DBD: Intracompany Vendors

⚠️ CRITICAL ACCOUNTING NOTE: This feature is not available for Cash Basis Accounting. However, cash-basis clients can utilize a month-end workaround outlined at the bottom of this article.

Part 1: System Administrator Setup

Before users can utilize this workflow, a system administrator must activate the feature parameters and grant specific operator security permissions.

Step 1: Activate the System Parameter

1. Accounts Payable → Setup → System → System Setup → Parameters.
2. Access Panel 2 / Screen II.
3. Locate and check the parameter: Activate Intracompany G/L Account? to Y.

Step 2: Enable Operator Security

Because assigning account numbers directly to a vendor master requires a strict understanding of your General Ledger, access is restricted by default.

1. Setup → System Utility Functions → Administrator Functions → System Access and Security → Application Security by Operator
2. Access the 2nd Panel / Setup II.
3. Check the setting: Allow access to Intracompany G/L Accounts? to Y for any operator who needs to manage these vendors.

Part 2: Vendor Configuration

Once permissions are granted, you must flag your internal department as an intracompany vendor.

• Navigate to Accounts Payable → Setup → Vendors .
• Open the Vendor Tab for your internal department (e.g., if your company is ABC Systems, Inc., you might set up a vendor called ABC Graphics).
• You will now see a new field at the bottom of the screen labeled Intracompany G/L.
• Enter the appropriate General Ledger Account mask designated for your company’s internal revenue.

Part 3: Operational Workflow & G/L Impact

With the setup complete, end-users can treat the internal production department exactly like an outside vendor during daily project management.

1. Order Entry & Purchase Orders

When you require artwork, printing, or internal services on a job, enter a line item in Order Entry for the work. Create a Purchase Order (more accurately acting as an internal Work Order) issued to your newly configured intracompany vendor. You can print this PO or bypass printing based on your team's tracking preferences.

2. PO Receiving & Automated Financial Postings

The Purchase Order serves as your turnaround document to record the exact costs of time and materials used.

When the job is finished and PO Receiving is processed, the system recognizes the vendor's intracompany flag. No vendor invoice is created in Accounts Payable. Instead, when the Purchase Journal is updated, the system automatically bypasses AP and makes the following General Ledger balancing entry:

DEBIT: Cost of Sales - Art / Production   — $XXX.XX

CREDIT: Revenue – Intercompany   — $XXX.XX

Note: The credit automatically routes to the revenue account assigned to the Vendor Master rather than standard Accounts Payable liabilities.

Cash Basis Accounting Workaround

Recommended Workaround: To capture this financial data, your accounting team can manually calculate the total amount of internal postings routed to the Revenue account from your Accrual books at the end of the month. You can then post a manual adjusting entry for that consolidated total directly into your Cash Books.