Setting Up Multi-Entity Accounts

Since the Associated Parent and Associated Child organizations are set up as separate legal entities, they must maintain separate general ledgers (GLs). Within Aptify, the chart of accounts for each entity is set up using the GL Accounts service. GL Accounts records are linked to Organizations records through the Organization field on the General tab of the GL Accounts form.

Use the Organization field on the GL Accounts record to identify the organization associated with this GL Account. The Multi-Entity accounting feature does not function properly if this field is left blank.

For the purposes of the example used throughout this chapter, the following GL accounts are required:

• Accounts Receivable (A/R) for Associated Parent
• A/R for Associated Child
• Sales for Associated Parent
• Sales for Associated Child
• Cash for Associated Parent

Each type of account required by an organization's business logic must have individual GL accounts created for each of the organizations in the hierarchal structure. It is highly recommended that the names of each of the GL accounts created reflect the organization to which it is assigned, and that no GL accounts be created that share the same name.

All asset, liability, sales, and expense accounts must be set up using the GL Accounts service. When orders and payments are batched to the General Ledger, the appropriate accounts are used for each entity based on transactional activity. Aptify may be configured to export general ledger batch information to any General Ledger accounting package (see Exporting General Ledger Batch Information for information on GL Batches).

In addition to establishing these accounts, you also need to create Due To and Due From accounts to record transactions between the entities and you also need to register the accounts to use within each organization, as described in the following sections:

• Adding Inter-Company GL Accounts
• Creating Due To and Due From GL Accounts

Adding Inter-Company GL Accounts

Aptify supports the concept of Due To and Due From accounts to handle the complex multi-entity orders and payments. Such accounts are established in the GL Accounts service but the linking occurs on the Inter-Company GL Accounts tab of each multi-entity Organizations record. The Due To account represents the liability account within the organization's chart of accounts. The Due From account represents the asset account.

Using the Associated Parent and Associated Child organizations as an example of related organizations, the Associated Parent must contain Due To Associated Child and Due From Associated Child accounts on the Inter-Company GL Accounts tab of the Associated Parent record. The Associated Child must contain Due To Associated Parent and Due From Associated Parent accounts on the Inter-Company GL Accounts tab of the Associated Child record.

Follow these steps to add a new inter-company GL account record to an organization:

1. Open a new record from the Inter-Company GL Accounts tab of the Organizations record.
2. In the Related Organization field, enter the name of the organization with whom this organization must adjust payments.
3. In the Due To GL Account field, enter the liability account this organization uses to recognize balances to the other organization.
4. In the Due From GL Account field, enter the asset account this organization uses to receive balances from the other organization. 
   
5. Click OK to save the record.

Creating Due To and Due From GL Accounts

Multi-entity organizations also need a way to recognize receivable and payable balances between organizations. Due To and Due From general ledger (GL) accounts must be set up in addition to each organization's regular GL accounts. These accounts allow the organizations to recognize and receive the payable balances between legal entities.

For example, the Associated Parent organization must have a Due To Associated Child liability account to pass balances to the Associated Child organization.

The Associated Parent organization must also have a Due From Associated Child asset account to recognize balances from the Associated Child organization.

Likewise, the Associated Child organization requires a Due To Associated Parent liability account to pass balances to the Associated Parent organization and a Due From Associated Parent asset account to recognize balances from the Associated Parent organization.