Many organizations have subsidiaries which they have created to serve the main company. This is done for various purposes, the main amongst them would be for taxation benefits. Since each company itself is a separate legal entity so they are taxed separately because their turnover is depicted separately. So, for example, in a company which is manufacturing cars, we can have subsidiary companies for the various services required by the main unit. One unit of a Subsidiary company can be an IT company, which will take care of the various IT services related to the main unit, other units can specialize in manufacturing of gear-boxes, another subsidiary can be created to provide house-keeping services, and so forth.
These subsidiary companies can further expand to service other subsidiary companies and external clients as well.
Below diagram shows the setup of subsidiary companies along with the main company:But the above setup leads to increased manpower requirement so as to maintain the accounts for each individual company. An invoice raised might not be entered or received by the recipient company.
All this leads to reconciliation issues and more often than that, the very purpose of creating separate entities comes to a big naught!
This is precisely where the intercompany feature of Sage ERP X3 comes to fore. Intercompany transactions are those transactions which occur when one company is involved in a transaction with another company or division within the same group. These can be Financial or inventory related transactions between two companies of the same entity.
So, how would the intercompany feature help the organization as a whole?
When a transaction is recorded in a company which is selling the goods or services, a corresponding purchase transaction is created automatically by the system. This means that when a Sales Invoice is created by the IT services company against the Main Company and vice versa a purchase invoice will be created in the Main Company against the IT services company.
Accordingly, controls are also in place which will allow users to create inventory receipts against shipments when there is an inventorial transaction between these divisions for an entity.
All this leads to an increased traceability as the entire transaction details are maintained in the same System which eliminates multiple entries for the same transactions. This leads to high productivity and transparency.
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