Apply Invoices To Intercompany Payable

[Curt_C]

We have two related entities, Small on QuickBooks and Large on an ERP system.

Small has an intercompay 'due to' for Large recorded in QuickBooks. Small is invoicing Large for work performed but Large is not going to pay the invoice. It will go against the 'due to' on Small and 'due from' on Large. I tried creating an invoice with the account being the Due To but since it's not classified as an AR account it won't work.

My plan is to generate an invoice, then make a journal entry reclassifying the amount from AR to the Due To.

Has anyone encountered this before and found a better way?

Thanks in advance.

[Joe Williams]

To make sure I understand.
You are invoicing Large (creating income) and Large will never pay the invoice.
If that is true, then I would create an Other Current Asset named "Due to Transfer to Large", and a payment item that has the bank account set to it. On the invoice, enter the payment item as the last item to get a net zero invoice.

[Curt_C]

Joe,

Thanks for the reply. I created a payment item and set it to the bank account GL and I created an Other Current Asset (OCA) type GL for the due to large transfer.

I'm assuming that I choose the OCA when I create the invoice, however I can only choose an Accounts Receivable type GL account when creating invoices.

Is there a setting or preference I need to change?

[RobJoy]

Another way of doing it:

Create invoices to A/R just as you would for any customer. Create a bank account called 'Intercompany' and immediately receive payment to that account.

You can use the dummy bank account for any other inter-company movements too, so it will hold the nett balance. For accounting purposes you can journal the balance to an OCA account - monthly maybe?