" field (For a visual reference see screenshots below
   
5. Navigate to the "Accounts" tab 
6. Select the "Intercompany AP Accts" button (located at the bottom of the screen) 
   Note: This should open the "Intercompany Payable Accounts" pop-up
7. In the "Intercompany Payable Accounts" pop-up enter the Child OU Id "OU Id" field
   Note: When configuring the Child OU you will enter the Parent OU in this field
8. Enter the AP Edit rule account # (created in Step 4)in the "Account" field
9. Close out of the Pop-up
10. Select the "Intercompany AR Accts" button (located at the bottom of the screen) - 
    Note: This should open the "Intercompany Receivable Accounts" pop-up
11. In the "Intercompany Receivable Accounts" pop-up enter the Child OU Id "OU Id" field
    Note: When configuring the Child OU you will enter the Parent OU in this field
12. Enter the AR Edit rule account # (created in Step 4) in the "Account" field
13. Close out of the Pop-up
14. Repeat the above for the Child OU Using the Child's Vendor and Customer