Intercompany Transactions in OneWorld
Intercompany transactions record business between subsidiaries within the same parent company. NetSuite OneWorld supports intercompany journal entries, intercompany sales orders and transfer orders, and intercompany vendor/customer relationships. Proper setup is critical for accurate consolidated reporting, tax compliance, and transfer pricing documentation. This guide walks through setup, processing, eliminations, and troubleshooting.
One-World Setup Prerequisites
Enable OneWorld (multi-subsidiary) under Setup > Company > Enable Features. Create subsidiary records with proper hierarchy. Configure intercompany relationships under Setup > Company > Subsidiaries > Intercompany: define which subsidiaries can transact with each other. Set up intercompany accounts in the chart of accounts—typically one intercompany receivable and one intercompany payable account per subsidiary pair. For example, Subsidiary A sells to Subsidiary B: A has "Due from B" (asset) and B has "Due to A" (liability). These must balance across the group.
| Component | Configuration |
|---|---|
| Intercompany vendor/customer | Link vendor in Sub B to customer in Sub A (or vice versa) |
| Intercompany accounts | Create in COA, assign to subsidiary pair |
| Auto-create intercompany journal | Enable in Subsidiary setup for auto-offset |
Intercompany Journal Entries
Use the Intercompany Journal Entry form to create balanced entries across subsidiaries. One subsidiary debits an expense (e.g., management fee); the other credits revenue. NetSuite can auto-create the offsetting entry when "Create Intercompany Journals" is enabled—you enter one side, and NetSuite generates the mirror entry. Use for management charges, cost allocations, funding transfers, and royalty payments. Always verify both sides sum to zero before posting.
Intercompany Sales and Transfer Orders
Intercompany sales orders: one subsidiary (seller) sells to another (buyer). The buying subsidiary receives an intercompany PO and bill automatically when fulfillment and billing run. Configure the intercompany relationship, fulfillment, and billing preferences. Transfer orders move inventory between subsidiaries with optional intercompany revenue recognition—configure item-level settings for transfer pricing. For drop-ship intercompany, the flow differs; consult NetSuite documentation for your scenario.
Eliminations
For consolidated reporting, intercompany balances must be eliminated so revenue/expense and AR/AP net out. NetSuite's consolidation features include elimination rules and elimination subsidiaries. Configure elimination subsidiary and mapping (which accounts to eliminate). Run the consolidation engine to produce eliminated financials. Work with your accountant to define elimination logic: reciprocal AR/AP, inventory profit in stock, unrealized gains/losses. Eliminations are typically run monthly or with each consolidation.
Transfer Pricing
Intercompany transfers often need transfer prices (e.g., cost plus margin, market price). Configure item costs, transfer pricing rules, or custom logic via workflows and SuiteScript. Document policies for audit and tax. Some organizations use custom fields to store transfer price basis and workflows to validate at order entry. Keep an audit trail for transfer pricing reviews.
Troubleshooting
Unbalanced entries: Check both sides sum to zero. Verify subsidiary and account on each line. Missing intercompany accounts: Add to COA and ensure correct subsidiary. Incorrect subsidiary on lines: Verify default subsidiary on the form and line-level overrides. Auto-create not working: Check Subsidiary preferences and intercompany relationship. Use Intercompany Allocation and related reports to validate balances between subsidiaries.
YRK Consulting has configured intercompany for 15-entity organizations. Contact us.