Multi-Company Accounting

Multi-company. Multi-country. Infinite Possibilities

The multi-company capabilities of Dynamics NAV | 365 Business Central are near legendary. It is implemented all over the world as a multi-company, often multi-country, solution with both consolidation and intercompany trading capabilities.

We have implemented so many multi-company solutions in so many different ways using Dynamics NAV | 365 Business Central because it’s the most important architectural decision that you can make. The structure needs to deliver the benefits the company needs, not pander to just the finance department (sorry if that’s you!) We have customers with hundreds of companies running within a single Dynamics NAV | 365 Business Central company entity, where the balance sheet and income statement is split by a company ‘dimension’ because it’s the best solution in that case. We also have different international Dynamics NAV | 365 Business Central databases moving intercompany transactions between them, again because it’s the right way to do it for that customer.

There is such variety in the types of intercompany relationships. Some are very separate organisations, each company trades in its own right, and the relationship between companies is not dissimilar to that of customer and vendor in normal trading. In this scenario the solution supports intercompany transactions by mimicking this customer/supplier relationship and automates the creation of the required opposite transaction. For example if company A raises a purchase order to buy something from its sister company B, a transaction will be placed in company B’s inbox which, when processed (having passed through company A outbox), will mean that company now has the requisite sales document to supply goods. On posting the shipment and invoicing in company B, company A will receive a purchase invoice again via the inbox. In this scenario often the finance departments of each company are separate and indeed for this reason the inbox and outbox mechanisms have manual intervention to ensure the receiving company ‘accepts’ the inbound transaction. We often automate this inbox/outbox processing where the companies are happy to do so.  In this scenario, each company is set up as a separate company in Dynamics NAV | 365 Business Central and all datasets (or at least most of them!) are completely separate. Each company has its own vendors, items, customers, G/L etc. Whilst this is great for separating, it is common in our experience for companies to want to share item information, know that certain customers in each company are in fact the same organisation or to maintain the G/L structure across companies. We at The NAV | 365 People even developed nHanced Multi-Company Management to help manage information between companies and to automate the inbox/outbox.

Other companies have separate companies, not for trading purposes, but for legal and shareholding purposes. In every respect the companies operate as if they are a single entity. Staff may be relatively unaware that transactions for one property or product type are in fact for one company rather than another; there may be a single warehouse and finance team processing all transactions. In this case, separating into distinct sets of data makes it very difficult for the smooth operation of the business, with staff needing to log in and out of companies, having no single visibility of all the information and all this just to help the accountants separate their balance sheet. In this case, if this is you, fear not!

We regularly implement Dynamics NAV | 365 Business Central in this scenario and implement all companies in a single Dynamics NAV | 365 Business Central company structure. How? We have a suite of functional amendments that allow the operation to create sales or purchase transactions, pay suppliers and receive payment from customers as cross company transactions and we put the balance sheet and income statement back into balance by company after posting. Fundamentally we are using a dimension per company, but we need enhancements to enable the VAT ledger to be split by company (if required) as well as the ability to re-balance the balance sheet following transactions such as a payment run, where invoices are paid with a single payment despite being for different companies. We have organisations with 100 companies or more operating within a single Dynamics NAV | 365 Business Central company, taking advantage of the sharing of static data, the simple operational view and single view of stock, debts and creditors. The only suggestion, don’t mix base currencies in one Dynamics NAV | 365 Business Central company; whilst possible, it’s really ugly! I speak from experience here too!

My mantra on the subject is that your Dynamics NAV | 365 Business Central solution should represent how you operate as an organisation. If your multi company is a finance and legal structure only, but your organisation benefits from operating as a single operation, then your system should look the same. It is not efficient to run your organisation to make the finance team’s life easy! But if needed you can solve difficulties for everyone with careful design.