PDF Resource
Objective or Task
Understand how "Due To" and "Due From" accounting works in Workday Finance.
What is "Due To/Due From" Accounting?
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“Due To" and "Due From” are accounting terms used to monitor financial obligations among various departments in different entities within a single organization.
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Essentially, they function as internal IOUs.
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These accounts are activated when one department owes money to another in a different entity or when recording intercompany transactions.
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Remember! In Workday Finance, we are moving from an entity structure to a multi-company structure. With this change, “Due To/Due From” will now be more visible to end users.
Benefits
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Workday's financial management system offers robust intercompany transaction processing capabilities, including the use of “Due To/Due From” accounts.
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Automation: Workday Finance automates the creation of due to/due from entries based on predefined intercompany pairing rules. This automation minimizes manual work and boosts accuracy.
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Real-Time Visibility: Workday provides real-time visibility into these accounts, allowing for timely reconciliation and accurate financial reporting.
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Intercompany Netting: Workday supports intercompany netting, which simplifies the settlement process by offsetting balances between entities.
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Compliance: Workday aids in maintaining compliance with local and global accounting standards concerning intercompany transactions.
Key Facts
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Terminology: “Due To” signifies an amount to be received, while “Due From” indicates an amount owed.
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Intercompany Transactions: These accounts record intercompany transactions. For instance, if Department A purchases goods from Department B across Department A and B, a "Due To" account records the liability in Department A, and a "Due From" account records the receivable in Department B.
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Balance Sheet Accounts: "Due To" and "Due From" accounts appear as current liabilities and current assets, respectively, on the balance sheet.
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Clearing Accounts: These accounts often serve as clearing accounts, where the balance zeroes out at the end of the period once intercompany transactions are settled.
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Reconciliation: Regular reconciliation of "Due To" and "Due From" accounts is necessary for maintaining accuracy in reporting and identifying any discrepancies.
"Due To/Due From" Role in Workday Finance
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“Due To/Due From” in Workday Finance has the ability to automatically generate the “Due To/Due From” accounting, based on Worktags that balance.
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Adding funds and companies complicates the process, as entries must also track the associated fund and company for each transaction.
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For intercompany transactions, these involve financial activities between different entities within the same organization. Workday Finance uses intercompany pairing rules to record these transactions. These rules determine the default “Due To/Due From” accounts, default intercompany accounts, and default settlement accounts for each company involved in the transaction.
Intercompany Invoicing - On Behalf Of
Buying on behalf of another company: University of Louisville (ULSA) > Supplier Invoice Outside Supplier > UofL Research Foundation (ULRF)/UofL Athletics Association (ULAA)
Outcome
- You understand how "Due To" and "Due From" accounting works within Workday Finance and how it supports intercompany transactions.
- You are prepared to interpret, monitor, and reconcile these accounts to ensure accurate financial reporting.