Intercompany Clearing in SAP

The use of intercompany clearing in SAP is sometimes an unused tool to combat intercompany balances spiralling out of control.

Probably the main reason why it is not used extensively is because intercompany clearing in SAP is highly manual. SAP users are required to manually match open items across the intercompany relationship and post manual and complex intercompany clearing transactions. BEST GL Clearing module automates  intercompany clearing in SAP, making it quick and easy to clear intercompany open items and reduce intercompany balances.

The management of open items on Intercompany accounts can be treated in different ways.. If the intercompany balance represents a 3rd party arm’s length relationship, one typically expects a payment to clear one account, with the payment being allocated to line items on the other account. However, when the intercompany relationships represent “internal” relationships, or Intra Company entries, then open item clearing is required to manage discrepancies and reconcile the internal trading relationship.

A good example is a logistics process where a Distribution Centre (DC) supplies stores within a group, or stores transfer stock between themselves. A host of Customer and Vendor postings are made that could be within one or across multiple Company Codes. If the latter, these may be Companies within the same legal entity or not. Either way, there is a need to reconcile open items to manage the stock being moved between locations. If open items are not matched and cleared, it is impossible to identify the value of stock in transit versus short deliveries, stock or price queries or even just incomplete invoicing processing.

If these accounts were cleared efficiently to only leave true outstanding items on the account, the open transactions on the account now represent incomplete processing (i.e. stock in transit) or legitimate queries. With effective clearing it makes it easy to categorise item on the accounts:

  • One expects open items on the Customer account in the Supplying Company – i.e. items still in transit.
  • Items open on the Vendor Account in the Receiving Company should represent issues and therefore require intervention.

The BEST GL Clearing module can assist with this type of intercompany Clearing in SAP and can be automated to perform this clearing without any user intervention.

Why BEST GL Clearing is so well suited to automated intercompany Clearing in SAP is because it can:

  • Clear automatically across Vendor and Customer Accounts
  • Clear automatically across Company Codes
  • Programmatically “cleanse” references to maximise matches
  • Summarise Clearing entries to simplify intercompany Clearing entries posted

The BEST GL Clearing module therefore allows for automated clearing across your intercompany Customer and Vendor accounts to match items that have been completed from a logistics process. These cleared items are then rolled up into the true intercompany Accounts if they reside in different SAP Company Codes. Open items that remain which are not still in transit can be easily identified and investigated. As an additional control, if you reconcile these accounts using the BEST GL Reconciliation module and incorporate ageing into the Recon, items that are not managed efficiently will be displayed as long outstanding items.

The BEST GL Clearing Module can help you automate your intercompany Clearing in SAP and ultimately your month end intercompany Reconciliations in SAP.

Watch our demo video and find out more about the BEST GL Clearing Module here.

Contact BEST to find out how the BEST GL Clearing module can automate your intercompany clearing in SAP.