Need to clear intercompany clearing account balances.

[former_member586946]

Hello ,

My client required to clear intercompany clearing account (OBYA) balances . Yearly it will be carry forward the balances and value increasing. Currently OBYA assignement for all company codes is same gl account. So they would expect to clear this intercompany clearing account balances between the company codes without involving or transferring to any other gl.

[sanilbhandari]

Hi seshu.v2

You should ask the accounting treatment your business user expects, before even looking for a solution. Let me explain you with an example. Suppose there are two company codes 1810 and 1010, There is a GL Account 100100100, which is assigned in OBYA. Now 1010 does an external procurement on behalf of company code 1810. You will have the below accounting entries created.

In Co Code 1010

I/C Account 100100100 DR

To External Vendor CR

In Co Code 1810

Expense A/c DR

To I/C Account 100100100 CR

Now please ask your business user how would they want to nullify the balances in the two company codes, with out hitting another account and making sure that the trial balance has equal debits and credits.

Before accepting a requirement, you need to ask yourself if that requirement even makes sense, especially as a finance consultant. In this case, it is clear, you cannot nullify the I/C Account in each of the company code unless there is a contra posting.

Best Regards

Sanil Bhandari

[former_member586946]

Hi Sanil,

Thanks for responding on issue.

Your correct without contra posting we can not clear IC account. I said the same already to my client but they are looking for nulify balance of Debit IC account in one company and credit IC account in other company code ( amount are same in both company codes). I am expecting any ICR ( Inter company reconciliation) process to clear this IC account. why because every yearend balances are carry forwarding since 1990 to till date each company code has huge millions of balances . They want to reduce the volume of IC account with clearing between Debit IC account and credit IC account between company code without transferring balances to other GL. I am sure it is not possible between company code without contra posting . But I am looking any ICR process or tools and implementation steps. Pls let me know if you aware or any other possibilities to clear balance of IC account.

Regards,

Seshu

[sanilbhandari]

Hi seshu.v2

Please ask them the accounting entry they expect, before you look for a solution. Once they tell you the accounting entries that can happen, than only you can look for a solution. If you do not know the requirement in first place fully, how would you look for a solution.

Best Regards

Sanil Bhandari