Intercompany Eliminations · Track 1 · Tutorial 1 of 5

Plan your intercompany items

Every setting in this track follows from one list: what your companies book between themselves, on which accounts, and how often. Write that list first. It decides which intercompany types you switch on, how the accounts should be named and mapped, and which items a rule can clear on its own.

You will needYour group in BrizoConsol with its companies loaded and mapped, as in the Foundations series. Someone who knows each company’s books.

By the endA plan for Your Group listing each intercompany item with its type, the account on each side, and how it will be cleared.

1See what the plan decides

An intercompany item is anything one company in the group books against another: a fee, a sale, a loan, a balance still owed. Each company books its side correctly, but added together both sides land in the group’s figures, so every item must be eliminated. Your plan answers four questions for each one:

Question	What it sets up	Where
What kind of item is it?	The intercompany type, and with it the place in the Intercompany menu	Switch on and add intercompany types
Which account does each company use?	The account pair a rule or an entry eliminates	Name and map intercompany accounts
Does it recur on the same accounts?	Whether a rule can clear it every month	The Automate with rules track
Do those accounts also hold outside business?	Whether it must be cleared from invoices and bills instead	The Eliminate by hand track

2List every item

Go through each company’s chart of accounts and its last few months of transactions with the person who keeps its books. For every item booked against another group company, write down:

The item	In plain words: the monthly management fee, goods sold, a loan.
From side	The company that charges, sells, lends or is owed, and the account it books to.
To side	The other company, and the account it books to.
How often	Every month, now and then, or once.
Shared account?	Whether either account also holds amounts with customers or suppliers outside the group.

Look in both directions. A balance owed is two items: the charge that created it, and the receivable and payable it leaves behind until it is paid.

Your Group’s intercompany items: Company A’s management fee, unpaid fees, goods and royalty with Company B, and its October loan to Company C, each labelled with its intercompany type — Your Group’s five items. Company F has none, so it does not appear in the plan.

3Give each item a type

BrizoConsol has eleven intercompany types. Each has its own entry in the Intercompany menu, so the type is how your team finds an item later. Four are switched on for a new group, and Other Eliminations is always on:

Type	Use it for	New group
Trade Receivables / Payables	Outstanding balances between group entities.	On
Sales / Purchases / Services	Internal goods sales, services and the matching costs, whether paid or not.	On
Inventory Transfers	Intercompany inventory sales and purchases.	On
Unrealised Profit	Profit in inventory not yet sold outside the group.	Off
Intercompany Loans	Loans, interest and funding balances.	Off
Management Charges	Management fees and shared service charges.	On
Dividends	Dividend income and distributions between group companies.	Off
Fixed Assets	Gains and adjustments from fixed assets moved between companies.	Off
Rental / Lease Adjustments	Rental and lease adjustments made by hand from lease schedules, not from invoices alone.	Off
Other Income / Expenses	Other intercompany income and expenses.	Off
Other Eliminations	Anything that fits none of the above.	Always on

If your team wants an item listed under its own name, plan a type of your own that works like one of these. Your Group does this for Company A’s royalty, which works like a management charge but is reported on its own.

4Decide how each item is cleared

Clear it with	When
A rule	The item recurs, each side always uses the same account, and those accounts hold nothing but this item. The rule then clears it every month without anyone touching it.
A GL entry	A one-off, or an item a rule does not cover. You enter the companies, accounts and amounts yourself.
A document entry	The account also holds outside business, so only some invoices and bills are intercompany. You pick those documents and the entry is built from them.

Note too where the two companies keep their books in different currencies. Their sides will differ once translated into the group currency, and each rule or entry for that pair will need to say how to treat the difference. Company A is in SGD, Company B in AUD and Company C in GBP, so every item in Your Group’s plan crosses a currency.

5Write the plan down

Your Group’s plan:

Item	Type	From side	To side	Cleared by
Monthly management fee	Management Charges	Company A — 4900 Management fee income	Company B — 6420 Management fees	A rule
Unpaid fees	Trade Receivables / Payables	Company A — 1250 Due from Company B	Company B — 2150 Due to Company A	A rule
Royalty	Royalties, a type of your own	Company A — its royalty income	Company B — its royalty expense	A rule
October loan	Intercompany Loans	Company A — 1300 Loan to Company C	Company C — 2400 Loan from Company A	A GL entry
Goods sold, INV-1043	Sales / Purchases / Services	Company A — 4000 Sales	Company B — 5000 Purchases, BILL-778	A document entry: 4000 Sales also holds sales to outside customers

Keep the plan with your month-end notes. When a company starts a new kind of intercompany business, add a row before the first month it is booked.

Check

Every item has one type, one account on each side, and a way to clear it. Every company that books an intercompany item appears in at least one row.

6If something goes wrong

The two companies give different amounts for the same item	One has booked something the other has not yet, or at a different rate. Note it: it is the difference a rule or an entry will have to treat.
One side uses several accounts for the same item	A rule reads whole accounts. Ask that company to book the item to one account, or plan to clear it by hand.
An item fits two types	Choose the one your team will look under. The type changes where the item is listed, not the amount eliminated.
Nobody knows the other side’s account	Ask the other company’s bookkeeper before you build a rule. A rule with a wrong account eliminates the wrong figures every month.

Want more detail? See the documentation

Intercompany Eliminations Guide Intercompany Types Intercompany Account Naming Conventions

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