ANS-1134 · ONEWORLD & MULTI-SUBSIDIARY
How to Manage Intercompany Accounts Receivable with Foreign Currency in NetSuite
Learn the foundational setup and modern NetSuite approaches for handling intercompany AR scenarios involving different subsidiary currencies.
Short answer
To manage intercompany accounts receivable with foreign currency, set up intercompany customers and vendors, create the invoice, and then leverage NetSuite's automated payment application and advanced intercompany journal entry features to handle foreign exchange gains/losses and settlement efficiently.
Scenario
A NetSuite user needs to process an Accounts Receivable (AR) transaction between two subsidiaries with different primary currencies, specifically involving an invoice issued by one subsidiary to another, and requires guidance on the proper setup and transaction flow.
Solution
Subsidiary Setup:
Ensure the primary currencies for the involved subsidiaries are correctly configured. For example:US Subsidiary Primary Currency: USD CAD Subsidiary Primary Currency: CAD
Intercompany Customer and Vendor Creation:
Establish the necessary intercompany records:For the US Subsidiary: Create an Intercompany Vendor. For the CAD Subsidiary: Create an Intercompany Customer.
Invoice Creation:
Create the invoice under the appropriate subsidiary. For instance, an invoice worth 80,000 CAD created under the CAD Subsidiary.
Payment Recording and Foreign Exchange:
NetSuite's automated payment application features should be utilized to record payments. The system is designed to automatically calculate and post foreign exchange gains or losses when payments are applied to invoices in a different currency than the subsidiary's base currency. Manual journal entries for payment and realized gain are generally superseded by these automated processes.
Intercompany Settlement:
For intercompany settlement, leverage NetSuite's 'Advanced Intercompany Journal Entries' which offer auto-balancing functionality. Alternatively, utilize designated intercompany transaction types (e.g., intercompany sales orders/purchase orders) for transactional activity, as these automatically create paired entries and handle eliminations, streamlining the process compared to manual journal entries for realized gain on both subsidiary sides.
Application of Payment to Invoice:
When applying payment to an invoice, use the "Accept Payment" button on the invoice. Payments are typically applied directly to invoices. Intercompany journals, if required for specific netting or adjustments, should be managed through NetSuite's dedicated intercompany features rather than marking them under the "Credits subtab" during standard payment application.
Expert NetSuite Support
Need help with this NetSuite issue?
OneWorld & Multi-Subsidiary consulting and configuration support