E-commerce Groups · Track 1 · Tutorial 2 of 2
Clear intercompany items in an e-commerce group
The same items come round every month. This is how to clear each one in BrizoConsol, in the order that closes the month cleanly, with links to the accounting behind them.
1Know the items
Each item is cleared under the type set up for it in Set up intercompany types for an e-commerce group.
2Clear each item
| Item | Type | How to clear it | See |
|---|---|---|---|
| Stock sold by the fulfilment company to trading companies | Inventory Transfers | A rule on the intercompany sales and purchases accounts. Hundreds of transfer lines a month are cleared together. | Eliminate sales, purchases and services |
| The mark-up in stock still held at the month end | Unrealised Profit | A month-end entry for the margin in unsold stock, from the stock system, not the ledger. It reverses automatically the next month. | Remove unrealised profit in inventory |
| Fulfilment fees from the logistics company | Fulfilment Fees | A rule on the fee income and fulfilment cost accounts. | Eliminate sales, purchases and services |
| Royalties to the IP company | Royalties | A rule on the royalty accounts; Method 2 with FX if the IP company is in another currency. | Eliminate management charges |
| Management fees from the holding company | Management Charges | A rule on the fee accounts. | Eliminate management charges |
| Unpaid invoices between companies | Trade Receivables / Payables | A document entry at each month end, or a rule on dedicated intercompany accounts. | Eliminate trade receivables and payables |
| Loans between companies | Intercompany Loans | A rule on the loan accounts, at the closing rate for a foreign company. | Eliminate loans and interest |
| Dividends to the holding company | Dividends | A GL entry in the month the dividend is recorded. | Eliminate intercompany dividends |
A rule suits an item that recurs on accounts holding nothing else; see the Automate with rules track. When the accounts also hold outside business, clear the item from its invoices and bills instead.
3Close the month in order
- Load every company’s month, so the rules run on the consolidation with both sides in place.
- Enter the document entries for unpaid balances at the month end.
- Enter the month-end entries for the margin still in stock, from each company’s closing stock.
- Enter the GL entries for one-off items in the month: dividends, asset transfers, new loans.
- Clear Intercompany → Elimination Review, as in Work through Elimination Review.
- Check each type on Review → Month End Status, as in Check eliminations on Month End Status.
Check
On the group’s Balance Sheet and Profit & Loss with Show Entities on, every intercompany line is zero in the group column, and nothing for the month is waiting in Elimination Review.
4Read more about the accounting
The BrizoConsol blog goes through the accounting behind these items for an e-commerce group, with worked examples:
5If something goes wrong
| An item is still in the group figures | Its accounts aren’t in a rule or entry, or one company booked it in another month. Check both companies’ books for the month. |
|---|---|
| The same rule waits in Elimination Review every month | Its method or tolerance doesn’t suit the usual difference. See Explain and clear intercompany differences. |
| A rule also eliminates outside business | The account isn’t only intercompany. Delete the rule and clear the item from its invoices and bills. |
Want more detail? See the documentation