Cross-Subsidiary Transactions
When subsidiaries within a OneWorld account transact with each other, NetSuite automatically creates paired intercompany transactions to maintain proper accounting in both entities.
How Cross-Subsidiary Transactions Work
Intercompany Transaction Flow
═══════════════════════════════════════════════════════════════════════════════
SCENARIO: USA Subsidiary sells to UK Subsidiary
Step 1: User creates Intercompany Sales Order in USA
USA Subsidiary UK Subsidiary
───────────────────── ─────────────────────
┌─────────────────────┐
│ Intercompany SO │
│ ─────────────────── │
│ Customer: UK Sub │
│ Item: Widget │
│ Qty: 100 │
│ Price: $50 │
│ Total: $5,000 │
└─────────┬───────────┘
│
│ System Auto-Creates
▼
┌─────────────────────┐
│ Intercompany PO │
│ ─────────────────── │
│ Vendor: USA Sub │
│ Item: Widget │
│ Qty: 100 │
│ Price: $50 → £40* │
│ Total: £4,000 │
└─────────────────────┘
*Converted at current exchange rate
Step 2: Fulfill the Intercompany SO
┌─────────────────────┐ ┌─────────────────────┐
│ Item Fulfillment │ ──────────► │ Item Receipt │
│ (Ships from USA) │ Linked │ (Received at UK) │
└─────────────────────┘ └─────────────────────┘
Step 3: Invoice/Bill
┌─────────────────────┐ ┌─────────────────────┐
│ Intercompany Invoice│ ──────────► │ Intercompany Bill │
│ AR: IC Receivable │ Linked │ AP: IC Payable │
└─────────────────────┘ └─────────────────────┘
═══════════════════════════════════════════════════════════════════════════════
Transaction Types
Intercompany Sales Order / Purchase Order
IC Sales Order → IC Purchase Order
═══════════════════════════════════════════════════════════════════════════════
SELLING SUBSIDIARY (USA):
────────────────────────────────────────────────────────────────────────────────
Transaction: Intercompany Sales Order
Field Value
───────────────── ─────────────────────────────────
Customer: UK Subsidiary (Intercompany)
Subsidiary: USA Operations
Currency: USD
Ship To: UK Warehouse
Terms: Intercompany Net 30
Lines:
┌───────────┬─────┬────────┬──────────┐
│ Item │ Qty │ Rate │ Amount │
├───────────┼─────┼────────┼──────────┤
│ Widget-A │ 100 │ $50.00 │ $5,000 │
│ Widget-B │ 50 │ $75.00 │ $3,750 │
└───────────┴─────┴────────┴──────────┘
Total: $8,750
BUYING SUBSIDIARY (UK) - Auto-Created:
────────────────────────────────────────────────────────────────────────────────
Transaction: Intercompany Purchase Order
Field Value
───────────────── ─────────────────────────────────
Vendor: USA Subsidiary (Intercompany)
Subsidiary: UK Operations
Currency: USD (or converted to GBP)
Receive At: UK Warehouse
Terms: Intercompany Net 30
Lines: (Linked to SO lines)
┌───────────┬─────┬────────┬──────────┐
│ Item │ Qty │ Rate │ Amount │
├───────────┼─────┼────────┼──────────┤
│ Widget-A │ 100 │ $50.00 │ $5,000 │
│ Widget-B │ 50 │ $75.00 │ $3,750 │
└───────────┴─────┴────────┴──────────┘
Total: $8,750 (£7,000 at 1.25 rate)
Intercompany Inventory Transfer
Intercompany Transfer Order
═══════════════════════════════════════════════════════════════════════════════
For moving inventory between subsidiary locations without a sale:
TRANSFER ORDER:
────────────────────────────────────────────────────────────────────────────────
From Subsidiary: USA Operations
From Location: USA Warehouse
To Subsidiary: UK Operations
To Location: UK Warehouse
Transfer Price: ☑ Use Intercompany Pricing
OR
☐ Transfer at Cost
┌───────────┬─────┬────────────┬──────────────┐
│ Item │ Qty │ Cost │ Transfer $ │
├───────────┼─────┼────────────┼──────────────┤
│ Widget-A │ 200 │ $30.00 │ $6,000 │
└───────────┴─────┴────────────┴──────────────┘
RESULT:
────────────────────────────────────────────────────────────────────────────────
USA Subsidiary:
Dr. Intercompany Receivable $6,000
Cr. Inventory $6,000
UK Subsidiary:
Dr. Inventory £4,800 (at exchange rate)
Cr. Intercompany Payable £4,800
Note: If transfer price differs from cost, margin recognized by selling sub
Intercompany Service Charges
Intercompany Service Transaction
═══════════════════════════════════════════════════════════════════════════════
SCENARIO: Corporate HQ charges management fee to subsidiaries
CORPORATE HQ (Provider):
────────────────────────────────────────────────────────────────────────────────
Transaction: Intercompany Invoice
Customer: Germany Subsidiary
Service Item: Management Fee - Q1 2025
Amount: $25,000
Account: 4500 - Intercompany Service Revenue
GERMANY SUBSIDIARY (Receiver) - Auto-Created:
────────────────────────────────────────────────────────────────────────────────
Transaction: Intercompany Bill
Vendor: Corporate HQ
Expense Item: Management Fee - Q1 2025
Amount: €23,000 (converted)
Account: 6100 - Management Fee Expense
GL IMPACT:
────────────────────────────────────────────────────────────────────────────────
Corporate HQ:
Dr. IC Receivable - Germany $25,000
Cr. IC Service Revenue $25,000
Germany:
Dr. Management Fee Expense €23,000
Cr. IC Payable - Corporate €23,000
ON CONSOLIDATION:
IC Revenue and IC Expense eliminated
IC Receivable and IC Payable eliminated
Net impact to consolidated P&L: $0
Setting Up Intercompany Customers/Vendors
Create Intercompany Customer
Intercompany Customer Setup
═══════════════════════════════════════════════════════════════════════════════
For each subsidiary that BUYS from you, create an IC Customer:
Navigation: Lists > Relationships > Customers > New
┌─ Customer Record ────────────────────────────────────────────────────────────┐
│ │
│ Company Name: UK Subsidiary - Intercompany │
│ │
│ ☑ Represents Subsidiary: [▼ UK Operations ] │
│ ↑ │
│ This checkbox links the customer to a subsidiary │
│ and enables intercompany automation │
│ │
│ Category: Intercompany │
│ │
│ Subsidiary: USA Operations (your selling subsidiary) │
│ │
│ Currency: USD │
│ │
│ Terms: Intercompany Terms │
│ │
│ Receivables Account: 1150 - Intercompany Receivable │
│ │
└──────────────────────────────────────────────────────────────────────────────┘
Create Intercompany Vendor
Intercompany Vendor Setup
═══════════════════════════════════════════════════════════════════════════════
For each subsidiary that SELLS to you, create an IC Vendor:
Navigation: Lists > Relationships > Vendors > New
┌─ Vendor Record ──────────────────────────────────────────────────────────────┐
│ │
│ Company Name: USA Subsidiary - Intercompany │
│ │
│ ☑ Represents Subsidiary: [▼ USA Operations ] │
│ ↑ │
│ This links the vendor to a subsidiary │
│ │
│ Category: Intercompany │
│ │
│ Subsidiary: UK Operations (your buying subsidiary) │
│ │
│ Currency: USD │
│ │
│ Terms: Intercompany Terms │
│ │
│ Payables Account: 2150 - Intercompany Payable │
│ │
└──────────────────────────────────────────────────────────────────────────────┘
Intercompany Pricing
Transfer Pricing Methods
Transfer Pricing Options
═══════════════════════════════════════════════════════════════════════════════
METHOD 1: Cost Plus Markup
─────────────────────────────────────────────────────────────────────────────
Item Cost: $30.00
Markup: 25%
Transfer Price: $37.50
Use when: Manufacturing to distribution subsidiaries
Compliance: Document the cost-plus methodology
METHOD 2: Market Price (Arm's Length)
─────────────────────────────────────────────────────────────────────────────
Market Price: $50.00
Transfer Price: $50.00
Use when: Comparable market transactions exist
Compliance: Document comparable transactions
METHOD 3: Negotiated Price
─────────────────────────────────────────────────────────────────────────────
Agreed Price: $45.00
Transfer Price: $45.00
Use when: Unique items, no market comparables
Compliance: Document negotiation and rationale
METHOD 4: Resale Minus
─────────────────────────────────────────────────────────────────────────────
End Sale Price: $100.00
Margin: 40%
Transfer Price: $60.00
Use when: Distribution subsidiaries resell
Compliance: Document resale margin analysis
Intercompany Price Lists
Navigation: Lists > Accounting > Intercompany Price Lists
Intercompany Price List Configuration
═══════════════════════════════════════════════════════════════════════════════
Price List: USA to UK Transfer Prices
Selling Subsidiary: USA Operations
Buying Subsidiary: UK Operations
Currency: USD
Effective Date: 01/01/2025
┌───────────────┬────────────┬────────────┬─────────────────────┐
│ Item │ Base Cost │ Markup % │ Transfer Price │
├───────────────┼────────────┼────────────┼─────────────────────┤
│ Widget-A │ $30.00 │ 25% │ $37.50 │
│ Widget-B │ $45.00 │ 25% │ $56.25 │
│ Widget-C │ $60.00 │ 20% │ $72.00 │
│ Service-Fee │ N/A │ N/A │ $500.00/month │
└───────────────┴────────────┴────────────┴─────────────────────┘
When IC SO is created from USA to UK:
→ System automatically applies these transfer prices
→ Documented for transfer pricing compliance
Transaction Flow Examples
Complete Intercompany Sale Flow
End-to-End IC Sale Flow
═══════════════════════════════════════════════════════════════════════════════
STEP 1: CREATE IC SALES ORDER (USA)
────────────────────────────────────────────────────────────────────────────────
Transaction: IC Sales Order #SO-12345
From: USA Operations
To: UK Subsidiary (IC Customer)
Items: 100 × Widget-A @ $50 = $5,000
AUTO-CREATED: IC Purchase Order #PO-67890 in UK
STEP 2: FULFILL ORDER (USA)
────────────────────────────────────────────────────────────────────────────────
Transaction: Item Fulfillment #IF-12345
Ships from: USA Warehouse
Ships to: UK Warehouse
USA GL:
Dr. COGS $3,000
Cr. Inventory $3,000
AUTO-CREATED: Item Receipt #IR-67890 in UK
UK GL:
Dr. Inventory £2,400
Cr. IRNB £2,400
STEP 3: CREATE INVOICE (USA)
────────────────────────────────────────────────────────────────────────────────
Transaction: IC Invoice #INV-12345
Amount: $5,000
USA GL:
Dr. IC Receivable - UK $5,000
Cr. IC Sales Revenue $5,000
AUTO-CREATED: IC Vendor Bill #BILL-67890 in UK
UK GL:
Dr. IRNB £2,400
Dr. IC Expense Variance* £600 *(if transfer price > cost)
Cr. IC Payable - USA £4,000
STEP 4: SETTLEMENT (See Settlement documentation)
────────────────────────────────────────────────────────────────────────────────
Options: Cash payment, Netting, or Journal entry
═══════════════════════════════════════════════════════════════════════════════
FINAL BALANCES (Before Elimination):
────────────────────────────────────────────────────────────────────────────────
USA: IC Receivable $5,000 | IC Revenue $5,000 | Margin $2,000
UK: IC Payable £4,000 | Inventory £2,400
ON CONSOLIDATION:
────────────────────────────────────────────────────────────────────────────────
IC Receivable/Payable eliminated
IC Revenue/COGS eliminated
Only external transactions remain
Drop Ship Between Subsidiaries
Intercompany Drop Ship
═══════════════════════════════════════════════════════════════════════════════
SCENARIO: Customer orders from UK, shipped from USA warehouse
External Customer
│
│ Orders from UK Sub
▼
┌─────────────────┐
│ UK Subsidiary │
│ ─────────────── │
│ Sales Order │
│ Customer: ABC │
│ Ship From: USA │ ──────────────────────┐
└────────┬────────┘ │
│ │
│ Creates IC PO │
▼ │
┌─────────────────┐ │
│ USA Subsidiary │ │
│ ─────────────── │ │
│ IC Sales Order │ │
│ Customer: UK Sub│ │
└────────┬────────┘ │
│ │
│ Fulfills │
▼ │
┌─────────────────┐ │
│ USA Warehouse │ │
│ Ships directly │───────────────────────┼────────► External Customer
│ to end customer │ │ (ABC Corp)
└─────────────────┘ │
│
RESULT: │
• UK books the external sale │
• USA books IC sale to UK │
• Physical shipment from USA │
• Inventory decremented from USA │
GL Impact Summary
Standard IC Transaction GL Entries
| Transaction | Selling Sub (Debit) | Selling Sub (Credit) | Buying Sub (Debit) | Buying Sub (Credit) |
|---|---|---|---|---|
| IC SO Created | - | - | - | - |
| IC Fulfillment | COGS | Inventory | Inventory | IRNB |
| IC Invoice/Bill | IC Receivable | IC Revenue | Expense/Inv | IC Payable |
| IC Payment | Cash | IC Receivable | IC Payable | Cash |
Intercompany Account Structure
Required Intercompany GL Accounts
═══════════════════════════════════════════════════════════════════════════════
BALANCE SHEET - Assets:
────────────────────────────────────────────────────────────────────────────────
1150 - Intercompany Receivable
└─ 1151 - IC Receivable - UK
└─ 1152 - IC Receivable - Germany
└─ 1153 - IC Receivable - Japan
BALANCE SHEET - Liabilities:
────────────────────────────────────────────────────────────────────────────────
2150 - Intercompany Payable
└─ 2151 - IC Payable - USA
└─ 2152 - IC Payable - Corporate
└─ 2153 - IC Payable - Germany
INCOME STATEMENT - Revenue:
────────────────────────────────────────────────────────────────────────────────
4500 - Intercompany Revenue
└─ 4510 - IC Product Revenue
└─ 4520 - IC Service Revenue
└─ 4530 - IC Management Fees
INCOME STATEMENT - Expense:
────────────────────────────────────────────────────────────────────────────────
5500 - Intercompany COGS
6500 - Intercompany Expenses
└─ 6510 - IC Service Expenses
└─ 6520 - IC Management Fee Expense
All IC accounts should be flagged for elimination on consolidation
SuiteQL Queries
Open Intercompany Orders
-- Find open IC Sales Orders and their paired POs
SELECT
so.tranid AS ic_sales_order,
so.trandate,
sell_sub.name AS selling_subsidiary,
buy_sub.name AS buying_subsidiary,
so.foreigntotal AS so_amount,
po.tranid AS paired_po,
so.status AS so_status,
po.status AS po_status
FROM
transaction so
JOIN transaction po ON so.id = po.createdfrom
JOIN subsidiary sell_sub ON so.subsidiary = sell_sub.id
JOIN subsidiary buy_sub ON po.subsidiary = buy_sub.id
WHERE
so.type = 'SalesOrd'
AND so.custbody_is_intercompany = 'T' -- Custom field or standard IC flag
AND so.status NOT IN ('SalesOrd:H', 'SalesOrd:C') -- Not closed
ORDER BY
so.trandate DESC
Intercompany Balance Report
-- IC Receivable/Payable balances by subsidiary pair
SELECT
from_sub.name AS from_subsidiary,
to_sub.name AS to_subsidiary,
SUM(CASE WHEN al.amount > 0 THEN al.amount ELSE 0 END) AS ic_receivable,
SUM(CASE WHEN al.amount < 0 THEN ABS(al.amount) ELSE 0 END) AS ic_payable,
SUM(al.amount) AS net_balance
FROM
transactionaccountingline al
JOIN transaction t ON al.transaction = t.id
JOIN account a ON al.account = a.id
JOIN subsidiary from_sub ON t.subsidiary = from_sub.id
JOIN subsidiary to_sub ON t.custbody_ic_subsidiary = to_sub.id
WHERE
a.acctnumber LIKE '115%' -- IC Receivable accounts
OR a.acctnumber LIKE '215%' -- IC Payable accounts
GROUP BY
from_sub.name, to_sub.name
HAVING
SUM(al.amount) != 0
ORDER BY
ABS(SUM(al.amount)) DESC
Best Practices
Transaction Entry
| Practice | Recommendation |
|---|---|
| Use IC Customer/Vendor | Always use the "Represents Subsidiary" linked records |
| Consistent Pricing | Use Intercompany Price Lists for consistency |
| Same Period | Process paired transactions in same accounting period |
| Documentation | Include IC reference in memo field |
Process Controls
| Control | Purpose |
|---|---|
| Approval Workflow | Require approval for IC transactions above threshold |
| Reconciliation | Monthly reconciliation of IC balances |
| Audit Trail | Maintain documentation for transfer pricing |
| Settlement Schedule | Regular settlement of IC balances |
Related Documentation
- Intercompany Flow - Detailed IC transaction flows and GL examples
- Intercompany Settlement - Clearing IC balances
- Consolidation & Elimination - Eliminating IC on consolidation
- Intercompany Journal Entries - IC journal entry specifics