Trading entities and partners

A shared charge starts with a legal entity and the partner that will receive or pay it. Trading entity records hold the entity code, name, type, country and base currency. Separate payable and receivable partner records hold the counterparty details used by the two finance desks. This gives a payables accountant and a receivables accountant a common place to check who is responsible for a charge before a balance appears in a period review.

A group with a United States parent and a Canadian subsidiary, for example, may record a shared service charge between those entities. The team selects the entity on the charge header and checks that the partner points to the intended trading entity. The two partner lists have different working details: payable partners carry remit-to information and terms, while receivable partners carry billing contact and credit limit. Keep those distinctions visible when a counterparty plays both roles.

• Entity identity. Admin maintains the legal entity, country, currency and status used across charges, journals and finance team assignments.
• Payable counterparties. Payables Accountant checks remit-to details and payment terms before preparing the payable.
• Receivable counterparties. Receivables Accountant checks billing details and terms before issuing the receivable.

Agree the naming convention for each legal entity and the meaning of parent company, subsidiary, division and joint venture in your group. Decide who maintains partner details and how a changed remit-to address or billing contact gets reviewed. A partner on hold should be visible to the finance desk before another charge is issued or paid. Agree how to handle a partner that is both a payer and a payee, since the payable and receivable partner records serve different desks.

Currency on the entity is reference data. Finance should agree how amounts are entered and how cross-currency charges are calculated before the first live cycle. The team should also identify the source of ledger account codes and choose the owner who checks a new account before it is used on a line.

Take one real shared service charge. Admin confirms the entity code and partner record. Payables Accountant prepares the received side against the payable partner. Receivables Accountant prepares the raised side against the receivable partner. Senior Accountant checks that both sides describe the same underlying charge and that their partner references can be followed without guessing. If the entity or partner was selected incorrectly, correct the charge before the payable is approved or the receivable is issued.

At period review, Controller should be able to follow the charge to its entity, counterparty and ledger line. The reviewer should also see which finance team member is responsible for the decision. Use a case that crosses two entity currencies during the pilot to settle the amount policy explicitly.

• AP Bills Worklist — Payables with their entity, counterparty, due date and decision state.
• AR Invoice Register — Issued receivables and their remaining balances by counterparty.

See charge preparation and period review.