I’m sure this never ending scenario will ring a bell…
You’ve got another company in your group that you need to transact with - you raise a Purchase Order in your PO spreadsheet, which then needs to be transferred into the accounting system; the other company then raises the corresponding Sales Order and then has to confirm delivery of goods/ services back down this same chain. The same numbers are entered and re-entered numerous times with hours of unnecessary time wasted by keying and re-keying the same information in different systems…
Don’t panic! It doesn’t need to be this way. By using a truly inter-company solution like Sage X3 you can manage this whole process in one place and eliminate the need for this duplication of workload.
Sage X3 Inter-Company Functionality
Firstly, I should point out that the term Inter-Company (and indeed Inter-Site, if referring to activity taking place within a single company) applies to a number of areas of Sage X3, including Sales, Purchasing, Inventory and Finance. In basic terms, Sage X3 will manage the process of an activity in one entity generating an activity in another, such as a Purchase Order in one company generating a corresponding Sales Order. The solution also allows you to map elements of the resulting invoices, so if, for instance, the selling company in an invoice transaction offers a discount, then the buying company can have that discount mapped to the appropriate "Discount Taken" account in their Trial Balance (which may be within a different Chart of Accounts). So in general terms we know that both sides of an inter-company transaction will balance according to the accounting principles in place on each side.
So, how exactly do we ensure that "happy path" from one company to another?
Well, if you're processing orders and then invoices, then it makes sense that you'll need a Customer on one side and a Supplier on the other. In Sage X3 these need to be flagged as Inter-Company with a link to the other entity in the transaction, and attaching these flags then has an impact on the order and invoice processes.
We then need to ensure that Sage X3 knows the type of documents and how they should be handled for the companies involved in the transaction - for example we might have to consider different document types where there might be legislation differences between companies, for instance for local taxes and the way that discounts are handled, as above. In terms of processing financial transactions across multiple companies within the same instance of Sage X3, there are two basic methods involved: Invoices and Journals.
Invoices and Journals
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Invoice processing itself can be automatic in X3 when it comes to simple management-type recharges. For example, the sales invoice entry generating a corresponding purchase invoice posting to be checked and finalised in the other company, or else simply linked, so that the Invoice is manually "attached" by a user to the AP entry and the corresponding costs carried over to save re-keying. There are rules and settings around this, of course, but that's it in a nutshell…
If you need to post journals rather than, or even as well as, invoices, then you need to consider the suspense account that sits in-between the debit and credit sides of the transaction. As long as you have the appropriate mappings in place and have the relevant Inter-Company parameter switched on, then there's a separate journal screen in X3 for posting across multiple companies at the same time - not just two, as with invoicing, but potentially many.
Once this is all set up in Sage X3, you can be confident that you’re able to post a journal or invoice, and know that its corresponding activity in all other entities will be automatically generated. Everything is linked, even if it’s coming from separate business units or even different countries, and all happens the first time the information is added. No duplication of workload. No entering and re-entering the same numbers. Just one solution that you can trust to automatically update information on every entity that needs it.