Interoffice Billing Reconciliation: AR/AP Elimination

Bulk Processing and Elimination of Interoffice AR/AP Transactions

What is it? 

The Interoffice Billing Reconciliation feature provides agencies with two powerful tools to manage intercompany transactions between offices:

1. Bulk Cash Receipt and Payment Creation - Automatically generates receipts and payments for interoffice billing transactions that don't involve actual cash exchange
2. AR/AP Elimination - Creates traditional elimination journal entries for remaining intercompany balances

This feature is accessed through Accounting > General Ledger > Interoffice Billing Reconciliation and provides a centralized view of all outstanding interoffice billing transactions across your organization.

Why it matters

Eliminates Manual Monthly Work

Agencies no longer need to manually create individual receipts and payments each month for interoffice billing transactions where no cash actually changes hands. This feature eliminates tedious, time-consuming processes and reduces extra steps in month-end close procedures.

Streamlines Financial Consolidation

For agencies with multiple offices, intercompany transactions create artificial receivables and payables that must be addressed during financial reporting. This feature provides two approaches:

• Permanent Settlement: Clear transactions through automated receipt/payment generation
• Elimination Entries: Traditional month-end elimination with automatic reversals

Improves Accuracy and Control

• Ensures both sides of interoffice transactions are properly matched before processing
• Validates that invoices haven't been revalued or modified since selection
• Maintains proper audit trails and approval workflows
• Handles foreign exchange differences automatically

Supports Different Business Models

Agencies can choose the approach that best fits their workflow:

• Companies that prefer to "settle" interoffice transactions can use bulk receipt/payment creation
• Companies that prefer traditional consolidation elimination can use the elimination journal function

How does it work 

1. Navigate to Accounting > General Ledger > Interoffice Billing Reconciliation to access the main interface.
2. The Interoffice Billing Reconciliation page displays all outstanding interoffice billing transactions with the following information. 
   1. Billing Office and Supplier Invoice Office
   2. Invoice Currency and Invoice Number
   3. Client Invoice Amount, Receipts, and Balance
   4. Supplier Invoice Amount, Payments, and Balance
   5. Invoice differences and balance differences
      
3. Filtering options:  Use the available filters to focus on specific transactions:
   1. Billing Office - Filter by the office that created the client invoice
   2. Supplier Invoice Office - Filter by the office that received the supplier invoice
   3. Date Range - Specify accounting year/month ranges.  The date range must be at least one (1) month and no more than twelve (12) months. 
   4. Suppress Zero Balances - When this option is checked, the system will suppress rows where both the Client Invoice Balance and Supplier Invoice balance are zero. 
      

       

Function 1: Create Payments & Receipts

When to use: For interoffice billing transactions where no actual cash will be exchanged between offices. 

How it works:

1. Select the transactions you want to settle by checking the boxes
2. Click "Create Payments & Receipts".   A pop-up box will appear with the current Date - this will be the receipt and payment transaction date. The Accounting Year and Accounting Month default to the month of the transaction date.  Update both date fields as needed.
3. The system validates that:
   • Client and supplier invoice balances match, 
   • You have appropriate access rights
   • Selected invoices haven't been revalued
4. The system automatically creates:

• • Supplier Payments grouped by office, supplier, and currency
  • Receipts grouped by office, client, and currency
  • FX rates and gain/loss handling is consistent with standard receipt and payment generation in the system. 
    
    

Result: Transactions are permanently settled - the AR and AP are cleared and no longer require monthly elimination entries.

Function 2: Eliminate

When to use: For traditional consolidation elimination of remaining intercompany balances.

How it works:

1. Select the transactions you want to eliminate
2. Click "Eliminate".   A pop-up box will appear with the current Date.  The elimination journal will have this as the transaction date.  The Accounting Year and Accounting Month default to the month of the transaction date.  Update both date fields as needed.
3. The system validates balances and access rights
4. The system creates:
   • Elimination journals that clear the AR and AP balances
   • Automatic reversal entries in the following month
   • Foreign exchange adjustments as needed

Result: Traditional elimination entries that reverse in the next period, suitable for standard consolidation reporting.

Key Validations

The system performs several important checks before processing:

• Balance Matching: Client invoice balance must equal supplier invoice balance
• Access Rights: You must have rights to both offices involved
• Timing: Ensures invoices haven't been modified since page load
• Revaluations: Prevents processing of invoices that have been foreign exchange revalued
• Accounting Periods: Validates the selected accounting period is open

Best Practices

• Run after revaluations: If using elimination journals, complete FX revaluations first
• Coordinate between offices: Ensure all related invoices are posted before processing
• Review before processing: Use the interface to identify and resolve any balance discrepancies
• Choose appropriate method: Use payments/receipts for permanent settlement, eliminations for traditional consolidation

This feature significantly reduces manual work while providing the flexibility to handle interoffice billing according to your agency's preferred accounting approach.