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Oracle Project CrossCharge Whitepaper
Oracle Project CrossCharge Whitepaper
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Table of Contents
Cross Charge Overview ................................................................................................................................. 3
Cross Charge Terminology ............................................................................................................................ 3
Cross Charge Processing Methods ................................................................................................................ 3
Borrowed and Lent Accounting Processing .................................................................................................. 4
Intra-Operating Unit ..................................................................................................................................... 4
Required Setup ......................................................................................................................................... 4
Example ..................................................................................................................................................... 5
Screen Shots .......................................................................................................................................... 6
Inter-Operating Unit ..................................................................................................................................... 8
Required Setup ......................................................................................................................................... 8
Example ..................................................................................................................................................... 9
Inter Company Billing .................................................................................................................................. 10
Setup & Example ..................................................................................................................................... 10
Transfer Price Rules .................................................................................................................................... 13
Transfer Price Schedules ............................................................................................................................. 14
Transfer Price Amount Calculation ............................................................................................................. 15
References .................................................................................................................................................. 18
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4. Intercompany billing - A method of internally billing work performed by a provider operating unit and charged
to a project owned by a receiver operating unit. The provider operating unit creates a Receivables invoice, which is
interfaced as a Payables invoice to the receiver operating unit.
5. Provider operating unit - The operating unit whose resources provide services to another project or
organization. (Expenditure operating unit)
6. Provider organization - For cross charge transactions, the organization that provides resources to another
organization. The default is the expenditure organization or the nonlabor resource organization, which can be
overridden using the Provider and Receiver Organization Override client extension.
7. Receiver operating unit - An operating unit whose projects receive services from another project or
organization. (Project operating unit)
8. Receiver organization - The organization whose project (task) receives services from another project or
organization. (Task owing organization)
9. Transfer price - The price agreed upon by the provider and receiver organizations in a cross charged transaction.
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Project just creates accounting entries to pass costs and revenue across organizations without generating internal
invoices.
Intercompany Billing Accounting - Using this method, Projects generates physical invoices and corresponding
accounting entries at agreed upon transfer prices between internal seller (provider) and buyer (receiver)
organizations when they belong to different legal entities or operating units.
No Cross Charge Process - This method will not result in any cross charge processing for transactions that cross
organizations
Note: - This method cannot be used for intercompany (cross legal entities) cross charges.
If we choose to pass costs from the Provider to the Receiver then this processing method will
Intra-Operating Unit
Intra-Operating Unit is a scenario where both the Provider and Receiver organization are within the same Operating
Unit.
Required Setup
1. Cross Charge should be enabled both at Project and Task Level. Along with the transfer price Rules Set.
2. In the Implementation Options Screen, under the Cross Charge tab (Cross Charges within an Operating Unit), the
Processing Method selected should be "Borrowed and Lent".
3. The following Auto Accounting Functions should be setup.
Borrowed and Lent Credit Account
Borrowed and Lent Debt Account
Labor Revenue Borrowed Account
Usage Revenue Borrowed Account
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Example
Let us consider the scenario below:
Provider Organization - Services-East
Receiver Organization - Services-West
Operating Unit - Vision Services
Legal Entity - Vision Services
1. Create a Project - "AA-Borrowed-Lent Project"
Organization - Services-West
2. Enable Cross Charge at the Project Level.
Enable Cross Charge at the Task Level for Task 4.0
3. Enter a Pre-Approved Expenditure Against the above project.
Employee: - Marlin, Ms Amy (who belongs to "Services-East" organization, which is different
from the Project Organization)
4. Distribute the costs by running PRC: Distribute Labor Costs
5. Run PRC: Distribute Borrowed and Lent Amounts
Once the above processes are completed, in the Expenditure Inquiry screen we can verify the following:
Screen Shots
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Inter-Operating Unit
Inter-Operating Unit is a scenario where both the both Provider and Organizations are from different Operating
Units.
Required Setup
1. Cross Charge should be enabled both at Project and Task Level. The transfer price Rules should be set at Project
and Task level.
2. In the Implementation Options Screen, under the Cross Charge tab (Allow Cross Charges to all Operating Units
within Legal Entity), the Processing Method selected should be "Borrowed and Lent". This has to be set in the
Receiver Operating Unit
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Example
Let us consider the scenario below:
Vision Services R+D Receiver OU
Vision Services Provider OU.
Legal Entity - Vision Services
1. Go to the Receiver Responsibility
Create Project - "AA-Borrowed Lent 3"
Organization - Vision Services R+D
2. Enable Cross Charge at the Project Level.
Enable Cross Charge at the Task Level for Task 3.0
3. Go to the Provider Responsibility
Enter a Pre-Approved Expenditure Against the above project.
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Employee - Marlin, Ms Amy (who belongs to "Services-East" organization, which is different from
Project OU)
4. Distribute the cost (Run PRC: Distribute Labor Costs).
5. Run PRC: Distribute Borrowed and Lent Amounts
Once the above processes are completed, in the Expenditure Inquiry screen we can verify the
following details:
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3. A Transfer Price Schedule should exist for the corresponding Provider and Receiver combination
4. Auto accounting Setup The function Intercompany Invoice Accounts should be configured
5. In Projects Vision Communications OU (Receiver Operating Unit)
Create a project "Contract New Project"
Enable Cross charge at both Project and Task Levels.
Under the Cross Charge Section, assign an Intercompany Tax Receiving Task at the
project level
6. In Projects Vision Services OU (Provider Operating Unit)
Create an Intercompany project type (Intercompany Billing should be enabled)
The project type should be a Contract project type
Create a template and project based on the above project type.
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In the project, under Customers and Contacts, ensure that the customer contact is be the
one defined, in the Vision Communications (i.e. Receiver OU) in the Implementation
Options screen Internal Billing Receiver Options (Customer name)
The project should have baselined funding.
From The Provider Responsibility Run PRC: Generate Intercompany Invoices for a Single Project.
Approve and Release the Invoice.
Run PRC: Interface Intercompany Invoices to Receivables
Go to a Receivables Responsibility for the operating unit and run the Auto invoice Import
Program.
13. Run PRC: Tieback Invoices from Receivables
Once the processes are successfully completed, data will be inserted into the following AP tables:
AP_INVOICE_LINES_INTERFACE
AP_INVOICES_INTERFACE
14. Run the Payables Open Interface Import from a Payables responsibility (In the Receiver OU i.e.
Vision Communications Responsibility)
15. Run PRC: Interface Supplier Costs (In the Receiver OU i.e. Vision Communications Responsibility)
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Bill Rate Schedule - For Operating Unit, specify the name of the operating unit that owns the bill rate
schedule that you want to use. For Schedule Specify the schedule bill rate schedule name to apply to the
basis.
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Transfer Price Amount Type Cost and Revenue - Applies to all the Cross Charge Transactions
Cost - Applies to transactions when the assigned work type has an amount type to Cost
Revenue Applies to transactions when the assigned work type has an amount type to Revenue
Effective Dates - Effective dates for the line.
Default - Choose one schedule line to be default to this schedule. Project uses this line to derive the transfer
price if none of the lines match your transaction. It is not mandatory to define one line as default; however,
if it cannot determine a rule to apply to a transaction then an error message is raised.
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References
Oracle Project Costing User Guide
Oracle Project Costing Student Guide
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