How to Set Up and Perform Intercompany Transactions in Dynamics 365 Business Central
Learn how to configure and process Intercompany Transactions in Microsoft Dynamics 365 Business Central.
This training article walks through the complete setup process, including Intercompany Partners, account mapping, dimension synchronization, sales and purchase transactions, Intercompany journals, and the use of the Intercompany Inbox and Outbox.
Intercompany functionality allows multiple companies within Business Central to automatically exchange transactions, reducing manual data entry and helping maintain accurate accounting records across related entities.
Understanding Intercompany Transactions
Intercompany transactions allow one company to create financial transactions that automatically generate corresponding entries in another company. Common use cases include:
Intercompany sales and purchases
Shared expense allocations
Intercompany journal entries
Intercompany chargebacks
Intercompany inventory movements
Before transactions can be exchanged, Intercompany functionality must be configured in each participating company.
Configure Intercompany Setup
Access Intercompany Setup
To access Intercompany Setup, open global search (Alt + Q) and type in Intercompany Setup. Select Intercompany Setup from the search results to open the page.
Complete the General Setup
On this page, you will add basic setup that is required to start using the intercompany functionality.
IC Partner Code: This is the code of the company you are in. It is limited to 20 characters, so name it as best as you can with the company name.
IC Inbox Type:
“Database” is the common option and tells the system that the intercompany inboxes will be managed within the environment.
“File Location” is less common and mainly used with on prem environments.
Auto. Send Transactions: If enabled, it will automatically send transactions to the intercompany partners. If this isn’t enabled, you will have to go into the “Intercompany Outbox Transactions” and go through the transactions and manually send them.
Synchronization Partner: Here you can choose which intercompany partner you want to sync your “Intercompany Chart of Accounts” and “Intercompany Dimensions” with.
Auto Send Transactions Toggle: When enabled, transactions are automatically sent to the Intercompany Partner after posting. Without this setting, transactions remain in the Intercompany Outbox until manually sent.
Transaction Notifications Toggle: When enabled, Business Central displays notifications whenever Intercompany transactions are created and sent. These notifications provide confirmation that the transaction was transmitted successfully.
For most organizations, enabling both toggles is recommended.
Intercompany transactions use a dedicated General Journal Template. If you haven't created one, you'll need to open General Journal Templates and make sure you have one created with the Type being Intercompany.
Return to the Intercompany Setup page after and select the Default Intercompany Journal Template and Default Intercompany Journal Batch.
Create Intercompany Partners
After completing the Intercompany Setup, the next step is to create your Intercompany Partners.
Add a New Partner
Select + Add, which will open up another window.
Fill in the required information on this page.
Transfer Type: This is where you specify the type of transfer for this intercompany partner. There are 4 options.
File Location: A file is meant to be generated and sent to the partner.
Database: The partner is set up within the same tenant.
Email: The transactions are meant to be sent by email.
No IC Transfer: The data is stored in your system, but nothing is generated to be sent.
Company Name: This is only populated if the company exists within your tenant
Code: This has a limit of 20 characters and is best if it closely resembles the intercompany partner’s name.
Country/Region: While this isn’t necessary to perform intercompany transactions, you can put the country where it is located.
Currency Code: This will be the currency code of the intercompany partner. If both companies are the same currency, leave it blank.
Auto. Accept Transactions: Specifies whether transactions received from this intercompany partner are accepted automatically. When enabled, eligible incoming transactions can bypass manual review in the Intercompany Inbox. Use this setting only when the partner’s transactions do not require approval or validation before documents or journals are created.
Customer No: You will have to set up an intercompany customer and select it here. Steps on this will follow.
Receivables Account: Here you will specify the G/L account that is used when creating “Intercompany General Journals” and the amount of the transaction is a debit to intercompany.
Outbound Sales Item No. Type: You have 3 options to choose from:
Order: This option is used if the items you are selling are the exact same item numbers in the other company.
Common Item No.: This option can be used if the items in the partner company are different. If this is used, you will need to populate this field on Item card in both companies.
Item Reference: This is another option that can be used if the items in the partner company are different. If this is used, you will need to populate item references on Item card in both companies.
Finally, you can also map bank accounts if needed by copying them from an IC partner. To do this, go to your bank accounts and ensure that the bank account is enabled for Intercompany transactions.
When this option is turned on, you can use the “Copy from IC Partner” function to pull in all the accounts. Otherwise, you can also add the bank accounts manually.
Intercompany Chart of Accounts
This is where you will set up a chart of accounts that is used to manage all the incoming intercompany transactions and the mapping of those transactions to your G/L.
Access the Intercompany Chart of Accounts
You will start by going to the “Intercompany Chart of Accounts”. This is done by clicking on the “IC Chart of Accounts” button that is on the “Intercompany Setup” page.
From here, you can create the chart of accounts by one of the following 2 methods:
Copy from Chart of Accounts: This will just replicate your existing G/L Chart of Accounts.
Synchronization Setup: This will use the synchronization partner or allow you to choose an IC partner whose setup you want to sync with and copy.
Once the Intercompany Chart of Accounts has been set up, make sure to click “Indent IC Chart of Accounts”. After, you will create the mapping by clicking “Chart of Accounts Mapping”.
You will need to map each applicable G/L account to an IC account.
The left side that shows the “Intercompany Chart of Accounts” is designed to map the incoming transactions. The right side that shows the “G/L Chart of Accounts” is designed to map the outgoing transactions.
If the intercompany chart of accounts and the standard chart of accounts are the same, you can simply use the “Map accounts with same no.” functionality. Note that to do this, you will have to ensure to select all from both lists.
Intercompany Dimensions
This is where you will set up dimensions that are used to manage dimensions used for all the incoming intercompany transactions and the mapping of those transactions.
You will start by going to the “Intercompany Dimensions”. This is done by clicking on the “IC Dimensions” button that is on the “Intercompany Setup” page.
From here, Click New +and you have the option to create the dimensions by one of the following 2 methods:
Copy from Dimensions: This will just replicate your existing Dimensions.
Synchronization Setup: This will use the synchronization partner or allow you to choose an IC partner whose setup you want to sync with and copy.
Once the Intercompany Dimensions have been set up, you will create the mapping by clicking "Dimesions" > “Dimensions Mapping”.
You will need to map all your dimensions to a dimension code.
The left side that shows the “Intercompany Dimensions” is designed to map the incoming transactions. The right side that shows the “Current Company Dimensions” is designed to map the outgoing transactions.
If the intercompany dimensions and the current dimensions are the same, you can simply use the “Map dimensions with same code” functionality. Note that to do this, you will have to ensure to select all from both lists. If dimension structures differ between companies, manual mapping will be required.
Once those have been mapped, you will need to perform similar steps to map the dimensions values. This is done by clicking the “Dimensions Values Mapping”.
Create an Intercompany Sales Transaction
To begin, go to "Sales" > "Sales Order" from the main menu.
Select "New" to open up a new sales order page. Select the Intercompany Customer and add items or service lines and any additional information. If it's complete, you can go ahead and post it from here by selecting "Post."
Once it is posted, you will receive a message that an intercompany transaction was created. Depending on your setting, the message, as shown below, might also state it was automatically sent.
Alternatively, if you want to be able to send this sales order over to the Intercompany partner before you do anything, you can also do that. Navigate to "Actions" > "Functions" > "Send Intercompany Sales Order." This will trigger the creation of the Purchase order on the other company side.
It should be noted that when using sales orders, both a purchase order and a purchase invoice is created in the other company. However, you shouldn’t be posting them both. This could create inconsistencies with your intercompany.
You should either post the order or the invoice. Business Central currently doesn’t create a purchase invoice that is linked to the purchase order, so posting the purchase invoice will not close out the purchase order. You would have to delete it if you posted the purchase invoice.
Create an Intercompany Purchase Order
Intercompany transactions can also originate from a Purchase Order. Begin by selecting "Purchasing" > "Purchase Orders" from the main menu.
Create "New" to open a new purchase order form. Select the Intercompany Partner and fill in the required information here.
Navigate to "Functions" > "Other" > "Send Intercompany Purchase Order." This action creates the corresponding Sales Order within the partner company.
Or alternatively, you can also simply "Post" the order.
Intercompany Journal Entries
Use the global search function to search for Intercompany General Journal.
The journal behaves similarly to a standard General Journal but includes additional Intercompany fields. Fill in the necessary information here.
An organization may record:
Shared salary allocations
Corporate expense allocations
Administrative charges
Rent allocations
Because account mappings have already been configured, Business Central automatically applies the appropriate Intercompany accounts.
Post the journal entry by clicking "Post."
Upon posting, you will get a message similar to when posting a sales transaction that an entry was created and, depending on your setup, it will also state that it was automatically sent.
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