Initiating a Netting Transaction
The Balance Overview page provides a grid view of the open payable balances for subsidiaries. This page groups transactions by subsidiary-subsidiary-currency. Each subsidiary-subsidiary-currency group displays the following open balances:
- Balance due – Includes accounts payable and accounts receivable balances from all open posted transactions.
- Netting amounts – The Available for netting shows the maximum amount from all the transactions between the two subsidiaries that can be netted off. The amount available for netting can be zero or a negative amount. A zero amount does not always mean there is no amount to be netted off. In some cases, zero or a negative value may mean that you have credits that are available for netting.
To initiate a netting transaction:
- Go to Transactions > Financial > IC Netting > Balance Overview.
- In the Netting column, click a New link to open the Netting Workbench page. This page enables you to create a netting transaction against the open payable and open receivable amounts in that row.
If the Action column displays a zero value on a row, there is no mutual balance to settle.
Intercompany Netting Limitations
The following are limitations of the intercompany netting functionality:
- The Netting Settlement permission defaults to Full permission level. The Netting Settlement Approval permission defaults to Edit permission level.
- Intercompany zero payment is not supported. You cannot clear accounts payable or accounts receivable if there is no mutual balance between two entities. For example, if you have a vendor bill and a vendor credit but no accounts receivable transaction, you cannot net it using intercompany netting.
- Intercompany netting supports only matched and linked intercompany transactions with the same amounts on the payable and receivable sides of the general ledger. The following examples describe supported intercompany transactions:
- Intercompany Journal Entries – There must be only one AP and AR line for each subsidiary-subsidiary-currency to ensure that the lines are nettable.
- Intercompany Invoice and Intercompany Bill – These transactions are linked through their related purchase order and sales order (arm’s length process inventory transfers). However, these transactions must be matched by having only one invoice and one bill for the same amount, and both must have intercompany entities.
- Intercompany Vendor Credit and Intercompany Credit Memo – This limitation is similar to the Intercompany Invoice and Intercompany Bill limitation. These transactions are linked through their related purchase order and sales order. They must be matched through only one vendor credit and one credit memo with intercompany entities and of the same amount.