Intercompany & Consolidation in Business Central (for Groups)

Intercompany and Consolidation in Business Central are straightforward when the foundations are right. In this guide we explain, in practical terms, how groups can post mirrored transactions, translate currencies, eliminate intra-group activity, and publish clean group accounts without turning month end into a spreadsheet marathon.

Who this is for

We wrote this for UK owners, finance directors and operations leads who run two or more legal entities and want the confidence that their group numbers are accurate, audit-ready and repeatable.

Whether your companies sit in the same database or across different environments and currencies, the principles are the same: standardise the basics, let Business Central do the heavy lifting, and keep a light governance layer to prevent drift.

Intercompany in practice

Intercompany in Business Central is about creating a single point of entry and allowing the system to generate the mirrored posting on the counterparty’s side automatically. We define each group entity as an IC Partner and decide how documents will flow, instantly if the companies share a database, or via file/email if they do not.

The quality of the experience comes from mapping once and reusing forever: cross-reference G/L accounts, customers, vendors, items and the key dimensions so that a sales invoice raised in Company A becomes a clean purchase invoice in Company B with the right accounts and dimension values already applied.

The receiving company simply reviews and accepts the document from its IC Inbox and posts as normal. Reconciliation is then a question of discipline rather than detective work: we compare partner balances, watch for date or currency timing differences, clear the IC inbox/outbox before close, and use small IC journals for any rounding in multi-currency flows.

This keeps day-to-day intercompany activity almost invisible; users key once, controllers have an audit trail, and ledgers tie out.

Consolidation without the drama

Consolidation works best when it lives in its own “reporting-only” company. Keep operational documents out and use journals for consolidation and elimination entries so that control accounts stay clean.

Each subsidiary is defined as a Business Unit with its currency, ownership or consolidation percentage, and data source.

Month end starts with shared accounting periods and current exchange rates; use the rate service so closing and (where required) average rates are ready before importing. What keeps the numbers technically correct is the translation method on each G/L account.

Balance sheet accounts translate at closing rate, income statement accounts at average rate, and equity lines such as share capital at historical rate. Once that is in place, importing balances is routine: Business Central applies the correct rate per account, we include dimensions only where the same codes and values exist in the consolidation company, and a test run highlights missing maps, period misalignments or FX gaps before anything is posted.

Eliminations then tidy up the group story. Book them in the consolidation company using recurring journals for the usual suspects – intercompany sales and purchases, balances such as AR/AP and loans with interest, recharges like management and IT fees, and unrealised profit in inventory where stock has been acquired within the group and not yet sold externally.

Reports flow naturally from there: a consolidated trial balance, P&L and balance sheet, and a Power BI model pointed at the consolidation company for consistent analysis across months.

What to standardise before you start

Groups that enjoy fast month ends tend to make the same early decisions. They adopt a group-standard chart of accounts and map any local accounts cleanly, rather than letting variations proliferate.

They agree a dimension model and keep at least Global Dimensions 1 and 2 identical across companies so that consolidated analysis remains possible without contortions; where variations exist, they create the missing codes and values in the consolidation company in advance rather than after the first import fails.

They design VAT deliberately. In the UK, domestic intercompany supplies are generally standard-rated unless the entities sit within a VAT group, where intra-group supplies are usually disregarded. Cross-border flows then follow the established rules: zero-rating for qualifying exports of goods and the reverse charge for many B2B services. Aligning VAT posting groups on both sides and testing sample documents prevents awkward surprises in the P&L.

Currency and ownership policies also belong in the foundation. Load closing and, if used, average rates every period and verify they align with the translation methods on the G/L accounts. For ownership, set the Business Unit percentage to reflect the accounting policy rather than convenience. Under IFRS and UK GAAP, controlled subsidiaries are normally consolidated 100% with Non-Controlling Interest recognised separately; percentage consolidation is reserved for particular cases and should be an explicit policy choice, not a default.

Finally, reduce future noise by reserving a distinct number series for intercompany documents, sharing identical posting date ranges and accounting periods, and blocking direct posting to sensitive control and equity accounts in the consolidation company. Retained earnings mapping mirrors the subsidiaries’ year-end rules so the consolidation close behaves predictably.

Benefits that matter to finance

The practical wins are cumulative. Users key once and both sides post correctly, so controllers spend less time chasing mismatches and more time reviewing outcomes.

Month end becomes a repeatable sequence rather than a bespoke exercise. Audit evidence improves because intercompany acceptance logs, naming conventions and file retention make the flow traceable.

Group analysis is richer when dimension codes and values are standardised and can travel with the consolidation. Above all, the model scales: adding a new entity or currency does not force a redesign, because the policy and mappings already exist.

Pitfalls to avoid

Most problems we encounter are avoidable with light governance. Periods must close together; if one company posts after another has closed, balances diverge.

Partial mapping is worse than no mapping – one unmapped G/L account can derail a clean intercompany chain – so review mappings monthly.

Dimension drift is another slow burn: allowing local codes mid-year without a plan will break consolidated analysis.

Exchange-rate timing matters; translating on stale rates will create spurious FX reserves and OCI movements.

Profit in stock should be checked routinely where there is regular intra-group trading of inventory.

VAT inconsistencies are a classic source of unexplained P&L differences, especially when posting groups do not match between entities.

And where companies exchange files across databases or tenants, the process needs light structure: one owner per entity, a fixed cut-off, a clear file naming convention and a retention location so imports can be retraced if needed.

Our month-end approach

When we run month end with clients, we take a steady, same-every-time approach. We lock posting dates, clear the intercompany inboxes and true up partner balances so timing differences do not bleed into the consolidation.

We update closing (and average) rates via the rate service and confirm they align with the translation methods on the accounts.

We import and test the consolidation first, post when clean, and then apply the elimination journals that mirror the group’s trading patterns.

The reporting pack follows, and Power BI refreshes from the consolidation company to keep dashboards consistent with the ledger. The end result is predictable timings and fewer surprises.

Next step

Whether you’re considering more companies to add to you empire or already have several let us help you set up intercompany correctly, so consolidations aren’t a headache.