Setup Considerations: On-Behalf-of Intercompany Activities

Administrator Guide

You can use this topic to help make decisions when planning your configuration and use of on-behalf-of intercompany. It explains:

Why to set it up.

How it fits into the rest of Workday.

Downstream impacts and cross-product interactions.

Security requirements and business process configurations.

Questions and limitations to consider before implementation.

Refer to detailed task instructions for full configuration details.

What It Is

On-behalf-of Intercompany is a financial accounting structure that enables transactions between different entities within an organization. In on-behalf-of intercompany, an entity pays for a good or service that's purchased by another entity in the organization.

Business Benefits

You can set up your tenant to record intercompany activities. Recording these activities enables an organization to generate activities on behalf of another entity:

Debts

Payables

Receivables

Use Cases

You might need to record an accounting transaction that occurs between at least 2 subsidiary or multinational companies within your organization. Here are a few activities where intercompany enables you to record those transactions:

Accounting journals.

Ad hoc bank transactions.

Allocations.

Asset accounting.

Customer contracts, invoices, and invoice adjustments.

Intercompany payments.

Payments on behalf of.

Payroll accounting.

Supplier invoices and invoice adjustments.

Questions to Consider

Questions	Considerations
Do you have subsidiary companies, or operate multinationally?	If you have subsidiary companies or multinational branches that perform transactions with each other, consider configuring intercompany profiles. Intercompany profiles enable you to record and process those intercompany transactions.
Do you need to provide source documents for statutory requirements?	Transactions between companies in different countries frequently require source documents for statutory reporting requirements. On-behalf-of transactions don't generate source documents. Before you configure intercompany transactions, consider whether you need to set up direct intercompany.
What kind of transactions do your subsidiary companies normally perform with each other?	The transactions that companies within an organization perform with each other determines whether you need to structure Workday for direct or on-behalf intercompany. Configure direct intercompany if you need to represent transactions where the companies conduct business like a supplier and a customer. You can configure a company as both a customer and a supplier to another company. Configure on-behalf intercompany when a company processes the payments and invoices in place of the company that provides the goods and services to customers. If both intercompany relationships apply to you, configure both.
How do your companies use your account sets?	You can only create an intercompany relationship between 2 companies when those companies use the same account set. Before you configure your intercompany profiles, ensure that the companies use the correct account sets.
How do you process and settle your intercompany transactions?	If you want to settle your intercompany transactions, you must configure these options on the Edit Intercompany Profile task: Default Payment Types Initiate Allowed Payment Types If you want to record intercompany receipts automatically, select the Record Intercompany Receipts check box. Workday only creates receipts for intercompany payments matched to an intercompany receivable. Workday doesn't consider unmatched accounting journals when automatically creating receipts. When you don't automatically record receipts, you must create manual receipts to use in your settlement runs using the Record Intercompany Receipts task.
How do you configure your security role assignments?	Workday uses the security configuration of the initiating company when determining who can view the intercompany transaction. Example: The company that creates the accounting journal determines the security requirements to access and process the intercompany transaction. Workday instead uses the security configuration of the customer on the original transaction to determine who can view the intercompany transaction when your company operates as the supplier. Consider setting up your company hierarchy role assignments to meet your security requirements if any users need to access both sides of the intercompany transaction.

Recommendations

Functionality	Considerations
Account posting rules	Workday recommends that you configure separate rules for the Intercompany Payables and Intercompany Receivables account posting rules if you want to settle intercompany transactions. Separate posting rules enable Workday to create the payables and receivables necessary for you to run the settlement process. When you don't configure separate account posting rules, you might have trouble finding unmatched on-behalf-of intercompany transactions when you want to close your ledger periods. If you configure both direct and on-behalf-of intercompany, we recommend you add a Direct Intercompany dimension on both the Intercompany Payables and Intercompany Receivables account posting rules. The dimension enables you to split up the account posting rules you use for on-behalf-of and direct intercompany transactions. Depending on the transaction types you use, you also need to configure additional account posting rules. Common posting rules include: Cash Spend Revenue Transaction Tax If you don't want to post intercompany transactions to Cash , you can instead configure a pseudo bank account to record the costs. Consider configuring the pseudo bank account when you want to reroute settlement transactions from the pseudo account to a different ledger account.
Fiscal schedules	Workday recommends that companies configured for intercompany transactions use a shared fiscal schedule. The shared fiscal schedule can be an alternate or primary schedule. Sharing a fiscal schedule reduces the potential for creating erroneous transactions that you need to eliminate using a consolidation.
Intercompany affiliate worktags	Workday recommends that you enable intercompany affiliate worktags on intercompany transactions you need. We further recommend that you create custom validations that require users to add the affiliate worktags on the associated transaction lines. Intercompany affiliate worktags help identify due-to and due-from companies on intercompany transactions. Identifying these worktags enables Workday to eliminate entries on consolidated financial statements. Workday also recommends that you configure your account posting rules to use the appropriate intercompany affiliate worktags as resulting worktags. Workday strongly recommends that you ensure your configuration doesn't result in a company creating intercompany transactions with itself.

Requirements

Before you can create intercompany transactions, you must:

Add an initiate intercompany event step on all business processes you want to use for intercompany activities.

Create intercompany profiles for all your intercompany affiliates on the

Edit Company Intercompany Profiles

task.

Configure account posting rules for intercompany payables and intercompany receivables.

Limitations

Before you configure intercompany, consider these limitations:

If you post intercompany activities to book codes that are outside the common book code, you can't settle those activities. To remove the intercompany balance, perform an elimination.

If you can't add an intercompany event step to a business process, Workday might not currently support intercompany transactions for that activity.

Tenant Setup

You can optionally configure these tenant options on the

Edit Tenant Setup - Financials

task:

Options	Considerations
No Intercompany Payable/Receivable Lines when Journals Self Balance by Company	When you select this check box, Workday doesn't generate intercompany payable and receivable lines on journals balanced by each line company.
Group Intercompany Payable/Receivable Lines	Reduces the number of lines generated on the journal and only displays payable and receivable lines for the transactions. Groups payable and receivable intercompany line amounts with these same details: Affiliate company. Ledger account. Balancing worktags. Workday doesn't net payables and receivables on the summary line.
Unrestricted Intercompany Affiliate Selection	Enables any company to add companies with valid intercompany profiles as intercompany affiliates on journal lines.
Copy Attachments to Intercompany Accounting Journals	Grant other companies access to attachments you add on intercompany parent journals. The other companies can view your attachments from their intercompany child journals. You can only view attachments of companies with a configured intercompany relationship.

Security

To create intercompany activities for another company, you must configure security roles for the activity on the other company. Example: If you're with Company A and you want to create an intercompany activity for Company B, you must have a security role that enables you to also create the activity for Company B.

Domains	Considerations
Set Up: Company Accounting on the Common Financial Management functional area.	Set up intercompany profiles. You need intercompany profiles to create intercompany transactions.
Set Up: Accounting Rules on the Common Financial Management functional area.	Set up account posting rules. You need separate account posting rules for your intercompany payables and receivables when you want to settle intercompany balances.

Business Processes

Configure the Accounting Journal Event
business process. Add the Initiate Accounting Journal Intercompany Event
business process step. Enables you to create accounting journals for on-behalf intercompany transactions.

If your company needs to process and settle on-behalf-of intercompany transactions, configure the Settlement Run Event
business process.

Reporting

Reports or Dashboards	Considerations
Intercompany Out of Balance Report	Identify and resolve intercompany out of balance issues.
Intercompany Payables and Receivables Reconciliation	Find and review out-of-balance amounts from posted journal lines on intercompany affiliate ledgers that remain at the end of the period. Enables you to identify and reconcile all intercompany items for each intercompany affiliate, including both matched and unmatched transactions.
Intercompany Work Area	Review intercompany activities, including in-progress journal lines, unrecorded receipts, and settlement runs. Enables you to find outstanding amounts due to or due from an intercompany affiliate.
Outstanding Intercompany Transactions	Find and review detailed information about outstanding intercompany transactions.

Integrations

Web Services	Considerations
Get Account Posting Rule Sets	Retrieves detailed information about configured account posting rule sets.
Get Intercompany Profiles	Retrieves detailed information about configured intercompany profiles. Enables you to view detailed information across multiple intercompany profiles.
Put Account Posting Rule Set	Creates or configures account posting rule sets. Enables you to set up many account posting rule sets at once.
Put Intercompany Profile	Creates intercompany profiles. Enables you to set up many intercompany profiles at once.

Connections and Touchpoints

You can use on-behalf-of intercompany with many activities in Workday. Intercompany expands existing functionality by enabling you to generate activities on the accounts of other companies. The intercompany profile you configure enables many intercompany activities across Workday.

Workday offers a Touchpoints Kit with resources to help you understand configuration relationships in your tenant. Learn more about the Workday Touchpoints Kit on Workday Community.

Concept: Intercompany Transactions

Setup Considerations: Payroll Intercompany Accounting

Steps: Set Up On-Behalf Intercompany Transactions

Reference: Edit Tenant Setup - Financials

The Next Level: On Behalf Of Intercompany