Can we create (or setup) Intercompany Segment after a ledger is created and being used? Or, do we have to create it when creating the Chart of Account structure, if we plan to use Intercompany transactions? Thank you.

I forgot to also ask if we always have to check Flexfield Qualifiers to qualify Intercompany segment as such? Thanks

Oracle does not support adding segments to your structure once you have started using your ledger.

Intercompany qualifier is optional. You only create an intercompany segment if you want to capture which company is on the other side of the transaction. Yet there are other ways of capturing that information as well for example creating separate GL accounts for each pair of companies doing business.
Hasan

Hi Hasan,
Thanks for letting me know an alternative way of capturing transactional information between pair of companies.
What if I want, instead, to implement Intercompany Account? In this case, are you clearly insinuating that once the ledger is in use, I can no longer implement an Intercompany Account? It would be too late at that point? Please, clarify this point, as I did not get it from your previous reply. Thank you.

One of the key things on a financials implementation is to get the chart of accounts right, because it is a big effort to change this after you have gone live. One of the most questions often asked asked is:

Do we need to define an Intercompany segment in our chart of accounts?

It is not required to define an Intercompany Segment, but I would always recommend defining one. Even if you do not have a great deal of intercompany activity at the moment, it is worth having one defined now as it is difficult to add one later if you grow and acquire companies or maybe expand operations into other countries or regions.

Once the ledger is created you can add as many accounts as you like in your account listing including intercompany accounts. However you cannot add a new segment to your structure, including intercompany segment.

Hasan

Keeping an extra segment in your chart of account structure "just in case" comes with a cost. The data entry takes longer (you can use tricks like defaulting the segment to a fix value etc). Processing takes some burden. Reports need to show extra segment as well (you can trim this segment out if need be).
One must keep a good balance between future use and the cost that users will pay now.
Hasan

Hasan, as you said, there is another cost effective way of capturing information about which company is on the other side of the transaction, by creating separate GL accounts for each pair of companies doing business, and thus, reducing data entry time, alleviating processing burden, and avoiding extra unnecessary segment in reports.
Are there, therefore, at all any reasons (good or bad) for an organisation to implement an Intercompany Segment as part of the Chart of Account? Why are there many implementations out there for Intercompany segment? Is it a lack of knowledge from the implementation consultants to add a Intercompany segment to a Chart of Account, instead of creating separate GL accounts for each pair of companies doing business?
Thank you.

"Intercompany Segment" solution is scalable while "multiple accounts" solution is not.
Lets say your company does business with 100 other sister companies. Using "intercompany segment" method you need one account while using "multiple accounts" method you need 100 accounts.
I hope that clarifies the difference.
Hasan

Thank you Hasan. I have now got the picture. I can now decide when to implement Intercompany Segment or GL Accounts to capture info about companies at the other side of a transaction. Cheers!