Basically the need for a multi-company environment comes down to having to track a separate entity with its own tax id number in a single Deltek Vision database. Some of the scenarios that require multi-company management include:
Additionally, the need for intercompany billing can occur when two or more related companies make payments on behalf of the others. The most common reason for intercompany billing is the sharing of labor resources between companies that have separate payrolls and/or making vendor payments for another related company.
When a firm decides to utilize multi-company functionality, it is recommended that sub-ledgers be set up to track the due to and from, and clear intercompany balances. This creates the ability to use both the AP and AR aging reports for the intercompany balances.
Upon implementing multi-company functionality in Deltek Vision, firms must determine what internal pricing structure to adopt. The options are:
Keep in mind, there is a lot of flexibility within the options above. Different scenarios can be created for different transaction types. Also, by order of operation, the various options can be overwritten at the individual company level or at the lowest work breakdown structure level by project.
Intercompany billing makes accounting’s job easier in regard to multi-company transactions. When transactions are made to projects not in the home company (company where the transaction is being posted), invoices and vouchers are created through a series of postings that are reflected in GLs of the respective companies. These invoices and vouchers also appear on the AR and AP aging reports noted above. Accounting can then clear the reports using standard check processing and cash receipts.
Using Deltek Vision’s multi-company functionality provides another benefit to firms with consolidated reporting. Consolidated reporting allows a view of the performance of all the companies within the database. Consolidated groupings can represent all companies or a cross section of companies depending on the needs of company leadership. The consolidation process incorporates standard eliminations of configured control accounts as well as client-defined accounts, such as capital investments in related companies. Consolidations are “memo” entries and not posted to the GL.
A multi-company database permits each company to maintain a unique GL while still only creating one set of shared GL account numbers. Furthermore, firms can restrict GL account numbers, and other master records can be shared and/or restricted as well. Also, Vendors can be shared. However, the accounting tab is company specific for account and 1099 purposes.
In addition to the benefits mentioned above, the multi-currency function works in tandem with multi-company to allow firms to have unique GL/functional currency. This is a great feature for firms that work internationally. Lastly, the consolidation process can include GAAP compliant currency translation and a gains/losses entry.
Firms of all sizes can benefit in many ways by using the multi-company functionality that is part of the core capabilities in Deltek Vision. Being aware of when, why and how to use a multi-company database will help your firm make important business decisions and operate efficiently. For more information, contact Full Sail Partners here.