Intercompany Elimination Matching Logic

Intercompany elimination matching in JustPerform reconciles transactions between entities within a group and generates offset differences for intercompany matching at each entity level. The system uses relationship-based filtering to identify and eliminate intercompany transactions.

Relationship-Based Matching

Entity and Interco Relationships - The matching logic uses Entity and Interco relationships defined in the ownership structure. All elimination calculations are based on Entity and Interco relationship as defined in the ownership structure.

Relationship Filter - Data filter for Intercompany Elimination follows the same approach as Automatic Journals. With difference being Method details (Relationship) is maintained at the Data action level rather than the individual rule level.

How Transactions Are Matched

Transaction Identification - The system identifies transactions where one entity's activity (such as a sale) corresponds to another entity's reciprocal activity (such as a purchase) within the group.

Seller and Buyer Pairing - Transactions are matched based on Entity (the company making the transaction) and Interco (the trading partner) relationships. The ownership structure defines which entities have intercompany relationships that require elimination.

Filtering Criteria - Rules refer to Consolidation and Ownership model with relationship between entities that transactions are posted against, when consolidated at group/subgroup level. The Applicable to settings determine which versions, groups, and other field members are included in the matching process.

Handling Matched Transactions

Once transactions are matched based on Entity and Interco relationships, the system applies the elimination:

Elimination Factor Application - Matched amounts are multiplied with Elimination factor based on Entity and Interco relationship. The factor is applied with -1 or +1 multiplier depending on whether eliminating or offsetting the transaction.

Posting Based on Method - How the elimination entry is posted depends on the elimination method (Seller, Buyer, or Offset). The method determines where any differences between seller and buyer amounts are posted.

Difference Handling

For any differences between matched intercompany transactions, the system will autogenerate and post the Offset values to offset account defined:

Seller Method - Assumes seller-side transaction is correct value. Any difference between amount booked by seller and buyer is posted to buyer side.

Buyer Method - Assumes buyer side transaction is the correct value. Any difference between amount booked by seller and buyer is posted to seller side.

Offset Method - Neither Seller or Buyer amounts are given any priority and the difference between Buyer and Seller transactions is posted to separate offset account.

Data Processing Flow

The system processes intercompany elimination through the following flow:

Step 1: Filter Input Data - Apply Applicable to and Relationship conditions to identify relevant transactions.

Step 2: Match Transactions - Pair seller and buyer transactions based on Entity and Interco relationships from the ownership structure.

Step 3: Calculate Eliminations - Apply elimination factor with appropriate multipliers (-1 or +1) to matched amounts.

Step 4: Post Results - Post elimination entries and offsets to appropriate accounts based on the selected method.

Step 5: Monitor Execution - Track execution status in Event Log for traceability and audit readiness.

Transaction Types Eliminated

The matching logic eliminates various types of intercompany transactions:

Sale of Goods or Services - Eliminates transactions such as sale of goods or services from one entity to another within the group. This means that the related revenues and cost of goods sold, and profits are all eliminated.

P&L Transactions - There could be P&L transactions that require elimination at the group level.

Interest Income and Expense - Offsetting interest expense and interest income being paid and received between entities within the group are matched and eliminated.