Entity/Entity Relationships

Business Relationships of various kinds can be formed between two Entities. These Relationships define how the Entities interact in different contexts.

Entity to Entity Relationships, individually, are directional meaning that the “first party Entity” has a specific, but different role in the Relationship as compared to the role of the “external Entity”. These roles are not reversible and therefore we say the Relationship is directional.

Relationship Kinds

There are many ways to divide Relationships into categories of like kinds, but for our purposes we’ll define the top level of Entity/Entity Relationship kinds as follows:

Sales

A Relationship where the first party Entity is the seller and the external Entity is the customer in sales related transactions.

  • Subordinate Relationships

    • Accounts Receivable

  • Person Roles

    • Fulfillment Recipient

    • Accounts Receivable

    • Customer Agent

Purchasing

A Relationship where the first party Entity is the buyer and the external Entity is the vendor in purchasing transactions.

  • Subordinate Relationships

    • Accounts Payable

  • Person Roles

    • Accounts Payable

    • Account Manager/Sales Representative

    • Shipping

Employment

A directional Relationship where the first party Entity is the employer and the external Entity is the employee/contractor/etc. In this case the external Entity is also an individual person.

  • Person Roles

    • Emergency Contact

Banking

A directional Relationship where the first party Entity is the consumer of banking services and the external Entity is a bank, lending institution, brokerage, etc. Banking Relationships are usually used to facilitate the creation of banking related ledger accounts rather than to facilitate the processing of specific transactions.

  • Person Roles

    • Account Manager

    • Payments

    • Receipts

    • Support

Ledger

A directional Relationship where the first party Entity is a parent company and the “external Entity” is a subsidiary company such that the subsidiary financials are consolidated into the financial reporting of the parent Entity.

Tax Authority

A Relationship where the first party Entity is the tax payer and the external Entity is the government agency to whom taxes are paid.

  • Person Roles

    • Remittances

    • Support

Last modified October 31, 2023: Add Book/Theory Entity/Entity Relationship page (ba923caa)