Organizations with multiple subsidiaries face challenges with regards their intercompany transactions. Elimination is one of them. But there is also the tedious process of allocating shared expenses between parent and children. This is why Upaya created a product called Shared Vendor Bill Allocation.
Upaya’s product streamlines the Shared Vendor Bill functionality in NetSuite for intercompany shared vendor bills. This product allows you to enter regular vendor bill transactions, allocate them to subsidiaries and, then run a script in the background to create the corresponding intercompany journal entries. The script automatically runs after the vendor bill is approved. It uses a single advanced intercompany journal entry for better tracking as opposed to multiple regular intercompany journal entries. This product is also highly customizable depending on the Client preferences.
However, it is only applicable to shared bills whose amounts are specific per transaction and not based on a fixed percentage.
How does it work?
Here is a workflow of the Shared Vendor Bill:
Customize Form: Fields to be added.
1. Allocation JE holds the link to the Advance Intercompany Journal Entry run by the script 2. Allocate to Sub is the subsidiary who will pay the fee of the particular line item 3. Upaya Item Account is the expense account for the particular item which is found in the master item record.
Advanced Intercompany Journal Entry Form:
1.Allocation -Vendor Bill Link holds the bill record link of the specific Advance Intercompany Journal Entry as a result of running the script
Create or edit existing Intercompany Accounts
1. Go to List > Accounting > New
2. Enter all the necessary information of the intercompany account.
3. Set Account Type to Accounts Receivable or Accounts Payable, whichever is applicable.
4. Make sure that it is associated to all Subsidiaries.
5. Make sure that the Eliminate Intercompany Transaction is checked.
6. Click Save.
Create Intercompany Entities
Source Subsidiary: Golden State Warriors LLC
Destination Subsidiary: GSW Arena Holdings LLC
For Source Subsidiary (Golden State Warriors LLC) create a customer record and set the following:
Subsidiary: Golden State Warriors LLC
Represents Subsidiary: GSW Arena Holdings LLC
Default Receivables Account: Select the Intercompany Accounts Receivable to be used on Shared Vendor Bill.
For Destination Subsidiary (GSW Arena Holdings LLC) create Vendor Record and set the following:
Primary Subsidiary: GSW Arena Holdings LLC
Represents Subsidiary: Golden State Warriors LLC
Default Payable Account: Select the Intercompany Accounts Payable Account to be used in Shared Vendor Bill
1. Navigate to Transactions > Payables > Enter Bills. 2. Enter mandatory information: a. On the Expense and Items tab > Expenses sub tab i. Select the expense account to allocate, the correct department and season ii. Populate the Allocate to Sub column if the line item needs to be allocated to another subsidiary. Otherwise, leave it empty.
b. On the Expense and Items tab > Item sub tab i. Select the item. Populate the Allocate to Sub column if the line item needs to be allocated to another subsidiary. Otherwise, leave it empty. ii. The Upaya Item Account column field will auto populate with the expense account associated to the item.
Once the bill has been approved, the script would run and automatically create an Advanced Intercompany Journal Entry for the allocation. It will be referenced by Allocation JE filed on the Vendor Bill record.
The Advanced Intercompany Journal Entry on the other hand will reference the Bill on Allocation – Vendor Bill Link field.
By default, the Journal Entry would be dated as the Vendor Bill Date and is automatically Approved.
The journal entry lines are as follows.
● The Expense and Item’s Accounts will be credited from the Source Subsidiary and debited to Allocate To Sub selected and will automatically pull up the actual vendor from the bill (10 AMP PRINTING).
● Source Subsidiary (Golden State Warriors LLC) will recognize receivable (1299 TEST Intercompany AR) and will automatically pull up the appropriate Intercompany Customer (797 GSW Arena Holdings LLC for GSW LLC).
● The Destination Subsidiary (GSW Arena Holdings LLC) will recognize payable (2399 TEST Intercompany AP) and will automatically pull up appropriate Intercompany Vendor (3519 Golden State Warriors LLC for Arena Holdings LLC).
● Eliminate column for both Intercompany AR and Intercompany AP lines are automatically set to Yes and Due To/From Subsidiary will automatically pull up the transacting subsidiaries which adheres to the proper setup on eliminating Intercompany transactions.
● A memo is added on the header and on each line item to indicate that they are created from Upaya Shared Vendor Bill.
We hope that you found our new product “Shared Vendor Bill” useful in overcoming challenges faced in intercompany transactions.
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Till Next Time,