ANS-0630 · ONEWORLD & MULTI-SUBSIDIARY
How to Manage Intercompany Royalties in NetSuite Using Dropship Transactions
NetSuite's standard dropship and intercompany features provide a no-customization solution for managing royalty payments between subsidiaries.
Short answer
NetSuite's standard dropship and intercompany features manage intercompany royalties. Set the sister company as preferred vendor for royalty items, checking 'Drop Ship Item' on the item record. Sales automatically create an Intercompany PO (ICPO) to the sister company, with purchase price representing royalty percentage. The sister company tracks royalties by matching ICPO with Intercompany SO (ICSO).
Scenario
A subsidiary sells items that require royalty payments to a sister company for each sale. The organization seeks an efficient method to track these intercompany royalty payments within NetSuite, utilizing standard functionalities without custom development.
Solution
This solution leverages NetSuite's standard Dropship and Intercompany features, requiring no customization.
Configure the sister company as the preferred vendor for the software items that the other subsidiary is selling.
Default to check the “Drop Ship Item” checkbox in the item record for these items.
When there is a sale for such an item, NetSuite will automatically create an Intercompany PO (ICPO) to the sister company. The Purchase price on this ICPO will represent the % of royalty that the sister company will receive for every sale.
In the books of the sister company, all royalties can be tracked by matching the dropship ICPO with an Intercompany SO (ICSO).
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