Subsidiaries
Subsidiaries represent legal entities within your organization that define financial boundaries for customers and ensure invoices, payments, and credit memos are posted and applied within the correct legal entity.
A Subsidiary represents a legal entity or business unit within your organization. It acts as a financial boundary for transactions and ensures that accounting entries (Invoices, Payments, Credit Memos) are posted under the correct legal and reporting structure.
In multi-entity environments (for example, ERP systems like NetSuite or Sage X3), subsidiaries define how financial data is segregated and reported.
Relationship: Customer ↔ Subsidiary (1 : Many)
A customer can belong to one or more subsidiaries.
Customer → Subsidiary = 1 : Many
A single customer record may operate across multiple legal entities.
Each Subsidiary maintains its own financial transactions for that customer.
Example: Customer ACME Corp belongs to Subsidiary A & Subsidiary B
ABC Corp may receive invoices from Subsidiary A.
The same ABC Corp may also receive invoices from Subsidiary B.
Relationship: Subsidiary ↔ Transactional Entities (1 : 1)
For transactional entities, the relationship is strictly 1 : 1.
Invoice: 1 Invoice belongs to 1 subsidiary
Payment: 1 Payment belongs to 1 subsidiary
Credit Memo: 1 Credit Memo belongs to 1 subsidiary
Important rule:
Entities must belong to the same subsidiary to be applied to each other.
Valid Scenarios
Payment (Subsidiary A) → Invoice (Subsidiary A)
Credit Memo (Subsidiary B) → Invoice (Subsidiary B)
Invalid Scenarios
Payment (Subsidiary A) → Invoice (Subsidiary B) ❌
Credit Memo (Subsidiary B) → Invoice (Subsidiary A) ❌
Determining subsidiary for a payment
The subsidiary for a payment can be set in one of the following ways:
Via Settings
During Posting (derived from invoice or customer)
Manual override by the user
Via Settings (Chart of Accounts Mapping)
A configuration mapping exists between Recipient Bank Account Number <-> Chart of Accounts <-> Subsidiary. If a payment is associated with a specific Bank Account (GL), the system derives the Subsidiary based on this mapping.
The system would detect the integrated bank accounts or lockboxes automatically.
If the integration is yet to be completed, the Bank Account number, Chart of Accounts, Subsidiary can be added.
Once added, this would serve as an automation rule. This can be changed when doing payment application
During posting (Derived from Invoice or customer)
When the settings are incomplete or not set, the following happens on Posting.
The system sets the Payment Subsidiary based on the Invoice's Subsidiary.
Multiple invoices: If multiple invoices are selected for a single payment,
The Subsidiary is derived from the first invoice
All selected invoices must belong to the same Subsidiary
If invoices belong to different subsidiaries → Posting will fail
No invoices: If the amount is completely allocated for a customer on-account.
The customer's default subsidiary is used for this payment.
All the above items can be manually overriden by the user during posting.
Split Payment:
All the Invoices belonging to a single card will follow the above rules
Manual override by user
Users can manually select the Subsidiary while creating or editing a Payment. If the user changes the Subsidiary:
Only invoices belonging to the selected Subsidiary will be available for application.
Cross-subsidiary invoice selection will be blocked.