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Administrator Guide
Last Updated: 2025-09-19
Setup Considerations: Invoice Netting

Setup Considerations: Invoice Netting

You can use this topic to help make decisions when planning your configuration and use of invoice netting. 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

When you have external or direct intercompany customers that are also your suppliers, you can net their invoices and settle the balance as a single payable or receivable amount. Example: A food service organization sells goods to its customers and also buys certain goods from them, making them suppliers too.
To use netting functionality, you need to configure the netting rules to establish relationships between the customers, sponsors, and suppliers for a given company. Workday enables you to create invoice eligibility criteria to determine which customer and supplier invoices can net.
You can:
  • Schedule the netting transactions for automatic processing.
  • Print a netting statement that you can add as an attachment to the supplier payment email.
  • Customize netting statement layout using the netting Business Intelligence and Reporting Tools (BIRT) form in Workday Studio Report Designer.

Business Benefits

When you uptake netting functionality, Workday enables you to:
  • Eliminate the workaround of calculating the differences between supplier invoice and customer invoice amounts, records the payment in the journals automatically, and offsets the appropriate transactions.
  • Simplify your settlement process by eliminating the need to process supplier and customer invoices separately, improving efficiency.
  • Reduce your operational costs by eliminating multiple bank settlements.
  • Improve your financial cash forecasting because you can now appropriately fund relevant accounts.
  • Improve your collections risk because you can now offset overall receivables with payables at once.

Use Cases

  • Suppliers and customers are the same business entity, but have different profiles who have an agreement to net the consolidated payables and receivables amount. They can record the invoices and generate a netting transaction at the end of each period that nets everything.
  • Suppliers and customers are the same business entity who have an agreement to net the transactions. The customer sends an invoice for each sale. The supplier contacts the customer to offset the amount of the purchase order at the end of the payment term. When the customer agrees, the supplier makes payment for the offset amount by bank transfer.
  • Suppliers and customers are different business entities and you can net the transaction as per your agreement.

Questions to Consider

Question
Considerations
Do you have contracts or external agreements with your business entities?
Ensure you finalize the netting agreements first as they determine how you configure your netting rules. For a single company, you can configure netting rules to establish relationships between specific:
  • Customers and suppliers.
  • Award sponsors and suppliers.
  • Customers plus sponsors and suppliers.
Do you need to net specific invoices when older invoices are still open?
You can manage which invoices to net by:
  • Defining the netting priority of invoices when you configure invoice eligibility rules.
  • Selecting specific invoices and adjustments when you run the netting process manually.
Can you net any customer and supplier invoice?
You can only include those invoices in a netting transaction that have open balances, even if only the partial amount is eligible for netting.
Do you have past due invoices that are part of dunning?
Even when an invoice is part of a netting transaction, Workday includes that invoice in the dunning as long as the netting transaction is in a draft status. To exclude that invoice from dunning, first complete the netting transaction.
Does the netting process also include invoices that aren't yet due?
Netting functionality uses the invoice date to determine if an invoice is eligible for netting transaction. Therefore, it can include invoices that aren't yet due.
Once the netting transaction is complete, Workday settles the net payable on the due date of that invoice as per the payment terms.
Do you have payment discounts as part of your payment terms?
When you net supplier and customer invoices, Workday calculates the payment discount only on the balance remaining after the netting transaction is complete.
Do you need to cancel a netting transaction and what is the impact?
When you cancel a netting transaction, Workday:
  • Reverts the payment status on the supplier and customer invoices.
  • Reverses the accounting entries for the transaction amount on the same ledger period as long as the period is open. Otherwise, Workday reverses the accounting entries in the next open period.
  • Releases the supplier invoices and customer invoices. You can then include those invoices in another netting transaction or a settlement run.
When your netting transaction is included in a netting transaction group, you must cancel the group and Workday cancels all transactions in the group.
Can you edit a netting transaction?
You can edit a netting transaction but can't change the header information. You can, however, add or remove invoices, change invoice amounts, and add attachments.
When editing intercompany netting transactions, you can't change invoice amounts nor add invoices. You can remove invoices when editing.
Can you net invoices in different transaction currency?
For netting, you can net in a different transaction currency but both the supplier invoices and customer invoices must be in the same currency.
For direct intercompany netting when supplier invoices and customer invoices use different currencies, you must create a netting transaction group that nets against a reference currency.
When the netting transaction currency is different from the invoice currency, the difference between the 2 exchange rates creates a realized exchange gain or loss journal entry.
Do you have worktag balancing enabled in your tenant?
When you define netting rules, Workday enables you to specify the worktags, including optional worktag balancing.
Workday uses the worktag you specify to calculate interworktag balancing entries when netting customer and supplier invoices.
Do you need to net invoices originating from awards?
When you run netting, Workday enables you to bill both indirect and direct award costs to the sponsor.
Do you use scheduled settlement runs for remittance?
Workday recommends that you process your netting transactions before the scheduled settlement runs. Once you start the netting run, the included invoices aren’t available for settlement or payment until after the netting transaction is complete.
Do you need to void a check after the settlement is complete?
When you void a check after the settlement is complete, then the associated invoices become eligible again for netting.
Can you send netting statements to your suppliers?
Workday enables you to print a netting statement from the related actions menu of the netting transaction that you can later add as an attachment to the remittance email.
You can only include those netting statements that have a print run type of
Final
.
Do you have a large number of customers that are also your suppliers?
Workday provides web services to mass load the netting rules instead of manually creating 1 rule at a time .

Recommendations

  • Configure your business policy to include a review step. It enables you to correct netting errors, add or remove invoices before the netting transaction is complete because you can't change the transaction once it's approved.
  • When there are errors in the netting transaction, cancel the transaction and create a new transaction, or create an adjustment.
  • Use detailed descriptive netting rule names to identify the company, customer, and supplier relationship that you want to net for. It helps you easily identify the rule to use when you create a netting transaction.
  • When configuring netting rules, select company hierarchy, or multiple customers and suppliers to include invoices from several entities within the same 1 company. For direct intercompany netting rules, you can select 1 or more companies, but you can't select a company hierarchy.
  • To determine which invoices to net first, specify a netting priority when configuring the invoice eligibility rules.
  • When you create invoice eligibility rules, you can make the rules more restrictive by specifying invoice type or dates to exclude certain invoices from netting, such as sponsor.

Requirements

  • Enable generation of unique IDs for netting transactions at tenant or company level.
  • Configure at least 1 netting rule to define the netting relationship between the desired customers and suppliers for a given company.
  • Configure invoice eligibility rules to define which customer invoices can be part of the netting transaction.
  • To attach a netting statement to the supplier remittance email, first settle the netted invoice and generate a final netting statement.
  • To enable direct intercompany invoice netting, access the
    Maintain Companies as Customers or Suppliers
     task, and select
    Enable Netting
     for every business entity that you want to be able to net direct intercompany transactions for.

Limitations

  • Netting doesn't include 1099 suppliers.
  • You can only net 1 company at a time.
  • Netting doesn't include discount calculations. Workday applies the discount to the final balance during the settlement process.
  • You can't select the invoices that are part of a settlement run. You can settle the remaining balance on the invoices after approving the netting transaction.
  • Workday doesn't include invoices that have pending activity, are on hold, or in dispute.
  • You can't change a netting transaction once it's approved. However, you can create an additional supplier or customer invoice adjustment when the netting transaction is incorrect.

Tenant Setup

Use the
Edit Tenant Setup - Financials
 task to enable the netting transaction ID sequence generator in your tenant.

Security

Domains
Considerations
Setup: Netting Rule
 in the Common Financial Management functional area.
Enables you to create netting rules.
Process: Netting Transaction
 in the Customer Accounts and Supplier Accounts functional areas.
Enables you to create netting transactions. Workday uses netting rules and invoice eligibility rules to retrieve invoices for netting. In Workday, all netting transactions occur by netting relationships.
You can only view customers and suppliers that you have access to.
Subdomains for
Process: Netting Transaction
 in the Customer Accounts and Supplier Accounts functional areas:
  • Process: Netting Transaction – Add Attachment
  • Process: Netting Transaction – Cancel
  • Process: Netting Transaction – Change
  • Process: Netting Transaction - Direct Intercompany Netting Run
  • Process: Netting Transaction – Reporting
  • Process: Netting Transaction – View
Enables you to secures access to a specific netting feature, giving you more control over users activities.

Business Processes

Configure these business processes in the Customer Accounts and Supplier Accounts functional areas:
  • Netting Transaction Event
     to review, edit, and approve netting transactions.
  • Direct Intercompany Netting Transaction Group Event
     to review, edit, and approve direct intercompany netting transaction groups. To approve, you need a role on the initiating company.

Reporting

  • Use the
    Find Netting Transactions
     report to view the:
    • Netting transactions completed in a given period.
    • Netting rule used for each transaction.
    • Number of supplier and customer invoices netted.
    You can drill down on all the parameters to access the details.
  • Use the
    Find Direct Intercompany Netting Transaction Groups
     report to view direct intercompany netting transaction groups by:
    • Initiating company.
    • Intercompany netting rule.
    • Reference currency.
  • Workday provides these report data sources for creating custom reports:
    • Direct Intercompany Netting Runs
    • Direct Intercompany Netting Transaction Group
    • Netting Customer Invoice Application
    • Netting Rules
    • Netting Supplier Application Activity
    • Netting Transactions
    • Netting Transaction for Netting Transaction Printing Run
Workday also includes netting and direct intercompany netting activity in these existing customer and supplier reports:
  • Customer Activity Details and Summary
  • Customer Balance Details and Summary
  • Customer Open Items
  • Customer Statements
  • Dunning Letters Custom Report
  • Invoice Aging - Composite View
  • Payables Aging
  • Payables Aging Detail
  • Payables to Supplier Balance Reconciliation and Exception Summary
  • Receivables Aging Detail and Summary
  • Retention Payables to Supplier Balance Reconciliation
  • Sponsor Statements
  • Supplier Activity Details and Summary
  • View Customer Invoices
  • View Customer Statements

Integrations

Web Service
Considerations
  • Get Invoice Eligibility Rules for Netting Transaction
  • Put Invoice Eligibility Rule for Netting Transaction
Use to create, update, or retrieve invoice eligibility rules for netting transactions.
  • Get Netting Rules
  • Put Netting Rule
Use to create new netting rules, update or delete existing rules, and retrieve rules.
  • Cancel Netting Transaction
  • Get Netting Transactions
  • Submit Netting Transaction
Use to cancel, retrieve, or mass load netting transactions in Workday.
When you submit the web service, we create an in progress netting transaction.
The
SAF-T Core
 and
SAF-T Norway
 integration templates support invoice netting and account for netting in arrears.

Connections and Touchpoints

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.

Other Impacts

  • The netting transaction period close activity group enables you to categorize operational transactions and accounting activity. You can close the group independently from procurement or customer accounts groups.
  • When the netting transaction currency is different from the invoice currency, the difference between the 2 exchange rates creates a realized exchange gain or loss journal entry.