Inter-Branch Transfer GL Account
  • 12 Jan 2022
  • 4 Minutes To Read
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Inter-Branch Transfer GL Account

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An inter-branch transfer general ledger (GL) account is needed to correctly book any transactions affecting GL balances in two different branches in order to keep the integrity of the balance sheet at the branch level.

You can define the rules that determine which GL accounts will be used for particular inter-branch transfers under Administration > Financial Setup > Accounting.

Administration screen with Inter-Branch Transfer GL account rules.

Please Note
This element can also be configured using Configuration as Code (CasC). For more information, see Configuration as Code.

Inter-Branch Transfer GL Account Rules section

The inter-branch transfer GL account rules consist of one default rule and additional custom rules which you can define.

Default rule

The default rule is pre-populated with All Branches (does not include unassigned) and can use any GL account of the type asset which is in your organization's base currency.

Warning!

We strongly recommend that you set an inter-branch transfer GL account for this rule, even if you do not currently use branches. If you do not set a general ledger account for the default rule, there will be two consequences:

  • it will not be possible to move a client or customer account from one branch to another,
  • your books may end up unbalanced if a customer makes a transfer at a different branch to their own, as there will be no automatic balancing in your chart of accounts.

Custom rules

Additional custom rules can be added between branches.

To add a custom rule:

  1. On the main menu, go to Administration > Financial Setup > Accounting.
  2. Select Add .
  3. Enter an ID (optional). If an ID is not entered then it will be automatically generated when saving the custom rule. The ID is used to manage the accounting rules using the API and also helps identify the same rules when working across Mambu instances, for example, your production and sandbox tenants.
  4. Enter the two branches for which you want to specify a GL account for inter-branch transfers.
  5. Use the dropdown to select the desired GL account.
  6. Select Save Changes.

To delete a custom rule, select Delete .

When a user, who is not assigned to a branch, posts a transaction, for a client who is assigned to a branch, the journal entries will be logged in the client's branch and will not be logged through the inter-branch transfer GL account.

Please be aware

You cannot delete a branch if rules are defined for it and if clients or groups are assigned to it. Also, it will not be possible to delete a GL account which has been used in a rule.

Accounting in Multicurrency

Early Access Feature
If you would like to request early access to this feature, please get in touch with your Mambu Customer Success Manager to discuss your requirements. For more information, see Mambu Release Cycle - Feature Release Status.

The Accounting in Multicurrency feature allows you to set new rules between branches for each currency.

For example, you can define one rule with a GL account in EUR for inter-branch transfers between Branch A and Branch B. And you can also define another rule with a GL account in GBP for inter-branch transfers between Branch A and Branch B.

Please Note

If you have Accounting in Multicurrency enabled, we strongly recommend setting a rule for each foreign currency used.

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Usage and examples

The inter-branch transfer GL account will be used by Mambu to log automatic journal entries in the following scenarios:

  1. When a transfer transaction is posted between clients assigned to different branches

An example of journal entries when a transfer of 100 is made from a deposit from a client assigned to Branch A to a deposit for a client assigned to Branch B:

Dr Savings Control of Member in Branch A 100
Cr Inter-branch account for Branch A 100

Dr Inter-branch account for Branch B 100
Cr Savings Control of Member in Branch B 100

  1. When a client is assigned to a different branch

An example of a client with 500 outstanding loan portfolio and 100 interest balance assigned from Branch A to Branch B:

Dr Inter-branch account for Branch A 600
Cr Loan Portfolio in Branch A  500

Cr Interest Receivable in Branch A 100
Dr Loan Portfolio in Branch B 500

Dr Interest Receivable in Branch B 100
Cr Inter-branch account for Branch B 600

  1. When a user assigned to one branch posts a transaction (e.g. disbursement or repayment) for a client assigned to a different branch

An example of a Credit Officer assigned to Branch A posting a repayment of 500 for a Client in Branch B via Cash:

Dr Cash in Branch A 500
Cr Inter-branch account for Branch A 500

Dr Inter-branch account for Branch B 500
Cr Loan Portfolio in Branch B 400
Cr Interest Receivable in Branch B 100

  1. When a user unassigned to a branch posts a transaction (e.g. disbursement or repayment) for a client assigned to a branch

An example of a Credit Officer unassigned to a branch posting a repayment of 500 for a Client in Branch B via Cash:

Dr Cash in Branch B 500
Cr Loan Portfolio in Branch B 400

Cr Interest Receivable in Branch B 100

Please Note

The net balance on the inter-branch transfer account should always be zero across all branches i.e. debits in Branch A will always be equal to credits in Branch B.

Manual Journal Entries

When posting manual journal entries for an inter-branch transaction with an inter-branch transfer GL account defined, the user will need to manually define the relevant journal entries for the inter-branch transfer GL account as well. An error message will be displayed otherwise.


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