Overview
This article explains the difference between cross-entity expenses and internal expenses, including when each expense type should be used. It also provides guidance on how to identify and properly flag cross-entity activity to help ensure accurate reporting and expense classification.
Key benefits / use cases
Ensures expenses are accurately classified as internal or cross-entity
Improves visibility and consistency in cross-entity reporting
Simplifies the process of identifying and flagging cross-entity activity
1. The difference between Cross-Entity and Internal Expenses
Cross-entity expense It is an expense (or other activity) that represents a transaction between two entities that are both inside the consolidation scope(intercompany / inter-entities).
These flows can be valid and counted at entity level, but they must be removed from the consolidated view to avoid double counting.
The consolidation rule is that expenses that will be flagged as “cross-entity” will be ignored in the consolidated view but still visible in the multi-entity accounts.
Internal expense It is an expense line that you intentionally categorize as“No impact” because it shouldn’t contribute to the footprint.Summary
Internal expense= the line is excluded (no impact). Cross-entity flag(multi-entity feature) = used so the line can exist at entity level but be removed from the consolidated view to prevent double counting.
2. How to flag Cross-Entity Expenses in the Platform
To effectively manage cross-entity activities, clients should follow these processes for flagging data:
For Financial Data:
During the Import Stage:
When importing your accounting file, look for a specific column or checkbox labeled "Cross-Entity Transaction" or similar.
Flag Transactions: For each transaction that involves multiple entities within your organization, mark or check this column.
Review and Verify: After import, review the flagged transactions to ensure all cross-entity activities are correctly identified.In the Expense module: 1. Click on the three dots next to the expense you want to flag, then select Edit.
A window will open where you can mark this expense as a cross-entity expense.
In the Data Collection File: Locate the "Cross-Entity" boolean column in your data collection spreadsheet.
Mark Activities: For each activity that spans multiple entities, set the value in this column to "True" or "Yes" (depending on the format).
Provide Additional Details: If possible, use an adjacent column to briefly describe which entities are involved in the cross-entity activity.