Xero Groups · Track 2 · Tutorial 2 of 3

Eliminate intercompany invoices and bills

When your Xero companies charge each other, one raises an invoice and the other records the bill, each naming the other as a contact. BrizoConsol can use those documents to eliminate the charge — and, because your companies keep different currencies, treat the difference as FX.

You will needOctober reloaded with invoices and bills, as in Set the lock date in Xero, then reload. Each company mapped to the group chart.

By the endHarbour Pte Ltd’s management fee to Harbour Pty Ltd eliminated every month by a rule that only posts when the invoice exists, with the currency difference posted as FX, and the October sale to Harbour NZ Ltd eliminated from its invoice and bill.

1List what your Xero companies charge each other

In Your Group, two intercompany items go through Xero in October 2026:

Monthly management fee	Harbour Pte Ltd invoices Harbour Pty Ltd SGD 20,000 (INV-0231) to 410 Management Fee Income. Harbour Pty Ltd enters the bill in SGD, and Xero records it in AUD to 485 Management Fees. Only intercompany amounts go through these accounts — a rule handles it (steps 2–4).
Goods sold to NZ	Harbour Pte Ltd invoices Harbour NZ Ltd SGD 30,000 (INV-0245) to 200 Sales, the same account as its outside customers. A rule can’t pick out the NZ part of 200, so you eliminate the documents (step 5).

Harbour Pte Ltd invoices Harbour Pty Ltd for the management fee and Harbour Pty Ltd records the bill in Xero; a Method 2 rule from 410 to 485 eliminates both sides when an invoice or bill names Harbour Pty Ltd — The fee as it sits in each company’s Xero, and the rule that clears it.

In Xero, set each sister company up as a contact under its real name — Harbour Pty Ltd, not Harbour AU. BrizoConsol finds the documents by those names.

2Add a rule for the fee

Select Your Group, and open Intercompany → Elimination Rules.
Click Add an Auto Elimination Rule.
Enter the Description Pte management fee to Pty, and choose the Intercompany Type Management Charges.
Choose Method 2: Use the amount in both Organisations.
Under Leg Scope, choose Harbour Pte Ltd and 410 as the From side, and Harbour Pty Ltd and 485 as the To side.

Why Method 2: Harbour Pte Ltd’s SGD 20,000 and Harbour Pty Ltd’s AUD expense almost never translate to the same SGD amount, because Xero converted the bill at its own rate and the group translates Pty’s figures at the month’s average rate. Method 2 clears each side at its own amount and posts the small difference to the treatment you choose. Method 1 would hold the month for review whenever the difference is over the tolerance.

3Only eliminate when the invoice exists, and treat the rest as FX

Under Only eliminate when an invoice or bill names, tick Harbour Pty Ltd under Customers.
Set Default residual treatment to FX, and choose the Treatment account for exchange differences.
Click Confirm.

Adding a new elimination rule: Method 2 from Harbour Pte Ltd 410 Management Fee Income to Harbour Pty Ltd 485 Management Fees, eliminating only when an invoice or bill names Harbour Pty Ltd, with differences treated as FX — The two sides (1), the name the month’s invoice must carry (2), and where the difference goes (3).

Where the names come from	The contacts on the posted invoices and bills of the two companies in the rule. Choose the companies first; the lists fill from their documents.
What counts	A posted invoice or bill of either company, dated in the month, naming Harbour Pty Ltd. Xero drafts and voided documents don’t count; invoices awaiting approval do.
How names are compared	Ignoring capitals, punctuation and endings such as Pte Ltd, Pty Ltd or Ltd.

Saving the rule recalculates the group: October’s fee is eliminated, and the difference is posted to the FX account. The entry is listed in Elimination Review, where you can adjust the treatment.

The check needs the month’s invoices and bills in BrizoConsol. The nightly read brings in the last 6 months; for an older month, reload it with Invoices and Bills ticked.

4Deal with a month the invoice is missing

In November, the month is loaded while Harbour Pte Ltd’s invoice is still a draft in Xero. The rule doesn’t post. It holds the entry in Intercompany → Elimination Review, with the reason:

Elimination Review: November’s management fee held back because no invoice or bill in November 2026 names Harbour Pty Ltd, with Review and Reject buttons — Why the entry was held (1), and what you can do with it (2).

The invoice is just late	Approve it in Xero and reload November for Harbour Pte Ltd. The rule then finds it and posts on its own.
The fee was booked without an invoice	Click Review, check the entry, and click Confirm & Replace to post it anyway.
The amounts shouldn’t be eliminated	Click Reject.

5Eliminate the sale to NZ from its documents

Harbour Pte Ltd’s 200 Sales also holds sales to outside customers, so eliminate the October sale from the Xero invoice and bill themselves:

Open Intercompany → Sales / Purchases / Services, keep the scenario on Actual and Oct-2026, and click Add Elimination Entry.
Click Documents at the top of the dialog.
On the From side, choose Harbour Pte Ltd and 200 Sales; on the To side, Harbour NZ Ltd and its purchases account.
Tick INV-0245 and Harbour NZ Ltd’s bill for it, or click the match button to pair them.
Check the lines, and click Confirm, allocating any difference to FX difference.

The full dialog is in Clear intercompany balances.

Document entries aren’t included in the Standard edition. There, post a GL entry for the amounts instead.

Check

On the group Profit & Loss for Oct-2026 with Show Entities on, the eliminations cancel the fee income against the fee expense, and the sale to NZ against its purchase. On Month End Status, the Eliminations card shows Posted.

6If something goes wrong

The name lists are empty	No posted invoices or bills are loaded for those companies. Reload a month with Invoices and Bills ticked.
The sister company isn’t in the name list	It has no posted invoice or bill in the loaded months, or is a contact under another name in Xero. Fix the contact in Xero and reload.
Every month lands in Elimination Review	The invoices name the company differently from the name you ticked, or are left as drafts. Check the contact and status in Xero.
The rule posts in a month with no fee invoice	Another posted document that month names Harbour Pty Ltd — any invoice or bill between the two counts.
A large amount lands in FX	It isn’t an exchange difference: one side is missing or wrong, such as a bill entered for the wrong amount. Fix it in Xero and reload.

Want more detail? See the documentation

Auto Eliminations Elimination Entries Intercompany Account Naming Conventions

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