> 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/consolidation/intercompany-setup/intercompany-relation-mapping.md).

# Intercompany Relation Mapping

Configure which relations (debtors/creditors) correspond to each group entity, so Smartbooks can automatically match intercompany transactions during reconciliation.

### Why This Matters

Smartbooks uses the intercompany relation matrix to identify and match transactions between group entities. Without this mapping, the reconciliation engine cannot reliably determine which invoices and payments belong to intercompany relationships. This leads to unmatched transactions and incorrect elimination proposals.

Completing this matrix is a prerequisite for the intercompany reconciliation module to function correctly.

### Setting Up the Matrix

1. Navigate to your consolidation's **Settings → Intercompany Settings**
2. For each entity (row), click the cells to select the corresponding relation from that entity's debtor or creditor list
3. Repeat for all entity combinations that have intercompany activity

You only need to fill in cells where an actual intercompany relationship exists. Cells without a relationship can be left empty.

### How It Works

The intercompany settings page presents a matrix with your group entities on both axes — rows and columns. For each combination, you specify which debtor or creditor relation in the row entity corresponds to the column entity.

**Example:** if Entity A has a creditor called "Intercompany B" that represents transactions with Entity B, you map that relation in the cell where row A meets column B.

|              | Entity A                                 | Entity B       | Entity C       |
| ------------ | ---------------------------------------- | -------------- | -------------- |
| **Entity A** | —                                        | Creditor: IC B | Creditor: IC C |
| **Entity B** | Debtor: IC A                             | —              | Creditor: IC C |
| **Entity C** | <p>Debtor: IC A </p><p>Creditor IC A</p> | Debtor: IC B   | —              |

The diagonal is always empty — an entity cannot have an intercompany relation with itself.

### What Happens Next

Once the matrix is complete, Smartbooks uses it to:

* **Match intercompany transactions** — automatically pair invoices and payments between entities
* **Identify discrepancies** — flag differences in amounts, timing, or missing counterpart entries
* **Generate elimination entries** — propose journal entries to eliminate intercompany balances during consolidation
* **Generate Intercompany Reclassifications** — Based on the IC matrix-