Setup Considerations: Direct Intercompany Activities
You can use this topic to help make decisions when planning your configuration and use of direct intercompany activities. It explains:
- Why to set it up.
- How it fits into the rest of Workday.
- Downstream impacts and cross-product interactions.
- Security requirements and business process configurations.
- Questions and limitations to consider before implementation.
Refer to detailed task instructions for full configuration details.
What It Is
Direct intercompany is a financial accounting structure that enables transactions between different entities within an organization.
Direct Intercompany functionality automatically generates:
- Supplier invoices from customers.
- Intercompany receipts to settle customer invoices when you settle supplier invoices.
Business Benefits
When you set up your tenant to record direct intercompany activities, your organization can automatically generate these activities with another entity:
- Debts
- Payables
- Receivables
Use Cases
Use direct Intercompany transactions when source documents must meet legal or statutory requirements. Examples: You enter transactions for a company in another country, or where there are tax reporting requirements.
Use direct intercompany to:
- Record accounting transactions that occur between at least 2 subsidiary or multinational companies within your organization.
- Purchase goods or services from another company within your organization.
Use direct intercompany to record transactions on activities such as:
- Customer invoices.
- Customer invoice adjustments.
- Supplier invoices.
- Supplier invoice adjustments.
- Intercompany payment.
Questions to Consider
Questions | Considerations |
|---|---|
How do you want to handle subsidiary or multinational companies? | If you have subsidiary companies or multinational branches that perform transactions with each other, consider configuring intercompany profiles. Intercompany profiles enable you to record and process those intercompany transactions. |
Do you need to provide source documents for statutory requirements? | On-behalf-of transactions don't generate source documents. Before you configure intercompany transactions, consider whether you need to set up direct intercompany. |
What kind of transactions do your subsidiary companies normally perform with each other? | The transactions that companies within an organization perform with each other determine whether you need to structure Workday for direct or on-behalf intercompany.
When you need to represent transactions where the companies conduct business like a supplier and a customer, configure direct intercompany. When a company processes the payments and invoices in place of the company that provides the goods and services to customers, configure on-behalf intercompany. When both intercompany relationships apply to you, configure both. |
How do your companies use your account sets? | You can only create an intercompany relationship between 2 companies when those companies use the same account set. Before you configure your intercompany profiles, ensure that the companies use the correct account sets. |
How do you process and settle your intercompany transactions? | To settle your intercompany transactions, you must configure these options on the Edit Company Intercompany Profile task:
If you want to record intercompany receipts automatically, select the Record Intercompany Receipts check box.When you don't automatically record receipts, you must create manual receipts to use in your settlement runs using the Record Intercompany Receipts task. |
How do you configure your security role assignments? | Workday uses the security configuration of the initiating company when determining who can view the intercompany transaction. Example: The company that creates the customer invoice determines the security requirements to access and process the intercompany transaction.
When your company operates as the supplier, Workday instead uses the security configuration of the customer on the original transaction to determine who can view the intercompany transaction. Consider setting up your company hierarchy role assignments to meet your security requirements if any users need to access both sides of the intercompany transaction. |
Have you enabled company or cost center partitioning? | Ensure that there are no issues with the combinations as you enter transactions between the companies. Also, ensure that worktags flow from 1 company to another company.
If there are some cost centers on the customer side, but not on the supplier side, you can enable a Review step on the supplier invoice to identify and correct the issue. |
How many sales and purchase items will you use when mapping revenue and spend categories? | Consider these points:
|
Do you have multiple intercompany spend categories mapped to a single intercompany revenue category, or multiple revenue categories mapped to a single spend category? | Perform 1 of these actions:
Expand the number of intercompany revenue categories or spend categories to create a 1 to 1 relationship. Create multiple sales items that map to the single intercompany revenue category. Then, map each of the sales items to a purchase item in a 1 to 1 relationship. Each purchase item then maps to the appropriate spend category. |
Recommendations
Functionality | Considerations |
|---|---|
Account posting rules | Configure separate Intercompany Payables and Intercompany Receivables account posting rules if you want to settle intercompany transactions. Separate posting rules enable Workday to create the payables and receivables necessary for you to run the settlement process.
If you configure both direct and on-behalf-of intercompany, consider configuring a Direct Intercompany dimension on both the Intercompany Payables and Intercompany Receivables account posting rules. Adding the dimension enables you to split up the account posting rules you use for on-behalf-of and direct intercompany transactions.Depending on the transaction types you use, you also need to configure additional account posting rules. Common posting rules include:
If you don't want to post intercompany transactions to Cash , you can instead configure a temporary bank account to record the costs. Consider configuring the temporary bank account when you want to reroute settlement transactions from the pseudo account to a different ledger account. |
Fiscal schedules | Use a shared fiscal schedule for companies configured for intercompany transactions.The shared fiscal schedule can be an alternate or primary schedule.
Sharing a fiscal schedule reduces the potential for creating erroneous transactions that you need to eliminate using a consolidation. |
Intercompany affiliate worktags | Enable intercompany affiliate worktags on customer and supplier invoices, to help identify due-to and due-from companies on intercompany transactions. Identifying these worktags enables Workday to eliminate entries on consolidated financial statements.
Workday also recommends that you configure your account posting rules to use the appropriate intercompany affiliate worktags as resulting worktags. Ensure that your configuration doesn't result in a company creating intercompany transactions with itself. |
Automate direct intercompany | Automate parts of the invoice processing for direct intercompany transactions.
You can configure the Customer Invoice Event business process to generate supplier invoices automatically from customer invoices upon business process approval.You can also enable automatic adding of these invoice items when you configure your customer and supplier relationships on the Maintain Companies as Customers or Suppliers task. Automatically adding invoice items reduces manual input and improves documentation.When you automate parts of the invoice processing, add a Review Supplier Invoice step to your Supplier Invoice Event business process. The review step enables you to ensure the accuracy of automatic processing. |
Custom validations | Create custom validations to guide the creation and processing of direct intercompany transactions. Some validations we recommend:
|
Requirements
Before you can create intercompany transactions, you must:
- Create intercompany profiles for all your intercompany affiliates on theEdit Company Intercompany Profilestask.
- Configure account posting rules for intercompany payables and intercompany receivables.
- Create customers and suppliers based on the companies in your organization.
These customers and suppliers should reflect the intercompany relationships within your organization for initiating and processing direct intercompany transactions. Configure 1-to-1 mapping for:
- Purchase items to sales items.
- Revenue and spend categories.
You can only select mapped configurations (either revenue categories to spend categories or sales items to purchase items) in an intercompany transaction.
Limitations
Before you configure direct intercompany, consider that you can only automatically process adjustments to direct intercompany invoices.
You can't manually create a supplier invoice adjustment on a customer invoice adjustment.
Tenant Setup
No impact. The intercompany configurations on the
Edit Tenant Setup - Financials
task apply specifically to on-behalf-of intercompany.Security
To create intercompany activities for another company, you must configure security roles for the activity on the other company. Example: If you're with Company A and you want to create an intercompany activity for Company B, you must have a security role that enables you to also create the activity for Company B.
Domains | Considerations |
|---|---|
Set Up: Company Accounting in the Common Financial Management functional area. | Set up intercompany profiles. You need intercompany profiles to create intercompany transactions. |
Set Up: Accounting Rules in the Common Financial Management functional area. | Set up account posting rules. You need separate account posting rules for your intercompany payables and receivables when you want to settle intercompany balances. |
Business Processes
When you need to initiate direct intercompany transactions, configure the
Customer Invoice Event
and Supplier Invoice Event
business processes. These enable you to create direct intercompany transactions on customer and supplier invoices. Add the Initiate Supplier Invoice or Adjustment Creation
service on the Customer Invoice Event
business process if you want to automatically create supplier invoices from customer invoices.If your company needs to process and settle direct intercompany transactions, configure the
Settlement Run Event
business process.Reporting
Reports or Dashboards | Considerations |
|---|---|
Intercompany Out of Balance Report
| Identify and resolve intercompany out of balance issues. |
Intercompany Elimination Out of Balance Report
| Use this report to reconcile:
The report by default runs for all Elimination rules, but you can select to run it for a specific rule. |
Intercompany Payables and Receivables Reconciliation
| Find and review out-of-balance amounts from posted journal lines on intercompany affiliate ledgers that remain at the end of the period. Enables you to identify and reconcile all intercompany items for each intercompany affiliate, including both matched and unmatched transactions. |
Intercompany Work Area
| Review intercompany activities, including in-progress journal lines, unrecorded receipts, and settlement runs. Enables you to find outstanding amounts due to or from an intercompany affiliate. |
Outstanding Intercompany Transactions
| Find and review detailed information about outstanding intercompany transactions. |
Integrations
Web Services | Considerations |
|---|---|
Get Account Posting Rule Sets
| Retrieves detailed information about configured account posting rule sets. |
Get Intercompany Profiles
| Retrieves detailed information about configured intercompany profiles. Enables you to view detailed information across multiple intercompany profiles. |
Put Account Posting Rule Set
| Creates or configures account posting rule sets. Enables you to set up many account posting rule sets at once. |
Put Intercompany Profile
| Creates intercompany profiles. Enables you to set up many intercompany profiles at once. |
Connections and Touchpoints
You can use direct intercompany with customer and supplier invoices in Workday. Intercompany expands existing functionality by enabling you to generate activities on the accounts of other companies. The intercompany profile that you configure enables many intercompany activities across Workday.
Workday offers a Touchpoints Kit with resources to help you understand configuration relationships in your tenant. Learn more about the Workday Touchpoints Kit on Workday Community.