Help... best setup for intercompany nominals/ charging

[--andrea--]

Hi,

I use Sage Line 50 Financial Controller, with multiple companies.

Can other people tell me how they have setup their nominal accounts for inter-company transactions?

Many thanks,
Andrea

[brucedenney]

I used to do accounts for a group of 5 companies and the inter-company transactions were a nightmare to control.

We created a set of balance sheet nominals which appeared in all the companies in the same sequence.

We would then pulled the five numbers from each company into five columns in a spread sheet in Excel using the odbc drivers (you could just type them if you wanted) This gave a matrix of Intercompany transactions which we could check netted to zero to check there were no errors, there there were a lot of transactions and we were always finding the odd error. Spotting which companies the error was ok, unless there were several errors overlapping in which case the nightmare scenario kicked in.

I think we used the numbers 2400, 2405, 2410, 2415 & 2420 for the actual accounts and then hit the whole 24xx range as Inter-company in the Chart of Accounts where we used the "floating" feature to show them in either assets or liabilities as is done with the VAT and Bank accounts.

[--andrea--]

Hiya Bruce,

Thanks for your reply.

Would you see any disadvantage to me setting them up as 'bank accounts' in the 1200 series, in a similar way that we set up say Directors Loan Accounts?

I say this because the companies frequently pay each others bills,(depending who has money in the bank!). And I can always ensure that they are both £0 at the end of the financial year.

Sales invoices and purchase invoices between each company I would deal with as if they were un-connected.

Does that make any sense?

Thanks,
Andrea

[brucedenney]

First idea is to avoid the problem altogether: If both companies use the same bank, then you might be able to get an arrangement, where they treat the two accounts as one net account for charges in which case you can use the "right" account always and you don't have to do the extra transactions and life will be simple.

Otherwise:-

The Bank account idea seems fine especially if you are doing a lot of this.

All transactions entered in one company will have to be mirrored in the other for you to be able to reconcile the bank accounts with the bank statements, you will also need to do an inter-company reconciliation (which with only 2 companies is easy)

Here is a quick overview of a transaction scenario.

If the invoice you want to pay is in company A you are going to pay it from company B
Do a bank transfer from Company B to the InterCompanyBankAccount. (This will really be the payment to the supplier)
In company A you pay the invoice using the InterCompanyBankAccount.
(You can print cheques, advices and so on now)

When you bank rec you also need to reconcile the intercompany accounts, as there are only two they should be the opposite of each other so if one is £1875.79 in credit the other should be £1875.79 overdrawn.

You might encounter a few extra issues with things like cheques that never clear. If you have huge volumes then bank charges might be an issue.

Multi-Company working: If you want to have two companies open at once and flick between the two, you will find that Sage doesn't let you do this, however, if you have 2 pc's you can run a copy on each, rather than having to physically put the 2 pc's next to each other you can use remote access software to be able to remotely access the other PC. The software we use for remote desktop support is perfectly suitable for doing this and is available for free from http://www.ultravnc.com/

[--andrea--]

Dear Bruce,

Just to let you know this is working great.

I shall stamp it out in the long run, but in the short-term this is good.

Many thanks,
Andrea

P.S. If we all whine sufficiently Sage will have to come up with a 'switch', whereby at the click of a button we shall be able to switch between companies without shutting down all our windows.

[brucedenney]

Well, perhaps...

There are a couple of issues, it is possible that the code can not be run multiple times on one machine for "logical" reasons.

If this were the case then, the best you could hope for was something that logged you our of one company and logged you back into the other. Not really all that handy for "flicking" between the two.

There are also probably going to be licensing issues running multiple copies on one machine.

I would not hold my breath for it.