> For the complete documentation index, see [llms.txt](https://smartbooks.gitbook.io/smartbooks-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://smartbooks.gitbook.io/smartbooks-docs/advanced-features/intercompany-reconciliation.md).
# Intercompany Reconciliation
Intercompany Reconciliation helps you identify and resolve intercompany differences. Transactions are automatically matched and can be traced back to the source.
### Before You Start
Make sure the following is configured before using intercompany reconciliation:
1. **Intercompany relation mapping** — Map which debtor/creditor relations correspond to each group entity in **Settings → Intercompany**. Without this, Smartbooks cannot reliably match transactions between entities. See Intercompany Relation Mapping for setup instructions.
2. **Elimination accounts** — Mark the relevant accounts for elimination in your consolidation setup. Only transactions on these accounts are included in intercompany matching.
### How Intercompany Matching Works
Smartbooks automatically matches intercompany transactions based on:
* Period
* Counterparty
* Amount
To account for real-world booking differences, Smartbooks supports:
* One-to-one matching
* One-to-many matching
* Many-to-many matching
This allows transactions that are split across multiple journal lines in one company, but booked as a single line in another, to still be matched correctly and excluded from intercompany differences.
### Cross-Period Matching
If no matching transaction is found in the same period, Smartbooks automatically checks:
* One period before
* One period after
If a match is found in an adjacent period, the transaction is marked as partially matched. This helps identify timing differences without immediately flagging them as reconciliation errors.
## Intercompany Differences in Reports
If eliminated accounts within a sub-consolidation do not sum to zero, Smartbooks will show an Intercompany Difference in the Profit & Loss or Balance Sheet.
From the report:
* Right-click on a value in the IC Difference line
* Select Show intercompany transactions
This takes you directly to the intercompany reconciliation screen, filtered to the transactions contributing to that difference.
### Intercompany Matching Screen
After selecting Show intercompany transactions, you are taken to the intercompany matching overview.
### Filters and Selectors
At the top of the screen, several selectors allow you to control which data is displayed:
* **Statement type:** Profit & Loss or Balance Sheet
* **Period selection**
* **View type:** Periodic or Year-to-Date (YTD)
* **Company selector:** Filter by one or multiple entities
* **Match status filter:**
* All transactions
* Matched transactions
* Unmatched transactions
* Unmatched & partially matched transactions
These selectors make it easy to isolate specific reconciliation issues.
### Transaction Overview
Each transaction line displays the following information:
* **Period** – The booked period
* **Date** – Booking date
* **Company** – Entity where the transaction is recorded
* **Account** – Account used for the booking
* **Counterparty** – Intercompany relation
* **Description** – Transaction description
* **Journal Entry** – Reference to the underlying booking
* **Amount** – Transaction amount
Clicking on the Journal Entry opens the original booking in the source company, allowing you to quickly trace and validate the transaction.
## How to Use Intercompany Reconciliation
### Step 1 – Identify Intercompany Differences
Start in your consolidated reports.
* Review the **Intercompany Difference** line in the Profit & Loss or Balance Sheet
* If a difference is shown, right-click on the value
* Select **Show intercompany transactions**
This opens the intercompany reconciliation screen, filtered to the transactions contributing to the difference.
### Step 2 – Focus on Unmatched Transactions
In the intercompany reconciliation screen:
* Set the match status filter to:
* **Unmatched**
* or **Unmatched & partially matched**
* Narrow the scope using:
* Period selector
* Company selector
* P\&L or Balance Sheet view
This helps isolate the transactions that require action.
### Step 3 – Review the Booking in the Source Company
Select an unmatched transaction and review its details.
* Check the **Company** and **Account**
* Click on the **Journal Entry** reference
* This opens the underlying booking in the source company
Confirm:
* The amount
* The counterparty
* The account used
### Step 4 – Check the Counterparty Company
Next, verify whether the corresponding booking exists in the counterparty company.
In the counterparty company:
* Go to the **Journals** or transaction overview
* Search for:
* The same amount
* The same counterparty
* The relevant period (including adjacent periods)
### Step 5 – Determine the Cause
At this point, one of the following typically applies:
#### **Case 1 – Booking Exists, but Account Is Not Eliminated**
* The transaction is booked on an account that is **not marked for elimination**
**Action:**
* Reclassify the transaction to the correct intercompany elimination account
#### **Case 2 – Booking Does Not Exist**
* The counterparty transaction is missing
**Action:**
* Create the required intercompany booking in the counterparty company
#### **Case 3 – Timing Difference**
* The booking exists in a different period
**Action:**
* No immediate action may be required
* The transaction may appear as **partially matched**
* Confirm whether the timing difference is acceptable
### Step 6 – Refresh and Validate
After making corrections:
* Refresh the data in Smartbooks
* Reopen the intercompany reconciliation screen and press the refresh button
* Verify that the transactions are now matched
* Confirm that the **Intercompany Difference** is resolved in the reports
## Best Practices
* Always confirm that **intercompany accounts are correctly marked for elimination**
* Resolve issues in the **source accounting systems**, not in reports
* Use partially matched transactions to identify timing issues early
* Reconcile intercompany balances regularly, not only at period-end
