Example of an Intercompany Billing Contract https://fga.fa.us1.oraclecloud.com/fscmUI/topic/TopicId_P_870E5C3F...

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This example describes the requirement of a professional services organization with global offices that must share
contract revenue for a resource between different business units.

Scenario
You are a specialized information technology professional services organization with headquarters in the New York, and
international offices in Aberdeen, Scotland, Paris, France, and Jakarta, Indonesia. Your organization provides design,
support, and maintenance expertise for energy companies. You just received a contract to provide information technology
upgrade services for an oil and gas exploration company located in the United States. Resources will work on the contract
for four weeks, and the client will be invoiced for labor hours and expenses at the end of each month. One consultant
who will work on the project is based in Paris. The remainder of the resources are based in the United States.

Billing Requirements
Major features of the contract are:

Invoice and recognize revenue based on hours worked by resources, and expenses incurred. The travel budget is
limited to $25,000.
The resources allowed on the contract are project manager, senior consultant, and junior consultant.
The contract is expected to be complete in four months.

Analysis
To share revenue for the consultant from Paris, you must create an intercompany contract. Your corporate policy dictates
that borrowed resources from different legal entities or business units receive 70 percent of the standard job bill rate. The
following table summarizes the setup of key contract and project features.

Key Feature Configuration

"Provider business Paris

unit"

"Receiver business New York

unit"

Project Create a project with the following key features:

Enabled for time and materials.

Enable the project to receive cross-charge transactions.

Project plan Assign the following resources to a chargeable and billable task:

Project Manager
Senior Consultant
Junior Consultant
Expenses

Set the baseline for the project plan.

Contract type Intercompany

Contract lines Create the following contract lines:

Line 1 for the Paris consultant's labor.

Line 2 for the Paris consultant's expenses.
Line 3 for all other consultants' labor.
Line 4 for all other consultants' expenses.

Bill plan Select an invoice method with a rate-based invoice method classification , and associate it with the contract lines.
Enter the transfer price schedule on the bill plan.

Revenue plan Select a revenue method with an as-incurred revenue method classification, and associate it with the contract
lines. Enter the transfer price schedule on the revenue plan.

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Example of an Intercompany Billing Contract https://fga.fa.us1.oraclecloud.com/fscmUI/topic/TopicId_P_870E5C3F...

Billing controls Create at the contract level, with the following details:

$25,000 hard limit for expenses.

Billing resources: expenses and labor.

Project All resources charge transactions for this contract to the same project.
transactions

Resulting Intercompany Invoice and Revenue Details

After you submit the cross-charge identification process and generate invoices, your client receives one invoice from the
New York business unit that contains charges for the work performed by all resources. The invoice amounts are
determined from the transfer price schedule in the bill plan, and calculated from transactions charged to the receiver
project. Revenue amounts are determined from the transfer price schedule in the revenue plan, and calculated from
transactions charged to the receiver project.

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