NCOAUG 2009 Intercompany Flow

Ravi Sagaram

Agenda

Introduction Intercompany (IC) Shipping Flows 2 OUs 3 OUs IR ISO Process Intercompany (IC) Procurement Flows 2 OUs 3 OUs Questions and Answers

Introduction

It is quite common now a days for companies to do business globally taking the advantage of cost, operations, tax benefits etc. These companies use Multiple Orgs and Multiple OUs for their operations. When one OU offers goods to another OU, it may call for intercompany transaction flow. The financial ownership in these cases may not follow the physical flow of the goods. Intercompany transaction flow establishes relationship between the physical flow of the goods and the financial flow

intercompany flow is generated automatically when the booking OU is different from the shipping OU. Shipping Flow Procurement Flow In the shipping flow. In the procurement flow. Intercompany flow is generated automatically when the purchasing OU is different from the receiving OU Intercompany Invoicing is generated automatically by the system in the above cases .Introduction Cont… Oracle applications provides mainly 2 types of intercompany transaction flows.

Inter Company Shipping Flow INTERCOMPANY SHIPPING FLOW .

The shipping OU ships goods to the customers directly. The Shipping OU records an Intercompany AR Invoice against the Selling OU at the transfer price.Inter Company Shipping Flow Intercompany Transaction flow for shipping is triggered when the Booking OU of a sales order is different from the shipping OU Booking OU books sales orders. The Selling OU records Intercompany AP invoice for the payment. These two invoices are recorded by the system using the intercompany transaction flow .

2.Inter Company Shipping Flow Sample Org Structure used in the examples Set of Books Legal Entity Operating Unit Inventory Org 1. .3….

Inter Company Shipping Flow Flow with 2 OUs Order is Booked in one OU It is shipped out of a different OU India Booking OU China Shipping OU .

Inter Company Shipping Flow Flow with 3 OUs Order is Booked in one OU It is shipped out of a different OU There is a financial OU in between these two OUs India Booking OU US OU China Shipping OU .

Inter Company Shipping Flow with 2 OUs Material Transactions Flow with 2 OUs US Booking OU Logical IC Sales Issue Logical IC Shipment Receipt China Shipping OU Logical Sales Order Issue Physical Sales Order Issue Customer .

Inter Company Shipping Flow with 3 OUs Material Transactions Flow with 3 OUs Logical IC Sales Issue Logical IC Sales Issue India Booking OU US Intermediate OU China Shipping OU Logical IC Shipment Receipt Logical Sales Order Issue Logical IC Shipment Receipt Physical Sales Order Issue Customer .

Inter Company Shipping Flow Logical Material Transactions Logical Material Transactions with 2 OUs .

Inter Company Shipping Flow Financial Flow with 2 OUs • Financial Flow with 2 OUs IC AR in China OU against US OU @ Tr Price US Booking OU China IC AP in US OU against China OU @ Tr Price Shipping OU AR invoice to Customer Customer .

Inter Company Shipping Flow Financial Flow with 3 OUs • Financial Flow with 3 OUs IC AR in US OU on India OU @Tr Price IC AR in China OU on US OU @ Tr Price India Booking OU US Financial OU China Shipping OU IC AP in India OU on US OU @ Tr Price AR invoice to Customer IC AP in US OU on China OU @ Tr Price Customer .

Inter Company Shipping Flow– Transfer Price Transfer Price with 2 OUs India Booking Org IC Trxs flow between China and US OUs @$110 (transfer price) China Shipping Org Cost = $110 Customer Price = $120 Cost = $100 Markup = $10 Transfer Price = $110 .

Inter Company Shipping Flow – Transfer Price Transfer Price with 3 OUs India Booking Org IC Trxs flow between US and India @ $120 US IC Trxs flow between Shipping Org China and US @ $110 China Cost = $120 Customer Price = $130 Cost = $110 Markup = $10 Transfer Price = $120 Cost = $100 Markup = $10 Transfer Price = $110 .

Inter Company Shipping Flow Financial Transactions OU-India Booking OU OU-USA Financial OU DR CR OU China Shipping OU 1 DR IC COGS($100) CR Inventory $100 1 Inventory Clearing $110 $110 DR Inventory 120 CR Clearing $120 1 IC COGS 110 Inventory 110 1 IC Receivables $110 IC Revenue) $110 2 1 COGS $120 Inventory $120 IC Accrual 110 IC Payable $110 3 1) IC Accrual $120 Rec $130 IC Payable $120 5 IC Rec 120 IC Rev 120 Logical IC Issue in China OU + Logical IC receipt in US + Logical IC issue in US to India OU + Logical Receipt in India OU + Logical Issue to Customer 4 2) Auto Invoice in OU China Rev $130 6 3) Import AP Invoice in US OU 4) Run Auto Invoice in US OU 5) Import AP Invoice in India OU 6) Run Auto Invoice in India OU .

Inter Company Shipping Flow – Transfer Price Transfer Price Logic Use External API Use Advanced Pricing Use Static Price List attached to the ‘Bill To’ customer or Customer Site .

else return (NULL). If the return value is 0 or null. I_price_list_id in number.G_RET_STS_SUCCESS. end if. . end if. This is a very powerful API and can be used easily without much customization. x_return_status OUT NOCOPY VARCHAR2. if (I_ship_ou_id = 81 and I_sell_ou_id = 147) then begin select nvl(unit_selling_price. then the value returned by the API is used for the transfer price CREATE OR REPLACE package body MTL_INTERCOMPANY_INVOICES as /* $Header: INVICIVB.2 2006/03/29 05:41:10 sbitra noship $ */ function get_transfer_price (I_transaction_id in number. x_msg_count OUT NOCOPY NUMBER. x_msg_data := null.Inter Company Shipping Flow Transfer Price External API API MTL_INTERCOMPANY_INVOI CES. exception when others then raise. I_ship_ou_id in number. end. then the system will ignore this value and look for other conditions to get the transfer price You can use this API to easily plug in variable transfer price like cost + x% or based on customer selling price etc. I_sell_ou_id in number. begin O_currency_code := null. x_msg_count := 0. x_return_status := FND_API. O_currency_code out NOCOPY varchar2. x_msg_data OUT NOCOPY VARCHAR2.GET_TRANSFER_PRICE If the external API returns value greater > 0 for the transfer Price.pls 120. return(l_transfer_price). end get_transfer_price. if l_transfer_price <> 0 then O_currency_code := 'USD'.0) * 4 into l_transfer_price from oe_order_lines_all where line_id = I_order_line_id. exception when others then null. I_order_line_id IN NUMBER default null) return number is l_transfer_price number := 0.

Inter Company Shipping Flow Transfer Price Advanced Pricing Profile ‘INV: Advanced Pricing for Intercompany Invoice’ decides the usage of advanced pricing Set the profile to ‘Yes’ in the from OU for using the advanced pricing If the profile is set to No. . then the system will use the static price from the price list associated with the Bill to Address of the IC Customer In the advanced pricing. use the qualifiers for the system to figure out the price list to be used.

Without advanced accounting checked. This is to create logical inventory transactions .Inter Company Shipping Flow Setups Setup Intercompany Transaction Flow for shipping Inventory Setup Organizations Intercompany Transaction Flow In the Shipping Flow. we can create IC flow only between 2 OUs. An inventory Organization should be defined and associated with all the OUs in the nodes even if there is no physical flow of inventory. Advanced accounting has to be checked for creating logical transactions and IC invoices and for defining more than one node in the shipping flow. Start OU represents the shipping Org and end OU represents the Booking OU.

Setup In the Intercompany relations.Inter Company Transaction Flow -. supplier site. Similarly specify the IC AP supplier. invoice type. IC COGS A/C and Currency Code. specify the IC AR invoice customer. or from OU or order currency . Inventory Accrual AC and Expense Accrual Account The currency for the IC invoices can be of the To operating unit.

Inter Company Shipping Flow with IRISO IR ISO Process System is designed only for 2 OUs in IR ISO Process The transfer type in the shipping networks should be setup to Intransit to enable the intercompany invoicing for IR ISO process Also the Internal Order Required Option should be checked in the shipping networks to enable the intercompany flow for the IRISO Process Hongkong OU IR US OU ISO Shipping OU .

5 6 7 . run the ‘Auto Invoice Master Program’ from the receivables responsibility. This will create records in the auto invoice interface tables On successful completion of the above program.Inter Company Shipping Flow with 2 OUs Process Flow Step # 1 2 3 4 Selling OU Book Sales Order Shipping OU Ship Sales Order Run the Material Transaction Manager and Cost Manager From the receivables responsibility. This will create IC AR Invoice From Payables responsibility of the Selling OU. run the ‘Create Intercompany AP Invoices’ Then run the program ‘Payables Open Interface Import’ from Payables responsibility. This will create IC AP Invoices in the selling OU. run the program ‘Create Intercompany AR Invoices’.

run the program ‘Create Intercompany AR Invoices’. This will create IC AR Invoice From Payables responsibility of the intermediate OU. This will create IC AR Invoice From Payables responsibility of the Selling OU. run the program ‘Create Intercompany AR Invoices’. This will create IC AP Invoices in the intermediate OU. This will create records in the auto invoice interface tables On successful completion of the above program. From the receivables responsibility. This will create records in the auto invoice interface tables On successful completion of the above program.Inter Company Shipping Flow with 3 OUs Process Flow Selling OU 1 2 3 4 Book Sales Order Ship Sales Order Run the Material Transaction Manager and Cost Manager From the receivables responsibility. run the ‘Auto Invoice Master Program’ from the receivables responsibility. run the ‘Auto Invoice Master Program’ from the receivables responsibility. Intermediate OU Shipping OU 5 6 7 8 9 10 11 . This will create IC AP Invoices in the selling OU. run the ‘Create Intercompany AP Invoices’. run the ‘Create Intercompany AP Invoices’. Then run the program ‘Payables Open Interface Import’ from Payables responsibility. Then run the program ‘Payables Open Interface Import’ from Payables responsibility.

Inter Company Shipping Flow Programs for creation of IC AR invoices Parameters for the program ‘Create Intercompany Invoices’ Parameters for Auto Invoice .

Inter Company Shipping Flow Programs for creation of IC AP invoices • Parameters for ‘Create Intercompany AP Invoices’ • Parameters for ‘Payables Open Interface Import’ .

Intercompany Procurement Flow INTERCOMPANY PROCUREMENT FLOW .

Inter Company Procurement Flow • Purchase Order is Booked in one OU and Goods are received in a different OU with an Intermediate OU for accounting. IC Trxs flow between Purchasing OU US and HK OUs @transfer price US Hongkong Trxs flow IC OU China Shipping OU between China and HK OUs @transfer price US Places PO On Supplier Supplier sends Invoice to US OU Supplier Goods shipped to China OU directly .

Inter Company Procurement Flow Financial Flow with 3 OUs • Material Flow with 3 OUs Logical Receipt of goods Logical Receipt of goodsPurchasing OU Logical Receipt of goods US Hongkong Intermediate OU China Receiving OU Logical Issue of goods PO is raised On the Supplier Logical Issue of goods Supplier ships The Goods Supplier .

Inter Company Procurement Flow Financial Flow with 3 OUs • Financial Flow with 3 OUs IC AP in HK OU on US OU @PO/Tr Price IC AP in China OU on HK OU @ PO/Tr Price US AP Invoice In US OU On Supplier Purchasing OU IC AR in US OU on HK OU @ PO/Tr Price Hongkong Intermediate OU IC AR in HK OU on China OU @ PO/Tr Price China Receiving OU PO is raised On the Supplier Supplier ships The Goods Supplier .

Inter Company Procurement Flow Setups Procurement Flow Setup (Intercompany Transaction Flow) Navigation Inventory Setup Organizations Intercompany Transaction Flow The Start OU is the Receiving OU The End OU is the Procuring OU Pricing Options are at PO price or transfer Price Check the Advanced Accounting for generating IC transactions Flow even for one node. .

or to OU or can be of currency of PO .Inter Company Procurement Flow Setups You can define Multiple nodes For each OU pair in a node. you can define the AR invoice details and AP invoice details The Currency code can be of from OU.

Questions and answers Questions and Answers .

com sagaram@hotmail.Contact Information Ravi Sagaram ravi.com 630-849-9888 mobile .sagaram@utstar.

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