F&B Groups · Track 1 · Tutorial 2 of 2

Clear intercompany items in an F&B 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.

You will needThe types set up, as in Set up intercompany types for an F&B group. The month loaded for every company.
By the endEvery typical intercompany item of an F&B group cleared for the month, with nothing left in Elimination Review.

1Know the items

Intercompany flows in an F&B group: Central kitchen to Restaurant companies: Food and finished goods at a mark-up; Brand company to Restaurant companies: Franchise royalties and marketing levies; Shared-services company to Restaurant companies: Management fees; Holding company to Restaurant companies: Loans and interest
Each arrow is an item to clear every month.

Each item is cleared under the type set up for it in Set up intercompany types for an F&B group.

2Clear each item

ItemTypeHow to clear itSee
Food and finished goods from the central kitchenKitchen SuppliesA rule on the kitchen’s intercompany sales account and the restaurants’ purchases account.Eliminate sales, purchases and services
The kitchen’s mark-up in restaurant stockUnrealised ProfitA month-end entry for the margin in closing stock, worked out in the kitchen’s currency. It reverses automatically the next month.Remove unrealised profit in inventory
Franchise royaltiesFranchise RoyaltiesA rule on the royalty accounts.Eliminate management charges
Marketing leviesMarketing LeviesA rule on the levy accounts.Eliminate management charges
Management fees from the shared-services companyManagement ChargesA rule on the fee accounts. Both sides must be booked in the same month, or a difference is left.Eliminate management charges
Unpaid invoices between companiesTrade Receivables / PayablesA document entry at each month end, or a rule on dedicated intercompany accounts.Eliminate trade receivables and payables
Loans to restaurants, and their interestIntercompany LoansA rule on the loan and interest accounts.Eliminate loans and interest

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

  1. Load every company’s month, so the rules run on the consolidation with both sides in place.
  2. Enter the document entries for unpaid balances at the month end.
  3. Enter the month-end entries for the margin still in stock, from each company’s closing stock.
  4. Enter the GL entries for one-off items in the month: dividends, asset transfers, new loans.
  5. Clear Intercompany → Elimination Review, as in Work through Elimination Review.
  6. 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 F&B group, with worked examples:

Financial Consolidation for Food and Beverage Groups: How Multi-Entity F&B Businesses Get Clean Group Accounts
How to Consolidate a Multi-Site F&B Group Where a Central Kitchen Entity Supplies Finished Goods to Restaurant Subsidiaries at a Mark-Up
Franchise Fee Eliminations in an F&B Group: How to Remove Royalties and Marketing Levies When the Franchisor and Franchisee Are Both Inside the Group
The Margin Hidden in Your Closing Stock: Eliminating Unrealised Intercompany Profit in F&B Group Consolidation
Intercompany Loans in a Restaurant Group: Eliminating the Loan, the Interest, and the Impairment You Didn’t Expect to Reverse
Management Fees in a Restaurant Group: What the Consolidated Accounts Actually Show and Why the Real Cost Is Not the Fee
Brand Royalties in a Restaurant Group: What Eliminates at Consolidation, What Doesn’t, and Why It Depends on Who Owns the Restaurant

5If something goes wrong

An item is still in the group figuresIts 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 monthIts method or tolerance doesn’t suit the usual difference. See Explain and clear intercompany differences.
A rule also eliminates outside businessThe account isn’t only intercompany. Delete the rule and clear the item from its invoices and bills.

Want more detail? See the documentation