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Level 1

Intercompany "Loans"

We currently have multiple companys, all of which are corporations.  We frequently transfer funds between these companies with the intent of repaying.  Currently it appears that on Company A "invoices" are being entered thus setting up AP Liability for the vendor (Company A) that received the funds and that is being coded to due/to from on the vendor account.  On Company B there are "checks" written to Company A and coded to opposing due/to from account so nothing shows as due on either the vendor or customer.  While I understand neither are considered vendor or customer and technically the intercompany is in balance something just does not seem correct with this treatment.  All of this predates me and I just want to get the accounting corrected for the past and on a go-forward basis.  Would really appreciate any input.



Not applicable

Re: Intercompany "Loans"

I have found (with much experience) that interco accounts you intend to repay in cash can best be recorded in QB by treating them as a "CreditCard" account - even if the account carries a debit balance.
Vendor bills are always recorded as-issued by the co named on the vendor bill. When a different co pays the bill the payor co records a cash disbursement and debits its Interco CC. The 'named vendor co' records a bill payment using the IntercoCC as the payment method. This keeps everyone in balance.
Level 1

Re: Intercompany "Loans"



Thanks for the reply.  Digging deeper it appears I have bigger issues as on both Company A and Company B the person coding all of these transactions is debiting interco on both sides... with that being said (as I have much more cleanup to do than I first thought) I want to make sure I am presenting my case correctly and hoping you can relate back to me (aside from the obvious gl coding error) how to correct as I did not 100% understand your answer.  While I've been in accounting for several years, my QB experience was quite some time ago.

Here is how it is currently being recorded (which I know is not correct):

Company A, enter invoice to Company B, shows vendor balance of $1,000 due to Company B

$1,000     Due to/from interco

       ($1,000)      A/P


Company B, enter "check" to Company A, shows vendor balance of $0.00 due to Company A

$1,000    Due to/from interco

      ($1,000)    Cash


My thought is to do a JE to debit cash/cr interco on Company A and debit interco/credit cash on Company B and leave vendor out of it completely, as long as the interco is balanced regularly, just not sure this is proper accounting of this type of transaction?




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