Intercompany matching with transactions

In intercompany reconciliation, differences typically arise between two partners. The reasons for those differences must be identified. Examining transactions can help determine whether a difference arises because of a usual currency fluctuation or is a real discrepancy such as a timing difference in the transaction currency.

The use of transaction currencies is optional. If used, you can distinguish between currency and transaction differences for consolidation debts (D processes) and consolidation expenditure/revenue (R processes). This distinction is possible only for rules that do not use segmentation and segmentation elimination elements. The formula is total difference - other difference = currency difference.

This method applies only to the D and R processes and is not used for the HD, HDE, HR, and HRE processes.

Activation of transaction currencies

As a transaction currency, you can use any currency that is configured as an entity currency in Business Modeling.

Transaction data

To provide transaction data, use one of these options:

Specify transaction data on the Intercompany Matching Detail Consolidation Debts or Intercompany Matching Detail Consolidation Expenditure/Revenue page. Alternatively, on the Transactions Data Entry Detail Cons. Debts or Transactions Data Entry Detail – Cons. Expenditure / Revenue page. To specify transaction data, you must select the HB I manual - Data Entry Manual level in the context.
See "Intercompany Matching Detail Consolidation Debts", "Intercompany Matching Detail Consolidation Expenditure/Revenue", "Transactions Data Entry Detail Cons. Debts", and "Transactions Data Entry Detail – Cons. Expenditure / Revenue".
Upload transaction data from the integration tables. To view uploaded data, you must select the HB I - Imported Data level in the context.

Differences in the Intercompany Matching Detail reports

In the Intercompany Matching Detail reports, the total difference in a group currency between two entities is broken down into a transaction difference and a currency difference. As long as no transaction data is specified, the total difference is displayed in the Currency Difference column. However, the journals post the total difference as other differences.

Deleting specified transaction values manually

To delete already specified values in a transaction currency from the database, you must press Ctrl + Del or specify #delete.

Caution:

If you specify 0 or press Del, then 0 is written back in the cube and is treated as a number. This causes an incorrect currency difference calculation. That is, the difference is identified as a currency difference instead of other differences because 0 is explained as other differences. In the user interface, 0 is displayed regardless of if it is a 0 value or a deleted (empty) value.

Business Modeling elimination setup

If no transaction data is specified, the D and R rules post differences to the Other Differences Account that has been set in Business Modeling. See ""Managing eliminations".

If you specify transaction values manually or upload them from the integration tables, the total difference is split into these differences:

Transaction difference: Booked as other differences
Currency difference: Considered in the Intercompany Reconciliation Status report and by the D and R processes in journals

The HD, HDE, HR, and HRE rules always post differences to the Other Differences Account. Those rules do not differentiate between currency differences.

Specifying transaction data, example

In this example, entities RU0001 and RU0002 have EUR as the local and group currency.

This table shows amounts that are displayed in the Intercompany Matching Detail Consolidation Debts report:


Consolidation Process	Group Currency (EUR)
D2 - Short term intragroup payables	RU0001 RU0002	RU0002 RU0001
A220210 - Trade Receivables (Fair Value)	320,050	460,000
A220100 - Advance Payments on Purchase of Current Assets	0	0
Sum	320,050	460,000
L300100 - Trade Payables	460,000	330,050
Sum	460,000	330,050
Difference		-10,000

The reconciliation of sums is always performed crisscross, which results in a difference of -10,000 EUR.

If you have not specified transaction data, Total Difference (-10,000 EUR) is posted as Other Difference by journals, but, in the report, it is displayed in the Currency Difference column.

Optionally, you can split the Total Difference into the Transaction and Currency Difference and explain the local values in transaction currencies.

When you click the difference in the Intercompany Matching Detail report, the Transaction Data Entry Detail report is displayed. The RU0001's account value is 320,050 EUR in the local currency. You must explain this value in the currencies in which the transactions took place. Even if EUR is the local currency of a company, transactions can be performed in other currencies, for example, USD.

You can specify appropriate amounts in the Transaction Currency column in the dialog box that is displayed after you click a value in theGroup Currency (currency ISO code) column in the Intercompany Matching Detail reports. Alternatively, you can specify those amounts in the Value in Transaction Currency column in the Transaction Data Entry Detail reports. All available transaction currencies are displayed. Each value that you specify is automatically calculated into the group currency based on the closing rate and displayed in the Transaction in Group Currency column in the dialog box and in the Value of Transaction in Group Currency column in the Transaction Data Entry Detail report.

Note: In the TFINANC cube, there can be several transactions in different currencies for each value in the local currency. You can specify only one transaction value for each transaction currency. If several transactions in one transaction currency exist, you must aggregate them into one transaction value.

Ensure that you explain the whole account and contra account local currency value in the relevant transaction currencies.

This table shows the explanation of local values in EUR (460,000 EUR on the RU0001 account and 330,050 EUR on the intercompany RU0002 contra account) into the USD transaction currency on the RU0001 towards intercompany RU0002 side and on the intercompany RU0002 towards RU0001 side, and the conversion of the amounts into the group currency (EUR):


Currency	Transaction Currency	Transaction in Group Currency	Transaction Currency	Transaction in Group Currency
USD - United States Dollar	Value of RU0001 vs. RU0002		Value of RU0002 vs. RU0001
A220100 - Advance Payments on Purchase of Current Assets	380,000	316,667	560,0000	466,667
A220210 - Trade Receivables (Fair Value)	0	0	0	0
L300100 - Trade Payables	550,000	458,333	400,000	333,333

When values are specified in transaction currencies on both sides (RU0001 towards intercompany RU0002 and intercompany RU0002 towards RU0001), a split of the Total Difference into Other Differences and Currency Differences is possible.

The Total Difference is calculated in the group currency in this way: (Sum Accounts of Entity (RU0001) vs Intercompany (RU0002) minus Sum Contra Accounts of Intercompany (RU0002) vs Entity (RU0001)) plus (Sum Accounts of Intercompany (RU0002) vs Entity (RU0001) minus Sum Contra Accounts Entity (RU0001) vs Intercompany (RU0002)) = Total Difference

(320,050 EUR - 330,050 EUR) + (460,000 EUR - 460,000 EUR) = -10,000 EUR

The Transaction Difference is calculated in the group currency in this way: (Sum Accounts of Entity (RU0001) vs. Intercompany (RU0002) minus Sum Contra Accounts of Intercompany (RU0002) vs Entity (RU0001)) plus (Sum Accounts of Intercompany (RU0002) vs Entity (RU0001) minus Sum Contra Accounts of Entity (RU0001) vs Intercompany (RU0002)) = Transaction Difference

(316,667 EUR - 333,333 EUR) + (466,667 EUR - 458,333 EUR) = -8,333 EUR

The Currency Difference is calculated in this way:

Total Difference in Group Currency minus Transaction Difference in Group Currency = Currency Difference

-10,000 EUR - (-8,333 EUR) = 1,667 EUR

Note: Currently, in the Intercompany Matching Detail report, the Currency Difference column shows the currency difference only if transaction values are specified. Otherwise, the column shows the whole difference amount. The journals post the values either to Other Differences or Currency Differences if the Transaction Difference is not empty. In the user interface, 0 is displayed regardless of if it is a 0 value or a deleted (empty) value.