Demo Global Ventures Group: inter-company cycle

Demo Global Ventures Group contains DGV UAE Trading LLC, DGV India Services Pvt Ltd, and DGV Saudi Retail Co. Each is a legal company with its own books, currency, tax registration, periods, branches, users, and chart. The UAE company sells inventory to Saudi; India provides implementation services to UAE; a group treasury team settles balances. This fictional case teaches why an inter-company event creates two coordinated legal records, not one shared journal.

Decide the relationship first

The group master records legal company, counterparty company, relationship type, default currency, transfer-pricing policy, tax treatment, settlement terms, and effective dates. A branch transfer within one company is not inter-company. A UAE warehouse dispatching to a Saudi legal entity is a sale/purchase or stock transfer between companies and requires two sides of evidence.

Field	Example	Impact
Selling company	DGV UAE Trading LLC	Revenue, inventory, output tax
Buying company	DGV Saudi Retail Co	Inventory, AP, input tax
Relationship	Inter-company inventory sale	Creates linked source/target documents
Transfer price	Cost + 12%	Margin and consolidation elimination
Currency	USD	Shared settlement currency
Settlement term	Net 30	Due-to/due-from ageing
Tax treatment	Export/import policy	Legal tax reporting
Effective date	2026-09-01	Applies to future transactions

Never use a customer record for a group company if the process needs inter-company controls. The legal counterparty must be identifiable on both sides.

Master and permission design

Create each company, branch, warehouse, book, currency, tax registration, numbering series, and period independently. A user may have access to UAE and Saudi but not India. The integration service needs a scope for both source and target companies, while a branch cashier should see neither group settlement detail nor transfer pricing.

Test company isolation: a Saudi user must not retrieve UAE documents by changing companyId; an India user must not post into a UAE period; a group controller may read both but still needs manage permission to reconcile or reverse.

Inter-company inventory sale

Saudi forecasts 200 refrigeration units. UAE creates a sales order with inter-company customer, destination branch/warehouse, currency USD, transfer price, delivery date, tax regime, and lines. Saudi creates or receives the corresponding purchase order with supplier company, expected date, warehouse, and matching quantity. A shared correlation ID links the documents.

At UAE fulfilment, the picker selects actual serials, warehouse, bin, and batch evidence. Delivery records carrier, export reference, destination, and quantity. Saudi receives goods into its warehouse and records customs, freight, inspection, accepted quantity, rejected quantity, serials, and local landed cost. A UAE delivery does not prove Saudi receipt.

The two companies can have different posting dates and periods. The integration must handle an in-transit interval without pretending the goods arrived on the dispatch date. If three units are damaged, UAE records dispatch of 200 and Saudi receipt of 197 with a claim; changing both documents to 197 hides the logistics difference.

Transfer pricing and tax

The agreed transfer price is cost plus 12%. The UAE invoice records item cost, mark-up, currency, tax treatment, and transfer-pricing reference. Saudi records purchase value, import duties, freight, and input tax according to local policy. Tax treatment must be reviewed by specialists; the system can preserve the selected regime but cannot decide legal obligations for every country.

The selling-company journal might be:

Dr Inter-company receivable                 USD transfer total
  Cr Inter-company inventory revenue        transfer net
  Cr Output tax / export treatment          configured amount
  Cr Inventory / COGS                        cost relief

The buying-company journal might be:

Dr Inventory and landed cost                 purchase cost
Dr Input tax / import clearing               configured amount
  Cr Inter-company payable                   supplier total

The exact accounts and stage depend on each company’s GL Mapping. Simulate both sides and verify the due-to/due-from balances agree.

Shared services from India

India provides 240 consulting hours to UAE. The India project records employee, WBS, hours, rate card, currency, billable status, approval, and service invoice. UAE records the corresponding expense or project cost and inter-company payable. The service is not inventory; the project dimension is essential to margin.

The service invoice includes period, WBS, rate, tax, currency, exchange rate, and source timesheet approval. A timesheet approved in India but not accepted by the UAE project manager should remain an inter-company exception, not an automatic payable.

Settlement and FX

Treasury settles the Saudi payable in USD. Each side records bank, value date, amount, currency, reference, allocation, and settlement status. A payment clears the due-to/due-from balance only when allocated to the correct inter-company documents.

If the UAE ledger is AED and Saudi is SAR, the shared USD settlement produces separate realised FX differences. The group report must show transaction currency, company currency, rate date, base amount, and FX result. A matching USD amount does not imply matching AED and SAR amounts.

Reconciliation dashboard

Check	Expected result
Source dispatch vs target receipt	Quantity and serials reconciled or exception owned
UAE receivable vs Saudi payable	Equal in transaction currency after timing/status differences
Transfer price vs policy	Mark-up within approved range
Tax treatment	Reviewed for origin, destination, and registration
Currency rate	Dated, approved, and traceable
Periods	Both company periods open for their posting dates
Correlation ID	Present on both document chains
Settlement allocation	Bank amount matched to open inter-company items

Reconciliation should classify differences: timing, quantity, price, tax, FX, unallocated payment, missing document, or true dispute. A “difference” is not automatically a write-off.

Consolidation and elimination

The group controller exports or queries both ledgers, maps inter-company revenue/cost and receivable/payable roles, and eliminates internal profit according to the approved consolidation policy. The elimination is a group reporting event; it must not alter the legal company journals. Keep source invoices, receipts, transfer-pricing evidence, and elimination journal linked.

If UAE reports USD 240,000 inter-company revenue and Saudi reports the same USD purchase, the group should not present internal trade as external revenue. If Saudi has received only 197 of 200 units, the inventory and in-transit balances need separate treatment. Consolidation cannot repair a missing receipt.

Close and exception challenge

Month-end close checks open inter-company orders, goods in transit, unmatched invoices, transfer-price exceptions, tax documents, due-to/due-from ageing, FX, periods, payments, returns, credit notes, and eliminations. Test late receipt, currency rate change, damaged serial, short shipment, rejected invoice, duplicate integration message, company period lock, tax registration mismatch, and reversal after settlement.

For every test capture source and target fields, permissions, correlation ID, stage, warehouse effect, legal-company journal, settlement, tax, FX, consolidation, and customer/supplier communication. Label behavior as product-supported, configured, policy-dependent, or extension-required. Use this chapter with Global rollout runbook, Advanced GL Mapping, Inventory, Sales lifecycle, and API Library.