Intercompany Receivables

Intercompany receivables occur when one of your company's organizations incurs a payable or receivable on behalf of another organization.

This typically happens during a posting process that involves a control account. Control accounts are the accounts that you selected, usually in the module settings screens, to serve consistently as one side of a transaction entry. (For example, you select the accounts payable liability accounts on the Configure Vendor Settings screen.) Numerous organizations may incur the cost, but only one organization can incur the liability. The following examples illustrate the intercompany receivable concept:

• In accounts payable transactions, you debit expenses to the individual organization incurring the cost. When you post the Accounts Payable vouchers, the liability is credited to an account for the corporate organization. You must record an intercompany payable for the incurring organization and an intercompany receivable for the corporate organization to keep the individual organizations' financial statements in balance.
• For timesheets, labor is debited to the individual organizations performing the work on a project. However, during posting, Costpoint credits the employees' respective home organizations for the accrued salaries. You must record intercompany payables for the performing organizations and intercompany receivables for the home organizations of the employees so the financial statements of the involved organizations are in balance.
• For cash receipts, cash is received and debited to a corporate organization cash account. However, Costpoint credits the owning organization of the project is credited for the receivable. You must record an intercompany payable for the corporate organization and an intercompany receivable for project's owning organization.
• Each period, you make a journal entry to amortize prepaid insurance. The organization that incurred the amortized cost receives the debit entry, but the organization to which the prepaid account belongs receives the credit entry. The incurring organization must record an intercompany payable, and the amortizing organization must record an intercompany receivable.

After these intercompany transactions, you cannot print balanced financial statements for separate organization unless you make the necessary intercompany entries.  Therefore, you should view the intercompany transactions solely as a financial statement adjustment. (Financial statements that include all organizations balance without adjustments because they include all transactions.)

The Create/Delete Intercompany Receivables screen calculates the amount of each organization's receivable or payable and includes those amounts in a journal entry. After you post that journal entry, you can generate financial statements that balance by organization.

The Post Intercompany Receivables process posts down only to the balance sheet level specified on the Manage Organization Structures screen. It does not post to the lower levels.

Do not create the intercompany receivable journal entry until the end of the accounting period, when you have entered and posted all transactions. Any postings that occur after the intercompany receivable is created and posted may contain intercompany transactions, and cause an imbalance in the organizational financial statements.