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AliB10006


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Inter-Company processes
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Good afternoon All,

I am new to Inter-Company setup and would like your advice.

We are just setting up a subsidery company (French) to a parent company (UK) and wondered what are the nominal codes and best practice we should be using especially for inter-Company money transfers while the subsidery company gets up and running.

We have been told to create a n/c 7919 as an Inter-Company Transfer for moneys coming in from the UK company to help with the French company but this wont show on the Long term liabilties (2300's) on the Balance Sheet, would i need to do a Journal entry for these so that they show on the Balance Sheet from 7919 to 2302?

An example: UK company pays into French account 5000.00, we put it as a Bank Receipt to N/C 7919 'Inter-Company Transfer' to pay a supplier in the French Company accounts. But, the loan money (5000) doesn't show on the Balance Sheet or maybe it doesn't need to.

We use Sage 50.

Any help gratefully received. :)



-- Edited by AliB10006 on Tuesday 21st of February 2023 02:46:27 PM

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nikita_rai


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Hi there,

Inter-Company processes refer to the series of actions, transactions, and communication that occur between different organizations. It involves the transfer of goods, services, and information from one company to another. This process is crucial for the efficient operation of companies and their ability to meet the needs of their customers.

Inter-Company processes can be challenging to manage as it requires effective communication, collaboration, and coordination between the parties involved. There are various processes that take place in inter-company processes such as procurement, sales, and distribution. These processes must be managed effectively to ensure that all parties involved benefit from the transactions.

One of the biggest challenges faced by companies in inter-company processes is ensuring that the transactions are carried out efficiently and effectively. This can be achieved through the use of technology and automation to streamline the processes involved. It is also essential to have clear communication channels and defined roles and responsibilities for all parties involved.

In conclusion, inter-company processes are an essential aspect of modern business operations. They require effective management to ensure that all parties involved benefit from the transactions. With the use of technology and clear communication channels, these processes can be streamlined and made more efficient, ultimately leading to better outcomes for all parties involved.

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AliB10006


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Hi nikita_rai, Thank you for your reply. Do you know what nominal codes you use and would that be on both companies?

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Onion4Sage


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Hi Alison,

I think your instincts about needing to carry intercompany balances on the balance sheet is correct. If goods and services were being supplied within the group I could see a P&L code like 7919 (normally categorised as part of Overheads) being involved but, if it's just funding, I don't understand why it's not as simple as Dr Bank and Cr Intercompany balance (marked as a "floating" account in the Chart of Accounts definition) and vice versa. Perhaps whoever gave you the original advice could provide some clarification for you?

HTH.



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AliB10006 wrote:

Hi nikita_rai, Thank you for your reply. Do you know what nominal codes you use and would that be on both companies?

 She is a bot

when you asked the person (?) who gave you the advice what did they say was the reason for that code.  perhaps you have misunderstood the nature of the deal.   If not BS every time.  best to use ledger accounts in each entity which will help consolidation and reconciliation in each company.



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