Intercompany transactions in Microsoft Dynamics 365 Business Central allow related companies within the same corporate group to post transactions between each other automatically, with matching entries created in both companies' accounts. Rather than manually entering a sale in one subsidiary and a corresponding purchase in another, intercompany functionality posts both sides from a single transaction, keeping group accounts consistent and reducing manual reconciliation work.
How intercompany transactions work in Business Central
Each related company is set up as a separate company within the same Business Central environment, with an intercompany chart of accounts mapping that links accounts across entities. When a transaction is posted that involves another group company, such as one subsidiary invoicing another for shared services, Business Central automatically creates the corresponding entry in the receiving company's accounts, using the appropriate currency conversion where the companies trade in different currencies.
Intercompany transactions in practice
- A group with a UK trading company and a separate UK property company uses intercompany functionality to post rent charges automatically between the two, eliminating manual duplicate entry.
- A multinational group with subsidiaries in different currencies uses intercompany transactions to handle automatic currency conversion when one entity invoices another.
- A finance team uses intercompany functionality to allocate shared central costs, such as IT and finance services, automatically across operating subsidiaries each month.
- A group financial controller uses intercompany balances that automatically match across companies to speed up month-end consolidation and reduce reconciliation errors.
How Advantage configures intercompany transactions
Advantage sets up intercompany functionality as part of Business Central implementations for multi-entity groups, designing the chart of accounts mapping and currency handling to match each group's specific structure. Find out more about our implementation services.
Talk to Advantage about Business Central for multi-entity groups →
Frequently Asked Questions
Does intercompany functionality require separate Business Central licences for each company?
Each legal entity transacting in Business Central is typically set up as a separate company within the same environment, and licensing is based on users rather than companies, so adding intercompany functionality between companies already in the same Business Central environment does not usually require additional licences.
Can intercompany transactions automate currency conversion between subsidiaries?
Yes. Where subsidiaries operate in different currencies, Business Central applies the relevant exchange rates automatically as part of posting intercompany transactions, removing the need for manual currency conversion calculations.
Does intercompany functionality eliminate the need for a separate consolidation process?
It significantly simplifies consolidation by ensuring intercompany balances match automatically, but a structured consolidation process, whether within Business Central or a dedicated tool, is typically still used to produce final group financial statements, particularly for more complex group structures.
