Ledgr/Documentation/Multi-company

Multi-company & consolidation

Watch the lesson: Add a second company and switch to it (1:36).

Several entities, each with their own books, adding up to one set of group accounts.

First: is this really a second company?

This is the question worth getting right, because the two answers are different features and undoing the wrong one means re-keying your books.

How many entities you can hold

Enterprise and Manufacturing include 2 companies. Company number one is never charged for. If you need a third or more, the Extra company add-on adds one company at a time. It is sold on Enterprise and Manufacturing only, bought in Settings → Billing & Plan — see add-ons. The rate steps down as the group grows:

One group can hold up to 100 entities.

The limit is checked when you create an entity, and nowhere else. If you are already over the allowance — because your plan changed, say — nothing is hidden, locked or deleted: you keep every entity and can go on working in all of them. Ledgr only declines to add a new one, and it tells you the figure and how to raise it.

Adding an entity

1. Multi-Company → Add Entity
2. Capture it like a company, because it is one

   Registered name, registration number, VAT number, financial year end, base currency and its legal form — (Pty) Ltd, close corporation, trust, sole proprietor, NPC or partnership. Whether it is a holding company or a subsidiary is not a type: it follows from the next step.

3. Set the holding company and shareholding

   This is what draws the group structure chart and drives which balances get eliminated on consolidation. Leave the holding company blank for a standalone entity.

4. Decide who works in it

   Open the entity and use Access to this entity → Restrict a user. Somebody with no entities listed can work in every entity; the first one you list for them confines them to the entities listed.

5. Give them a role in it, if it should differ

   Each person listed for the entity shows their role there. By default that is their organisation role from Roles & users; pick another from the menu beside their name and it applies whenever they work in this entity — so someone can be an Admin in one entity and a Viewer in another. Choosing a role here needs permission to edit roles. The owner always holds every permission in every entity, and you cannot change your own role.

Switching between entities

The entity switcher sits in the header. Pick an entity and the whole application — dashboard, invoices, reports — scopes to it. Pick Group view and you get the consolidated position. What you are looking at is always named in the header, which matters more than it sounds when you are about to issue an invoice.

Inter-company transactions

When one entity in the group charges another, record it as an inter-company transaction so both sides are linked. Each one carries the entities involved, the amount and the date. The IC balance matrix shows, at a glance, who owes whom across the whole group.

Invoicing another company in the group does this for you. On the customer's contact, set One of your companies to the company they are. When you send them an invoice, Ledgr enters the same invoice in that company's bills — waiting in its supplier invoices for somebody there to accept it, so its books change only when it agrees — and records the inter-company transaction for the invoice total. Voiding the invoice before the other company acts takes both back.

The bill names your company as the supplier with the VAT number and address from your company profile, so the other company can claim the VAT on it like any other tax invoice. If you record or correct the VAT number afterwards, the next invoice you send that company brings the supplier up to date; a bill that company has already accepted keeps what it posted.

For an invoice and bill like this, whether the amount is still a balance between the two companies is read from their books, not from the inter-company transaction’s own payment record: it cancels out of the group’s receivables and payables while your invoice has an amount due and the other company’s bill has an amount outstanding, and it is read as at the date of the statement you are viewing. Once both are paid it is no longer a balance.

Two separate things then happen to it, and Ledgr keeps them apart on purpose:

• Eliminating it is a statement about the group's figures — the amount is out of the consolidated accounts. Its status runs pending → matched (both entities agree the amount) → eliminated.
• Recording payment is a statement about cash — the money moved between two bank accounts, on a date, with a reference.

A management fee is routinely eliminated at year end and still unpaid, which is exactly what the matrix exists to show — so one action cannot be made to mean the other. Removing a payment record is always allowed; eliminating cannot be undone by recording a payment, and recording a payment does not take an amount back into the consolidated figures.

One account, several companies. When one company’s bank account pays another’s bill, book the bank line as Paid for another company in Banking. Ledgr records both halves at once — the paying company’s bank and what it is owed back, the other company’s cost and what it owes — and the inter-company transaction that ties them. On consolidation the amount owed and the amount due cancel out; it is not treated as a sale between them, so neither company’s turnover changes.

A loan or a dividend between two companies. When you record one by hand, say what the amount is: A loan or A dividend rather than A sale or service. Like a payment made for another company, it is a balance between the two, so it cancels out of what they owe each other and never comes off the group’s revenue or costs. A sale between them comes off at the amount before VAT, because the VAT is owed to SARS and is nobody’s revenue.

An amount a finalised consolidation has already eliminated cannot be restated — its figure is in a report somebody has filed. Correct it with a further transaction rather than by editing history.

Consolidation

Group view produces a consolidated income statement and balance sheet with eliminations applied:

• Inter-company revenue is eliminated against the matching inter-company expense
• Inter-company receivables are eliminated against the matching payables
• The holding company’s investment in a subsidiary is eliminated against the group’s share of that subsidiary’s share capital. Any difference is shown as goodwill (you paid more) or as a gain on a bargain purchase (you paid less), and the part you do not own is shown as non-controlling interests.
• A dividend one company in the group pays another (captured as an inter-company transaction of kind Dividend) is eliminated from the receiving company’s income and from the paying company’s dividends declared, so the group shows neither income it paid itself nor a distribution to itself.

The group’s annual financial statements apply the same eliminations, the investment’s included, and their basis-of-consolidation note says what the records cannot support.

Ledgr finds the investment by a mark on its account: in the chart of accounts, choose Rename on the non-current asset account that holds it (coded below 1300) and turn on Investment in a subsidiary; turn it off to take the mark away. Until one is marked, the balance sheet says so and leaves the investment and the subsidiary’s capital in, which counts the subsidiary twice. Ledgr does not record the date you gained control, so it sets the investment against the capital as the subsidiary’s books hold it today and treats what the subsidiary has earned since as the group’s; goodwill is shown at cost.

Every line of the consolidated trial balance, income statement and balance sheet is the figure after the eliminations, so the lines add up to the totals; on the trial balance each row says how much of its debit and credit is an elimination.

When one company sells goods to another and the buyer still holds some of them, the seller’s profit on that part has not been earned by the group. State on the transaction what the goods cost the seller and the share the buyer still holds at the date of the statement; the consolidated figures then take that part of the profit out of inventory and out of group profit, in full (IFRS for SMEs 9.15). The cost is read from the seller’s stock for a sale that came from an invoice. A sale whose held share is not stated is left alone, and the statement says how much profit it carries.

The same holds for equipment. Register the equipment in the buying company, then name that asset (buyerAssetId) and the seller’s carrying amount (sellerCost) on the transaction. While the buyer still holds the asset, the gain the seller booked as profit on disposal comes off the equipment’s cost and group profit, and so does the depreciation the buyer has charged on that gain, so the group carries the equipment at its own cost and depreciates that. An asset the buyer has sold outside the group has realised the gain, and nothing is eliminated.

A subsidiary that keeps its books in another currency is translated into the group’s currency the way IFRS for SMEs section 30 requires: its assets and liabilities at the closing rate of the statement’s own date, its income and expenses at the rate of the day each was posted, and its share capital and other equity at the rate of the day it was contributed. The difference is the foreign currency translation reserve, shown in equity. Each statement names the closing rate it used, with that rate’s date and where it came from, so the same statement read on another day gives the same figures. If no rate is on file for a currency, its figures are included at 1:1 and the statement says so; capture the rate in Settings and they restate.

Which is why the IC log matters — an unrecorded inter-company charge inflates both group revenue and group costs, and the group balance sheet with it.

Shared contacts

The contact database is shared across the group, with a badge per contact showing which entities trade with them. One customer buying from two subsidiaries is one contact with two badges, not two records that drift apart.

Group structure

An org chart showing the holding company and its subsidiaries with connectors and shareholding. Useful for a funder pack, and useful for checking that the parent relationships you captured are the ones you meant.

Common problems