Cross Company Code Clearing Accounting

Cross-Company code clearing accounts cab be G/L accounts as well as Customer and Vendor accounts.
We can enter cross-company code transactions in one step in the General Ledger, Accounts Receivable, and Accounts Payable application components.

Several company codes are involved in a cross-company code transaction. In a cross-company code transaction, the system posts a separate document with its own document number in each of the company codes.

Individual documents are linked by a common cross-company code number. The system generates line items automatically (receivables and payables arising between company codes) in order to balance the debits and credits in each document.

You may use only one company code for offsetting entries. That is to say, regardless of the number of company codes involved, you must make one of the following entries:

•Only one company code on the debit side and the rest on the credit side.
•Only one company code on the credit side and the rest on the debit side.

Example from the G/L View:
This supports for example, central procurement or central payment transactions. In central procurement, one company code makes purchases for several others, while in central payment transactions, one company code pays for the others.

In central purchasing, the invoice item is entered in one company code, and offsetting entries are made in different company codes. The system generates a separate document for each company code. These documents are marked as related by a shared transaction number.

Example from the Vendor View:

A vendor delivers equipment to one company code and other equipment to a second company code, but sends only one invoice for all the equipment to the first company code. You enter part of the expense and post the invoice to the vendor account in the first company code. When entering the invoice, you have to post part of the costs in the second company code. Before you post the cross-company code transaction, the system generates line items automatically (receivables and payables arising between company codes). If you enter a cross-company code transaction, the system posts a separate document with its own document number in each of the company codes. Although the document numbers are different, documents in both company codes have the same number for the cross-company code transaction, the same posting date, the same document date, and the same document type.

Example from the Customer View:

A customer buys a product from one company code and installation and service from another company code, but only receives one invoice for the product and installation from the first company code. The first company code sends and posts the invoice, while the second company code withdraws part of the revenue from the first company code.

Postings for clearing between the company codes involved are made automatically. These clearing entries identify the receivables or payables that arise between the company codes. Each company code-specific document states a zero balance.

Cross Company Code Transactions in SAP FICO:

A Cross Company Code transaction involves two or more company codes in a single transaction in SAP R3 FICO. This means that a cross company code transaction posts to accounts in two company codes.

The way SAP FICO works is that it posts a accounting document in each company code rather than one single posting document. This is because in SAP FICO, one accounting document is always assigned to one company code. A question naturally comes to mind as to how do the debits and credits match i.e. how do accounts balance. To balance accounts, SAP FICO automatically generates line item entries which are posted to a clearing account. Such clearing accounts are normally payables or receivable accounts within company codes. SAP FICO tags cross company code transactions with a common cross company code transaction number for reference. Some examples of cross company code transactions are:

1. Goods are sold by one company code to the another company code.

2. Goods are purchased by one company code from the other company code.

3. One company code makes a payment on behalf of another company code.

When we transfer balances from one company to another company then system will consider the gl accounts in T.code OBYA for intercompany code postings. These accounts have debit balance in company code will equal to credit balance in another company code. In a simple words

Transfering 1000 of vendor A balance to XYZ company code from ABC company code.

Vendor code Dr 1000

Intercompany clearing Cr 1000 –

this entry passess in company code ABC(here vendor balance will be zero after  passing the above entry

 Intercompany clearing Dr 1000

Vendor code Cr 1000              –

this entry passes in company code XYZ.

When the user pass the entry he will give one vendor (ABC company) Dr and vendor (XYZ company) Cr.  Back ground system will bring the intercompany clearing accounts.

Finally the balance of intercompany clearing Cr of ABC Company will get nullify by the intercompany clearing Dr of XYZ Company.