Intercompany Invoicing: How to Set Up and Use this Feature within Oracle
Applications
Phyllis A. Doig
Oracle Corporation
I. Introduction
A key requirement for the global implementation of
Oracle applications is the ability to process
"intercompany transactions," where one business
unit invoices another at transfer price for customer
shipments. This paper provides setup steps,
implementation tips, and guidance for coordinating
the many departments which become involved with
intercompany invoicing. It will cover the following:
⇒ The entire process flow from booking the
customer order through shipping, billing, and in
particular generating the intercompany
receivable and payable invoices. By seeing
intercompany transactions in the context of the
total process flow, you can improve the
efficiency of your project implementation by
identifying shared setups, interdependent
procedures, and common issues.
⇒ All system transactions, whether performed by
users or set up to run in the background
automatically. This will help you decide how to
configure the applications for your business.
⇒ The accounting transactions, to help you
configure the system in a way that will fully
automate the accounting for each sales order
shipment and invoice.
⇒ All setup steps for order processing,
emphasizing those specific to intercompany
invoicing.
⇒ Finally, implementation tips and issues will be
presented to help you anticipate questions that
may arise during your implementation.
The information provided in this paper comes from
implementation experiences using versions 10.6
through 10.7 of Oracle applications, both character
Copyright  1998 by Phyllis Doig, Oracle Corporation
5/4/00
mode and Smart Client. It will focus on setups and
transactions in the core "distribution" applications
including Oracle Order Entry (OE), Receivables
(AR), and Inventory (INV). Please refer to the
manual "Multiple Organizations in Oracle
Applications" for more specific information
regarding intercompany invoicing using the latest
release of Oracle applications.
II. What is Intercompany Invoicing?
When a customer order is processed through the
order cycle and then invoiced, the selling
organization records journal entries to accounts
receivable, revenue, and as applicable tax and
freight. The shipping warehouse records journal
entries to its inventory asset and cost of goods sold
accounts.
When this same scenario involves a selling
organization in one business unit but a shipping
warehouse in a different business unit, additional
accounting must take place. The shipping
organization needs to bill the selling organization at
transfer price, and the selling organization needs to
make the corresponding payment.
The intercompany AR invoice is the transaction
used by Oracle to record intercompany receivable
accounting for the shipping organization: debiting
intercompany AR (at transfer price), tax, and freight
and crediting intercompany revenue.
The intercompany AP invoice is the transaction
used by Oracle to record the payable accounting for
the selling organization: debiting intercompany
COGS (at transfer price) and freight and crediting
the intercompany payable account.
Ideally, these transactions should happen
automatically and as soon as possible after the
shipment takes place. This can be done using the
intercompany invoicing process within Oracle
applications.
The benefits of intercompany invoicing include:
⇒ Transaction-level detail. Each intercompany
transaction can be traced back its source sales
order, for improved reconciliation.
⇒ More accurate information. GL dates of the
intercompany transactions reflect the actual
shipment date (if you choose to set it up this
way), improving data accuracy such as exchange
rate conversions.
⇒ Improved accounting. Features within Oracle
allow you to automate the selection of GL
accounts, eliminating data entry error and
improving the quality of cost and revenue
reporting.
The challenges include:
⇒ Process ownership. You will see that setting
up intercompany invoicing involves Order
Entry, Receivables, Payables, Inventory, and
General Ledger applications. Rarely does one
person oversee the entire process, creating
challenges to the setup, testing, and ongoing
maintenance of this feature as your business
needs change.
⇒ Measuring performance. How will you
measure the success and identify any concerns
with intercompany transactions? What tools are
available to inquire and report on intercompany
activity?
⇒ Maintaining the interfaces. Intercompany
records step through particular interfaces in
sequence; some interface tables may appear to
be empty when, in fact, they have not yet been
populated and processed. Know what to look for
before closing your periods.
III. Major Concepts and Terminology
The Organization Model
When implementing business applications
worldwide, companies need to address the issue of
how to separate certain information that is specific to
each operating unit while at the same time making
other types of information globally accessible.
Within Oracle applications, this is handled through
the "multi-organization" configuration: a single
installation of software which supports the
independent operation of your business units (such
as sales order bookings and invoices), with key
information being shared across the entire
corporation (such as on hand inventory balances,
item master, customer master, and vendor master).
While the organization model continues to evolve
with advanced releases of the applications, core
structures involved with intercompany invoicing
remain as follows:
Set of Books - the financial reporting entity for
which there is a chart of accounts, currency, and
financial calendar for securing ledger transactions.
Legal Entity - the organization at whose level fiscal
and tax reporting is prepared.
Operating Unit - the organization which is
considered a major "division" or "business unit", at
whose level business transactions are segregated –
sales orders, invoices, cash applications, payables,
and purchasing documents, for example. Certain
Oracle applications such as OE, AR, AP, and parts
of PO are "partitioned" at this level, meaning that
operating units have visibility only to their own
transactions.
Inventory Organization - the organization at which
warehousing, manufacturing, and/or planning
functions are performed.
Page: 2
 Global Computers Corp.
Tip: For intercompany billings, there is no sales
UK Set of Books US Set of Books order – only an invoice. Therefore there is no
(GBP) (USD)
corresponding order cycle for intercompany
transactions to flow through. There is, however, a
Legal Entity: Legal Entity:
GCI Ltd. GCI Inc. specific sequence of events which take place in the
processing of an intercompany invoice; this will be
discussed in the section "System Transactions and
Oper. Unit: Oper. Unit: Intercompany Invoicing".
The UK Div. The US Div.

The Order Type

Inv. Org: Inv. Org:
Manchester New York
An order type in Oracle is a source of default
information for that order. It is assigned to the order
Inv. Org: Inv. Org: header when the order is first created and is kept
Swansea San Jose throughout the entire order cycle.

The order type assigns the following characteristics

Inv. Org: Inv. Org:
Aberdeen Chicago to your order:

• which cycle the order will flow through

Fig 1: The organizational model which will be used
throughout this paper is for a fictitious company called
Global Computers Corporation
The Order Cycle
Within Oracle applications, an order cycle is a series
of actions performed on an order in a predefined
sequence. The sequence begins with the initial entry
of the order and may subsequently include order
approval, pick release, shipment confirmation,
billing, reduction of inventory, and closing the order.
Approval steps may be built into an order cycle to
interrupt the order's flow until approval is received.
Companies generally set up more than one cycle to
process different kinds of orders including:
• which type of invoice will be used when the
order information is passed to Oracle
Receivables and produces an invoice
• whether credit check will be required
• whether prices may be changed
• which "Standard Value Rule Set" will be used.
A rule set determines how to automatically
default particular fields onto the order or order
line, based on criteria that you provide.
• if you use FlexBuilder (or the Account
Generator in R11) to pull COGS segments from
the order type, there is a place to provide the
COGS segment values on the Order Type
screen.

• Standard Shipment
• Shipment with Approvals
• Billing Only
• Returns for Receipt of Inventory
• Returns for Credit Only
• Returns for Receipt and Credit
• Internal Orders
• Quotes

Order cycles can be set up in any of a variety of ways

to suit your business needs. The sales order
described in this paper will use a standard shippable
order cycle (book the order, pick, ship, interface to
AR, interface to INV, and then close the order).

Page: 3
 ORDER TYPE setups include:
In the MAIN section:
Order Cycle
Standard Value Rule Set for defauting data onto orders
Default Price List
In the SHIPPING INFORMATION section:
Default Warehouse
Demand Class
Whether to perform Credit Check and when
In the FINANCIAL INFORMATION section:
Invoice Type of invoices resulting from this sales order
COGS account segments
Fig. 2: Selected data from the Order Type setup.
Tip: Notice that the Order Type assigned to your
order can derive segments of both the COGS account
and the Revenue account. The COGS segments can
come from the order type itself; the Revenue
segments can come from the invoice type which is
identified in your order type's setup screen. By
doing this, you can segregate cost and revenue based
on the type of order chosen: orders for standard
revenue vs. service revenue, for example.
The Invoice Type
The purpose of an "invoice type" is similar to that of
an order type: it defaults certain data and properties
onto the invoice. Default data includes the invoice's
payment terms and GL accounts. Properties include
whether tax and freight may be applied and whether
the invoice may be credited for more than its original
amount.
"Invoice Type" is a subset of "TransactionType",
since there are other classes of transactions such as
credit memos, debit memos, and deposits, each of
which has their own "type". Frequently, though, you
will find that the terms "invoice type" and
"transaction type" are used interchangeably.
There is no "cycle" for invoices; an invoice is
entered, completed, and printed for mailing to the
customer. The parallel in OE would be that an order
is entered, booked, and a Sales Order
Acknowledgment is printed for mailing to the
customer.
INVOICE TYPE setups include:
Class (whether it is an invoice, debit memo, credit memo,
&etc)
Whether to allow freight, tax
Whether to allow overapplication
Which default Credit Memo Type to use for credits against
this transaction
RECEIVABLES account segments
REVENUE account segments
OTHER account segments, including: Freight, Tax,
Unearned Revenue, Unbilled Receivable, Clearing
Fig. 3: Selected data from the Invoice Type setup.
Tip: Since the invoice type can be used to
automatically generate account assignments without
user intervention, consider how you plan to design
your accounting flexfield (usually a task for the GL
team) in conjunction with how to set up your Invoice
Types (usually done separately by the AR team).
This will greatly facilitate the invoicing process and
period closing procedures.
* * * *
Organizations, order cycles, order types, and invoice
types represent key building blocks for designing the
overall order processing flow with intercompany
invoicing.
⇒ Consider all available features of these data
structures when identifying your business
requirements and setting up Oracle applications.
⇒ Consider how your designs will stand up to
changes over time. Challenge them with
extensive unit and integrated test plans which
simulate (1) the current environment and (2)
scenarios going forward at least 5 years.
Integration testing, in particular, is a great
opportunity for validating how well your
business processes and system transactions will
flow throughout your applications worldwide.
Page: 4
IV. Business Processes and Intercompany ⇒ The UK Division is the "selling organization",
making the end customer sale from its operating
Invoicing
unit. Revenue from the sale is converted from
DM to GBP.

The complete business process for placing sales ⇒ The US Division is the "shipping organization",
orders in one operating unit while shipping out of from which product will be supplied directly to
another can be summarized in six steps: the customer. Cost is recorded in USD.

Global Computers Corp. ⇒ The US Division invoices the UK Division at

transfer price in GBP, which is then converted
German to USD; this UK Division produces the
Customer
intercompany payable in GBP.

To best handle this scenario, we must first describe

the business processes taking place, tie them to
Legal Entity: Legal Entity:
GCI Ltd. GCI Inc. transactions that would be performed in Oracle, and
identify the required system setups.
C
A
D
Oper. Unit:
E
Oper. Unit: Business Process Descriptions
The UK Div. The US Div.
F

This section details one of any number of possible

B scenarios. You will need to decide what is most
Inv. Org: Inv. Org:
appropriate for your business, since the tasks
Manchester New York performed by order administration, scheduling,
shipping, and finance departments vary from
UK Set of Books US Set of Books company to company.
(GBP) (USD)
A, B, C, D = Standard Order Processes
E, F = Intercompany Tip: The chart itself is a handy tool for
documenting procedures that are not typically
Fig. 4: Sales order with intercompany invoicing.
formalized. Its format can help you to facilitate
cross-functional team meetings aimed at identifying
A= Customer places an order with the "selling
your future business processes.
operating unit".
B= The order is scheduled to ship from a warehouse
associated with a different operating unit. # PROCESS DESCRIPTION
C= Product ships from this warehouse directly to -Performed by
the end customer. -Location
D= The selling operating unit issues an invoice to 1 RECORD Receive customer order by
the end customer. ORDER phone or fax. Document
E= The shipping operating unit issues an - Sales Dept order information <provide
intercompany receivable invoice to the selling details> on hard copy PO.
- UK
operating unit at transfer price. Deliver to Order Admin.
F= The selling operating unit issues an 2 ENTER ORDER Enter order information
intercompany payable to the shipping operating into system. Clarify order
- Order Adm
unit. specifics, validate, and
- UK
confirm the booking.
In the context of our Global Computers example:

⇒ The customer is located in Germany, and

purchases product in the German currency DM.

Page: 5
3 SCHEDULE Check product availability. 11 PREPARE FOR Identify shipments waiting
ORDER Identify ship-from INVOICING to invoice.
- Logistics warehouse (i.e the NY - Billing Dept
- UK Warehouse). Record - UK
anticipated schedule dates
12 GENERATE Prepare and quality check
and inventory locations.
INVOICE the end customer's invoice.
4 ISSUE Communicate the demand Print and mail to customer.
- Billing Dept
DEMAND of booked orders to the
Planning Department - UK
- Logistics
located in the US. 13 POST TO GL Review accounting from
- UK
- Finance Dept the end customer invoice,
5 CREDIT Perform credit check for incl tax and exchange
CHECK new customers. Approve - UK
rates. Confirm and post to
- Billing Dept as needed. GL.
- UK 14 REVIEW Identify shipments.
6 RESCHEDULE Record requested changes INVENTORY Perform inventory
- Logistics or for scheduled delivery, - Manufacturing accuracy checks. Review
Order Admin whether request is from - NY Whse costed transactions.
- UK internal sources or from
15 PREPARE FOR Identify shipments
the customer. Update ship-
I/C INVOICING originating from UK sales
from location, schedule
- Billing Dept orders.
date, or ship-to
information as needed. - US
7 RELEASE Reserve material to the 16 GENERATE I/C Prepare and quality check
PRODUCT sales order; release for AR INVOICE the intercompany AR
- Logistics shipment and produce - Billing Dept invoice. Print and mail to
picking documents at the - US UK Finance department.
- UK
NY warehouse. 17 POST TO GL Review accounting from
8 PICK Use pick slip to locate - Finance Dept intercompany AR invoices,
PRODUCT reserved material and stage incl tax and exchange
- US
- Shipping for packing. rates. Confirm and post to
- New York GL.
Whse 18 GENERATE I/C Receive intercompany AR
9 CONFIRM Finalize shipment AP INVOICE invoice. Generate
SHIPMENT information; enter carrier, - AP Dept intercompany AP invoice
- Logistics packaging, weight, freight - UK and approve as needed.
- UK charges, and other data 19 POST TO GL Review accounting from
into the system. Produce intercompany AP invoice.
- Finance Dept
packing documents at the Confirm and post to the
NY warehouse: pack slip, - UK
ledger.
mailing label, commercial
Fig. 5 Business process descriptions for sales order with
invoice. intercompany invoicing.
10 PACK AND Collect packing
SHIP documents, check and
- Shipping confirm against actual Process Ownership
- New York material. Load ready
Whse material and communicate Notice that no less than ten departments in two
backorders to UK countries are listed in the above scenario. A great
Logistics. deal of information is being gathered and "passed
over the wall" to the next department. You can
improve the quality and timeliness of this
information by assigning process ownership at

Page: 6
different levels, both at the initial and later phases of
implementing Oracle applications.
Levels of Process Ownership1
Strategic. The person(s) at this level will need to be
knowledgeable with regard to both cost and revenue
cycle issues for the corporation as a whole -- in
today's context as well as in the years to come. This
person will likely play an advisory role, helping the
implementation team to understand and resolve
issues regarding the strategy for product line
reporting, customer / market reporting, sales
territory reporting, sales commissions, organization
structure definition, and cost and revenue
accounting. All of these subjects tie to setups in OE,
AR, and INV and will affect the above process flow.
Since global implementations often take place in
stages, with different operating units going up at
different times, this role is crucial to overall project
success. It will help the team to properly configure
the system in a way that will work smoothly and be
adaptable to future changes.
Tactical. The person(s) at this level work closely
with more specific functional areas, and have greater
depth of knowledge about the corresponding
business processes and data requirements. They may
be the front line managers overseeing one or more of
the above listed departments. Their role will more
strongly influence the application setups and
reporting requirements, to ensure that the system
will accurately provide the information that they
need to manage their areas on a day-to-day basis.
They will also charter teams to resolve specific issues
affecting more than one department. For example,
the Inventory Manager might oversee a cross-
functional team to decide how to handle returns that
were originally from intercompany shipments.
Operational. These are the "super users" who are
chartered with understanding the day-to-day
processes performed within each Oracle application.
To an extent every "super user" plays this role, but
actually taking ownership means being able to
identify performance measures and following up on
their outcome.
For example, the UK Receivables super user can be
responsible for ensuring consistency between the
revenue invoiced to the German customer and the
revenue invoiced by the US on the intercompany
invoice: did all items invoice successfully? How
does the end customer invoice compare to the
intercompany invoice? Were the items assigned the
correct transfer price? Were the accounts assigned
correctly? Were the exchange rates entered as
needed for the DM-GBP and GBP-USD conversions?
Having process owners at this level will ensure that
these types of issues are resolved.
Timing of Process Ownership
The First Phase. Phase One represents the first
operating unit(s) to go into production with an ERP
system. For this phase, the process owners described
above will mainly be involved with the initial setup
and testing of the applications, and will also be
responsible for identifying issues for the future
phases.
Future Phases. As subsequent operating units are
implemented, which may be weeks or months later,
the same process ownership will be needed but to a
different extent. Key structural decisions will
already have been made, and new process owners
will be called upon to transfer learnings from Phase
One to subsequent phases. In addition, promotions,
new assignments, general workload, time zone
differences, and the quality of Phase One
documentation will all have an effect on future
phases. Having process owners involved will help
you to better manage these changes and experience a
more successful implementation.
* * * *
The challenges of assigning and maintaining process
ownership exist for software implementations in
general, but are especially evident with
intercompany invoicing due to the number of
applications involved and the degree of coordination
required.
V. System Transactions and
Intercompany Invoicing
The Transaction Flow
Given the business processes outlined in the last
section, map out the steps which would then need to
Page: 7
be recorded using Oracle applications. The • The UK is the selling organization which places the
following diagram reflects the transactions that German customer's order.
would be performed when processing a standard,
shippable order with intercompany invoicing. Your • The US is the shipping organization, which ships to
transactions may differ depending on the order the German customer.
cycle(s) you have constructed.
• The US issues an intercompany AR invoice to the UK.

• The UK issues an intercompany AP invoice to the US.

The Transaction Specifics

Transaction Flow:
Sales Order Cycle with Intercompany Invoicing Each of the steps described above represents a
transaction that takes place using Oracle
OE: Book Order (UK) applications. For each transaction, we will identify:

OE: Demand Ifce (UK) The operating unit in which the transaction is
performed (UK, US in our example).
Standard Order Cycle Steps

OE: Pick Release (UK) The application (OE, AR, INV, AP).
Whether it is manually performed or scheduled to
OE: Ship Confirm (UK) run automatically
A description of the transaction, including relevant
OE: Receivables Ifce (UK) OE: Update Shipping Info(UK)
details about the data being processed

AR Interface Tables OE: Inventory Interface (UK)

Step 1 Enter, book the customer order
From: UK Order Entry
AR: AutoInvoice (UK) INV Interface Tables
Type: Manual
AR: Print Invoice (UK) INV: Transaction Mgr (US) Descr: Record order header and order line
information; select "booked" when
INV: Create Intercompany finished.
Additional Steps for Intercompany Invoicing

AR Invoices (US)
The Customer on this order is the end
AR Interface Tables customer, i.e. the German customer.
The Order Type that you assign will pick
AR: AutoInvoice (US) up a Standard Value Rule Set which can
be set up to automatically populate many
AR: Print Invoice (US) fields on the order header and line,
including which price list to use and
INV: Create Intercompany which recommended warehouse to ship
AP Invoices (UK)
from.
AP Interface Tables The Price List must contain the items
being ordered, in the appropriate currency
AP: Invoice Import (UK)
for your customer: DM in this case. Any
Discounts that may apply should be
created and attached to this price list.
AP: Print Invoice (UK)
The Salesperson(s) who are to receive
Fig. 6: System transactions for sales order with quota and non-quota credit for the sale
intercompany invoicing (GL posting not shown). For this should be chosen. "Quota" credit must
scenario: add to 100%; "Non-Quota" credit can be
less than, equal to, or greater than 100%.
The Ship-From Warehouse that you select

Page: 8
 on your order lines will be the NY
Distribution Center in our example; the
fact that it belongs to an operating unit
other than the UK is what will later
initiate the intercompany transactions.
Step 2 Communicate demand to
Manufacturing
From: UK Order Entry
Type: Manual or Scheduled
Descr: Communicate to US manufacturing the
demand generated by your booked sales
order lines created in the UK; optionally
create a reservation for your sales order.
Demand and reservations will be placed as
of the order line's schedule date.
The Demand and/or Reservation is placed
in the UK, and communicated to
Manufacturing in the US.
The Schedule Date is maintained by a UK
Order Entry responsibility.
Step 3 Perform pick release and print picking
documents
From: UK Order Entry
Type: Manual, but many order lines can be
released at one time.
Descr: Select lines that are ready to be picked out
of the warehouse and staged for shipping.
Generate the appropriate picking
documents, i.e. the pick slip.
Before performing pick release, you may
need to provide additional information
regarding the location from which product
is to be picked; this depends on your
settings for reservations and item controls.
The Subinventory location needs to be
chosen or can be defaulted from the item.
Note: the specific Locator is not entered
prior to picking; it is entered during
shipment confirmation.
Picking Documents should print in the US
at the New York Distribution Center.
When performing pick release, select the
appropriate document set, whose
corresponding printer is located in NY.
Step 4 Perform shipment confirmation and
print shipping documents
From: UK Order Entry
Type: Manual
Descr: Confirm a batch of pick slips, individual
pick slips, particular lines, or partial
quantities of a line. Leave unconfirmed
items as is or tag them as being
'backordered'. Add freight, insurance,
handling, or other fees and note shipping-
specific information such as the waybill
number, weight, number of packages.
Upon confirmation, generate shipping
documents at the NY warehouse.
At this time, assign the Locator (if item is
under locator control).
Freight and other charges can be added to
the pick slip. Tip: Only charges set up
in the UK Order Entry system in the same
currency as the German customer's order
will be available to choose from.
The Shipping Documents should print in
the US at the New York warehouse. When
performing ship confirm, select the
appropriate document set, whose printer
assignment is a NY printer.
The Process Online field, if checked, will
automatically perform the subsequent
shipping steps (8 and 9). You can control
whether this field is set automatically
using the profile option OE: Immediate
Inventory Update. If 'Yes', then the
process online field will be checked
without your having to set it yourself.
Step 5 Run 'Receivables Interface'
From: UK Order Entry
Type: Usually Scheduled; can be Manual
Descr: After shipment confirmation is performed,
run this program to populate the
Receivables interface tables using the
standard source 'OE Import Standard'.
Sales order lines will now have the status
of 'Receivables Interface - Interfaced', but
they have not yet been imported into AR.
If you run the 'Order/Invoice Summary
Report' at this time, you will see the
German customer's sales order number
with no corresponding invoice number.
Step 6 Run 'AutoInvoice Master Program'
From: UK Receivables
Type: Manual or Scheduled
Descr: After the Receivables Interface has been
run from UK Order Entry, the German
Page: 9
customer's invoice information is ready to
be imported into Oracle Receivables.
Run 'AutoInvoice Master Program' for the Step 7
Invoice Source identified in Step 5. This
will spawn a child program called From:
'AutoInvoice Import Program'. Upon
completion, the 'AutoInvoice Execution Type:
Report' will identify the number of records Descr:
successfully processed, the number
rejected, and detailed descriptions of the
reasons for rejection. The number of
records successfully imported will not
necessarily match the number of invoices
or invoice lines created; this depends on
how you use the AutoInvoice Grouping
Rules to consolidate imported records.
Step 8
The Customer is the German customer in
our example. From:
The Prices on the invoice reflect the price Type:
list used on the German customer's sales Descr:
order plus freight charges added to the
pick slip.
The Invoice Type assigned to the German
customer's invoice comes from the one
assigned to the original sales order's Order
Type.
Tax is calculated using tax features set up
in UK Receivables, including system Step 9
options, tax locations, tax authorities, tax
From:
codes, and exceptions/exemptions.
Type:
The GL Account Distributions on the
imported invoice come from Descr:
AutoAccounting Rules in the UK
Receivables system. These rules let you
use the Invoice Type, Salesperson, Item,
Tax Location, or a Constant to
independently source each segment of the
accounts.
The invoiced amount is selling price (from
the German customer's price list) times
quantity sold, plus freight, plus applicable
taxes.
The GL Date associated with the accounts
usually comes from the ship date, but can
alternatively be the date you entered when
running AutoInvoice. This is determined Step
by the Invoice Source's GL Date 10
Calculation field.
From:
Once this program completes successfully,
Type:
you will have created the customer's
invoice(s) in Oracle Receivables and will Descr:
see an invoice number in OE's
Order/Invoice Summary report.
Run one of the invoice print programs
that are available in AR.
UK Receivables
Manual or Scheduled
After reviewing the German customer's
invoice for accuracy, print and mail to the
customer.
Note: Since a single sales order can
generate one or more invoices, the German
customer's invoice may not necessarily
contain the same lines as the original sales
order.
Run 'Update Shipping Information'
UK Order Entry
Usually Scheduled; can be Manual.
After shipment confirmation is performed,
this program updates the Order Entry
tables to reflect the order lines' shipped
status.
'Update Shipment Information' and
'Inventory Interface' are usually scheduled
to run in sequence on a regular, frequent
basis.
Run 'Inventory Interface'
UK Order Entry
Usually Scheduled; can be Manual.
After 'Update Shipping Information' is
completed, this program inserts data into
the Inventory Interface tables, where they
will await processing by Oracle Inventory.
On-hand balances in Inventory will not
reflect the shipment until these records are
processed in Step 10.
Check OE's process exception report for
any issues associated with building the
COGS account, which happens at this
time.
Update Shipping Information and
Inventory Interface are usually scheduled
to run in sequence and on a frequent basis.
The Transaction Manager processes the
material issue out of inventory
US Inventory
Scheduled
The Transaction Manager is set to
Page: 10
 periodically sweep the Inventory interface
tables, after which the on hand balance is
reduced and the accounting distributions
are made.
Step Run 'Create Intercompany AR Invoices'
11
From: US Inventory
Type: Usually Scheduled; can be Manual
Descr: Similar to Receivables Interface, in that
this program will populate the AR
interface tables with information about the
intercompany invoice. However, it
assigns a different invoice source.
The Invoice Source for these records is
'Intercompany'.
Step Run 'AutoInvoice Master Program'
12
From: US Receivables
Type: Manual or Scheduled
Desc: After 'Create Intercompany AR Invoices'
has been run from US Inventory, the
intercompany invoice information is ready
to be imported into Oracle Receivables.
Run 'AutoInvoice Master Program' for the
Invoice Source identified in Step 11. This
will spawn a child program called
'AutoInvoice Import Program'. Upon
completion, the 'AutoInvoice Execution
Report' will identify the number of records
successfully processed.
The Customer is the UK Operating Unit in
our example. There will only be a Bill-To
Site on the invoice; no Ship-To.
The Prices on the invoice come from a
transfer price list attached to UK
Operating Unit's bill-to site. While the
UK office may have more than one bill-to
address, the intercompany invoice will use
the one you chose when you defined the
Intercompany Relationship in Oracle
Inventory.
The Invoice Type also comes from the
Intercompany Relationship setup screen.
The Currency of your intercompany
invoice is the currency on the transfer
price list (GBP in our case). Conversion
Rates must exist for the invoice date, if
this currency differs from that of the
functional currency (USD).
The GL Account Distributions on the
imported invoice are derived using
AutoAccounting Rules in the US
Receivables system.
The Salesperson assigned to this invoice is
the seeded 'No Sales Credit', which can be
renamed to some other value.
The GL Date associated with the accounts
usually comes from the ship date, but can
be changed to the date you entered when
running AutoInvoice. This is determined
by a setting applied to the Invoice Source.
Once this program completes successfully,
you have created the invoice(s) in the US
Receivables system.
Step Run one of the invoice print programs
13 available in AR.
From: US Receivables
Type: Manual or Scheduled
Desc: After reviewing the intercompany invoice
for accuracy, print and send to the UK
office.
Note: Since some inventory records may
get held up in the Inventory Interface
while others go through, the "Create
Intercompany AR Invoices" program will
only populate the AR interface with those
shipment lines that successfully passed
through Inventory. Therefore, the US
Division's intercompany AR invoice may
not have the same number of lines as the
corresponding packing slip.
The Payment Terms assigned to this
invoice come from the bill-to site of the
UK office (set up as a customer address in
US Receivables)
Step Run 'Create Intercompany AP Invoices'
14
From: UK Inventory
Type: Usually Scheduled; can be Manual.
Desc: Creates records in the AP interface table.
Only those records which successfully
imported into the US AR system (Step 12)
will populate the AP interface.
Step Run 'Invoice Import'
15
From: UK Payables
Type: Scheduled; can be Manual.
Page: 11
Desc: Generates the intercompany AP invoice.
Vendor is US Operating unit, and the site
is the NY warehouse set up in the UK
Payables system. Choose the site to use for
intercompany payables transactions
between UK and US operating units in the
setup screen 'Define Intercompany
Relations'.
Any Tax Codes that may apply must exist
in the UK Payables and US Receivables
systems, spelled the same and with
matching upper/ lower case.
Fig. 7: System Transaction Detail
VI. Accounting
Accounting Distributions from the Shipment
US SET OF BOOKS
Dr Cr
COGS@ unit cost x Inventory Valuation @
quantity unit cost x quantity
Currency
The transaction will be recorded in US Dollars, the
currency of your shipping organization.
Prerequisites
(1) From UK Order Entry, Update Shipping
Information and Inventory Interface completed
successfully. The Inventory Interface program will
produce error messages if it failed to generate an
allowable COGS account code combination due to
expired segment values or invalid combinations of
segments. Run the Order Entry report "Process
Exception Report" to see the error message in detail.
(2) From US Inventory, the Transaction Manager
imported the shipment information and successfully
completed the sales order issue transaction.
Source of COGS Account
The COGS account is built using FlexBuilder (in
Release 10 and earlier) or the Account Generator (in
Release 11). Individual account segments may come
from different sources (the item or warehouse, for
example), but the combination as a whole must be
allowable in the US Set of Books. Typically the
segments come from your item or item/org attribute
"Cost of Sales Account", where 'org' refers to the
New York Distribution Center.
Source of Asset Account
The corresponding asset account typically comes
from the setup of the NY warehouse or from its
subinventory (refer to the 'Define Organizations' or
'Define Subinventory' screens).
How to Review the Accounts
You may review the accounting transactions on line
by signing on using a US Inventory responsibility
and inquiring on Material Transaction Distributions
corresponding to your item, the NY warehouse,
and/or the Ship Date.
Accounting Distributions from the Customer
Invoice
UK SET OF BOOKS
Dr Cr
AR@ (selling price x qty Revenue
+ Tax Tax
+ Freight) Freight
Currency
The transaction will be recorded in the currency of
the price list on the sales order; in this case the
"entered currency" is DM. It will be converted to the
"functional currency" of British Pounds using the
exchange rate corresponding to the invoice line's GL
date (usually the same as the date shipped).
Prerequisites
(1) From UK Order Entry, shipment confirmation
of the original sales order was performed and the
Receivables Interface completed without error. Use
Order Entry's Process Exception report to identify
any errors. For example, an error may occur if the
record could not be processed due to a "hold" on the
order or order line.
(2) From UK Receivables, the AutoInvoice
programs completed for source = OE Import
Standard.
Source of Account Segments
All of the above accounts are built using
AutoAccounting, which runs as records are imported
into Oracle Receivables. Individual account
segments may come from different sources, and the
Page: 12
combination as a whole must be allowable in the UK
Set of Books.
• For source = Salesperson, account segments
come from the accounts assigned to the
salesperson(s) that are receiving quota (revenue)
credit for the particular invoice line. The
revenue distributions will be directly
proportional to the percentage of sales credit.
• For source = Invoice Type, segments come from
those shown on your invoice type's setup screen.
• For source = Standard Lines, segments come
from the item attribute "Sales Account" at the
item master level only. (Item/Org sales accounts
will be ignored.)
• For source = Tax, segments come from the
accounts attached to your tax code or tax
authority (depending on the qualifiers identified
in the Sales Tax key flexfield).
How to Review the Accounts
You may review the accounting transactions on line
by signing on as a UK Receivables responsibility and
querying the actual customer invoice.
Accounting Distributions from the Intercompany
AR Invoice
US SET OF BOOKS
Dr Cr
Intercompany Intercompany Revenue
AR@(transfer price x Freight
qty Tax
+Freight
+Tax if applicable)
Currency
The transaction will be recorded at transfer price,
using the price list attached to the UK Organization's
bill-to site and the currency of this price list. In our
example, the UK will have a price list in GBP; the
intercompany invoice will be created in GBP and
converted to USD.
Tip: Freight, handling, duty, and/or insurance
charges were entered via the pick slip during
shipment confirmation; in other words, they do not
exist on the transfer price list. If the currency of
these charges (DM in this case) differs from the
currency of the intercompany AR invoice (GBP in
this case), then a second intercompany AR invoice
will be generated in DM for only these charges.
Had the charges been entered in GBP, then a second
intercompany invoice would not be created and the
charges would appear on the same invoice as the
shipped items.
Prerequisites
(1) From US Inventory, the Transaction Processor
successfully completed the sales order issue, i.e.
shipment records have been imported into Inventory.
(2) From US Inventory, the Create Intercompany
AR Invoices completed successfully for Shipping
Operating Unit = US
(3) From US Receivables, AutoInvoice programs
completed without error for source = Intercompany.
Source of Accounts
All of the above accounts are built using
AutoAccounting, which runs as records are imported
into Oracle Receivables. Individual account
segments may come from different sources, and the
combination as a whole must be allowed in the US
Set of Books.
• For source = Salesperson, account segments
come from the accounts assigned to the
salesperson called 'No Sales Credit' (you may
change this name).
• For source = Standard Lines, segments come
from the item master's Sales Account for your
items.
• For source = Standard Lines where Account =
Freight, the account segments will come from
the item identified by the profile option "Tax:
Invoice Item as Freight" (assuming "Tax:
Invoice Freight as Revenue" = Yes). Again,
only the item master-level Sales Account will be
used.
However, if freight is not an item and is instead
a header-level charge on the invoice, then these
account segments will come from a Standard
Memo Line called "Intercompany Freight".
This comes seeded in Oracle Receivables. For
Page: 13
 our scenario, the memo line must exist in US
Receivables.
• For source = Invoice Type, segments come from
the invoice type identified in the Define
Intercompany Relations screen for transactions
between the US and UK operating units.
How to Review the Accounts
You may review the accounting transactions on-line
by signing on as a US Receivables responsibility and
querying the actual intercompany invoice.
Accounting Distributions from the Intercompany
AP Invoice
UK SET OF BOOKS
Dr Cr
Trade COGS @(transfer Intercompany Payable @
price x qty) (transfer price x qty +
+Freight Freight)
Currency
The transaction will be recorded in the currency of
the AR invoice; if different from the functional
currency of the selling organization (GBP in our
scenario), it will be converted to the functional
currency of British Pounds using the exchange rate
corresponding to the invoice line's GL date.
Prerequisites
(1) From US Receivables, the intercompany AR
invoice was created.
(2) From UK Inventory, the Create Intercompany
AP Invoices program succeeded for the Selling
Operating Unit (UK)
(3) From UK Payables, the Invoice Import program
completed for invoice source = Intercompany.
Source of COGS Account
The COGS account is built using FlexBuilder (in
Release 10 and earlier) or the Account Generator (in
Release 11) for the UK set of books. Typically,
segments are sourced from a combination of constant
values and the COGS account from the UK
Operating Unit (see Define Organizations form).
Source of the Freight Account
The Freight account comes from the account
identified on the Define Intercompany Relations
screen, for selling operating unit = UK and shipping
organization = US.
Source of the AP
The I/C Payable comes from the liability account
associated with the "vendor site", i.e. Global
Computers' US office which was created in the UK
Payables system. Since more than one payable site
can exist for this supplier, this is the one identified
on the Define Intercompany Relations screen.
How to Review the Accounts
Review these accounts by querying up the payable
invoice using your UK Payables responsibility, and
reviewing the accounting distributions on-line.
VII. Application Setup Steps
This section addresses preparations that need to take
place in Oracle applications (OE, AR, INV, AP) in
order to fully process a sales order with
intercompany invoicing.
First, a checklist of only those steps relevant to
intercompany invoicing will be provided. It will
include a combination of: application setup steps
that need to be performed only once (for example,
Define Intercompany Relations) as well as data that
needs to be available each scenario or combination of
selling / shipping organizations that you will be
testing (for example, having exchange rates
available for the date and currency of your
transaction ).
For a full listing of all setup steps for the distribution
modules (OE, AR, INV, AP) with comments
pertaining to our intercompany scenario, please refer
to Appendix A.
And finally at the end of this section, there is a chart
which will be helpful as you prepare to set up many
combinations of operating units for all of your
potential intercompany scenarios.
Please note that the information presented here
refers back to our scenario with Selling Organization
= UK, Shipping Organization = US (New York
Warehouse).
Page: 14
A. Intercompany Invoicing Checklist
FROM SYSTEM ADMINISTRATION
[ ] Define Responsibilities
You will need at least the following responsibilities
to run a sales order with intercompany invoicing
through testing:
System Administrator - to create and assign
responsibilities; to maintain profile options; to run
the 'Multi-Org Setup Validation Report' and ensure
that profile option settings are consistent; and to
ensure that ‘Replicate Seed Data’ program is run for
any new operating unit.
UK Order Entry Administrator - to place the end
customer's order and schedule shipment out of the
US warehouse; to perform pick release; to confirm
shipment; and to set up the Intercompany COGS
account defaults for the UK set of books. (Or, create
a separate responsibility to do the scheduling &
shipping.)
UK Receivables User - to invoice the end customer.
UK Payables User - to create US Global Computers'
NY warehouse as a vendor site; to generate the
intercompany payable invoice.
UK General Ledger Manager - to ensure that valid
account segments and account code combinations are
available with respect to the UK set of books,
including: AR, Tax, Freight, Revenue accounts on
the end customer invoice and Trade COGS, Freight,
I/C Payable for the intercompany AP transaction.
UK Inventory Manager - to maintain item
information, and to run the "Create Intercompany
AP Invoices" program if it is to be run on-line.
US Order Entry Administrator - to set up the
standard COGS account defaults for the US set of
books.
US Receivables User - to set up UK Global
Computers as a "customer site"; to generate the
intercompany AR invoice for billing the UK office at
transfer price.
US Payables User - to be available for the opposite
scenario (sell out of US, ship from UK), but is not
necessary for this scenario (sell of UK, ship out of
US).
US General Ledger Manager - to ensure that valid
account segments and account code combinations are
available with respect to the US set of books,
including: AR, Tax, Freight, Revenue accounts on
the intercompany invoice and COGS and Asset
accounts for the shipment transaction.
US Inventory Manager - to maintain item and US-
specific item/org attributes; to set up the UK-US
Intercompany Relationship; and to run the "Create
Intercompany AR Invoices" program if this is to be
done on-line.
[ ] Profile Options
Each of the above responsibilities must have values
for the following profile options, whether set at the
responsibility level specifically or whether the value
is defaulted down from the site or application levels:
MO: Operating Unit - this is the profile option
which "stamps" the id of the appropriate operating
unit onto transactions performed by a responsibility,
particularly in OE, AR, AP, and PO. TIP: It is
very important to assign this profile option as soon
as the responsibilities are created. Failure to assign
this correctly will result in serious problems when
using the applications. For our scenario, the UK
responsibilities should point to the UK, and US
responsibilities should point to the US.
GL Set of Books Name - US responsibilities must
point to the US set of books; UK responsibilities
must point to the set of books used by the UK.
OE: Set of Books - This is mainly required by OE
and AR responsibilities, and should be the same set
of books as assigned to the GL Set of Books profile
option.
OE: Item Validation Organization - Your item
master organization, or the inventory organization
used by OE and AR to validate item attributes -- for
example to derive the correct revenue accounts and
VAT codes.]
HR: Business Group - the appropriate organization
which represents the HR business group used by your
responsibility. This may be the seeded "Setup
Business Group" if no other organizations have been
assigned this classification. TIP: When creating
organizations in Oracle Inventory, be careful that the
Inventory or Manufacturing responsibility you are
using has this profile option set correctly. Any
organizations that you proceed to set up will be
assigned to this business group. If incorrect, you
will not be able to retrieve these organizations in the
"Define Organizations" screen.
Page: 15
The following profile options may be set at the site
level. If set at the responsibility level, their values
must be the same for all responsibilities involved in
multi-org transactions:
• INV: Intercompany Currency Conversion (can
only be Corporate or Spot, not User)
• Tax: Allow Override of Tax Code
• Tax: Invoice Freight as Revenue
• Tax: Inventory Item for Freight
[ ] Review the Multi-Org Setup
Run the report in System Administration called
"Multi-Org Setup Validation Report" to identify any
missed or conflicting profile option settings.
[ ] Assign Organization Access
This feature allows you to specify which
organizations a responsibility can access, and is an
important feature for controlling Distribution and
Manufacturing responsibilities. Maintaining access
may be an extensive process, depending on the
number of responsibilities and organizations
involved. If this setup is not performed, then all
responsibilities will have access to all organizations.
The actual setup is done through Oracle Inventory,
but is often maintained by the person who creates
users, assigns responsibilities, and maintains profile
options.
FROM ORDER ENTRY (UK)
[ ] To prepare for the end customer sales order,
review the following setups:
• The German Customer is set up and has a bill-to
and ship-to Address and Profile Class. A valid
tax authority or Tax Code should exist for the
ship-to, and a valid Remit-To assignment should
exist for the bill-to.
• The Order Type for the end customer's order
exists and has the appropriate Order Cycle and
Standard Value Rule Set. Check that the
Financial Information zone picks up the correct
invoice type for the end customer’s invoice (and
therefore the correct AR, Revenue accounting).
• Review any Approvals, Holds used by this order
cycle. TIP: Have a simple order cycle (no
approvals) available for testing the
intercompany feature.
• Create a Price List in the currency appropriate
for your end customer, with all orderable items
assigned to it. If the currency is different from
the UK's functional currency, maintain
exchange rates.
• Create Discounts applicable to this end
customer, and attach the price list.
• Check that Salespersons, if required, will be
available for your order.
• Ensure that Territories exist and will default
from the appropriate source when your invoice
is generated.
• Test Flexbuilder (or the Account Generator) for
Intercompany COGS. After determining the
source of account segments, ensure that your
data has the appropriate segment values
available and will build a valid code
combination.
• Check which Demand Class, if any, should
default onto your order.
• Freight Carriers should be set up from the item
master organization.
• Picking and Shipping Document sets should be
appropriate for your customer, and assigned to
the correct printer (in NY). Since they will
print from the US warehouse in New York, you
may want special document sets for US
intercompany shipments.
FROM INVENTORY (US)
[ ] For the shipment out of the New York
Distribution Center:
• Check Inventory Items and all associated setups
(item attributes, item/org attributes for NY,
UOM, categories,… ).
• Check Organization-related setups, including
Subinventory features and accounts related to
the sales order issue that will take place out of
the US.
• Review ATP Rules to check on availability of
items in the NY Distribution Center.
• For testing, put a quantity of product on-hand
Page: 16
 and have ready any specifics regarding item
controls for when you do shipment confirmation
(locator, serial number, revision, subinventory).
FROM RECEIVABLES (UK)
[ ] For the end customer invoice:
• Review properties of the Invoice Type for the
end customer’s invoice, including its default
Credit Memo Type if returns will be created.
Check the profile option AR: Use Invoice
Accounting for Credit Memos.
• Review the Invoice Source used by the above
invoice type (OE Import Standard), to identify
numbering requirements (i.e. manual vs.
automatic)
• Review AutoAccounting (and sources of account
segments), which will automatically build the
accounts associated with the end customer’s
invoice. Ensure that the sources of account
segment values actually have data (the invoice
type, salesperson, and/or item). Accounts
assigned to the item attribute "Sales Account"
should ONLY exist at the item master level.
• Review Tax Rates and Locations for your end
customer
• A Remit-To Address must be available for your
end customer’s address
• The appropriate Calendar Periods are open.
• Corporate or Spot currency exchange rates exist
for the date of your transaction.
FROM ORDER ENTRY (US)
[ ] For the intercompany AR invoice issued by the
US:
• Ensure that a Transfer Price List exists for the
UK operating unit. You may want to create one
by (1) copying the end customer's price list
(which in our case is in DM), (2) adjusting the
price by the appropriate percentage, reflecting
the transfer % and exchange rate % (DM to
GBP), and (3) changing the currency of the
price list to GBP.
FROM RECEIVABLES (US)
[ ] For the intercompany AR invoice:
• The Customer, Address, Bill-To and Customer
Profile have been created representing the UK
Operating Unit. A valid Remit-To Address and
any Tax Code or tax-related information should
be assigned. Payment Term should be
assigned to the bill-to (ensure that the same term
exists in UK Payables).
• The Invoice Type = an invoice type that you
may set up specifically for intercompany
transactions. If tax does not apply to your UK
office, then set "Tax Calculation" to No (First,
however, create a Credit Memo Type which also
has Tax Calculation = No; you will assign this
as the default credit memo type for your invoice
type. The credit memo type must exist first.)
• The Invoice Source = Intercompany. The
AutoInvoice Data Validation parameters are
usually all id's (similar to OE Import Standard).
The difference between the "Intercompany" and
"OE Import Standard" sources is that if you
have no AutoAccounting segments dependent
upon salesperson, then set "Allow Sales Credit"
to No on the Intercompany invoice source. If
this is the case, ensure that the System Option
"Require Salesreps" is also No.
• Review AutoAccounting, to automatically build
the accounts associated with an invoice. Ensure
that all sources of account segments actually
have accounts assigned, for the data you are
transacting.
• Tax Rates and Locations corresponding to the
UK Operating Unit's location, if tax is being
applied, should be reviewed. Any tax codes set
up here must EXACTLY match the tax names
in the UK Operating Unit’s Payables system
(You only need to do this for tax codes that may
be used on intercompany transactions.)
• A valid Remit-To Address should be available
for the UK Operating Unit’s bill-to address.
• Since the intercompany invoice will pick up its
currency from the UK operating unit's transfer
price list (the one attached to its bill-to site), the
currency will probably be different from your set
of books' functional currency. Ensure that either
Corporate or Spot Currency exchange rates are
created for your invoice date. Note that 'User'
exchange rates are not applicable for
intercompany invoices. Also note that the
Page: 17
 choice of ‘Corporate’ or ‘Spot’ rates is
determined from the profile option INV:
Intercompany Currency Conversion.
• System Options: “Requires Salesreps” must be
“No”.
• Review the standard Memo Line called
Intercompany Freight. Ensure that it has a
value for Revenue Account. Even if
AutoAccounting is not set up to look to
"Standard Lines" for any of the Freight Account
segments, an account needs to exist here (it will
not be used). Otherwise, the intercompany AR
invoice may get created without freight.
• Payment Terms for the intercompany AR
invoice should match the spelling and case of
Payment Terms for the intercompany AP
invoice (which is set up by UK Payables).
FROM PAYABLES (UK)
[ ] For the intercompany AP invoice:
• Vendor / Site = The US Operating Unit and its
New York warehouse, respectively. Ensure that
this is a valid payable site with a Tax Name
assigned (if applicable) and Liability Account.
• Tax Names must EXACTLY match the spelling
and setup of the corresponding Tax Code in the
US Receivables system.
• Payment Terms for the intercompany AP
invoice match the spelling and case of the same
term created in US Receivables.
FROM INVENTORY (US)
[ ] Define Intercompany Relations. This screen
identifies the Intercompany AR and Intercompany
AP defaults for Shipping Organization = US, Selling
Organization = UK.
• AR Information:
Customer = UK Global Computers.
Site = One of UK's bill-to sites (set up using
US Receivables)
Transaction Type = the Intercompany
Invoice type (set up using US Receivables)
• AP Information:
Vendor = US Global Computers
Site = One of US's sites (set up using UK
Payables)
Revalue Average = Y or N (whether to
revalue the average cost in the UK when
creating intercompany AP invoices)
Freight Account = the expense account for
intercompany AP invoices, where line type
= FREIGHT
[ ] Define Freight Carriers
Fig. 8: Checklist for setting up intercompany
transactions.
B. Full Setup Listing
To help you incorporate the above information into
the overall setup of the applications, a chart of all
setup steps is provided in the Appendix.
For Oracle applications release 10.7, the chart lists
each setup step, provides navigation paths, and
assigns one particular "owning" application to each
step. Also assigned are other applications that the
setup step should be reviewed with. For example,
units of measure can be set up by the person
responsible for Oracle Inventory; this person should
coordinate with his or her OE/AR counterparts to
identify any units of measure for non-stockable
items, such as service contracts.
The assignment of responsible and coordinating
applications is provided as an example only, and
should be reviewed within the context of your
company.
C. Preparing for Global Setups
One scenario was presented throughout this paper in
order to keep the discussion focused. Setting up
many combinations of organizations, however, can
become a complex task. Consider using the chart
below when determining how to organize your team
for completing all of the required setups in OE, AR,
INV, and AP for intercompany invoicing:
SCENARIO: Sell from UK -
Ship from US
If the SELLING GCI Ltd in the UK
Operating Unit is…
Page: 18
 And the SHIPPING New York Distribution All profile options related to multi-org should be set
Inventory Org is… Center in the US up correctly before any new responsibility is
available to users.
Then using this US Receivables:
responsibility, create • GCI Ltd, London
this customer site
• UK Interco. Invoice All Applications: Effective Dates and Seed Data
and this transaction
type: If phasing in different operating units over the life of
As this UK Payables: your project, consider the effective dates for any data
responsibility, create • GCI Inc., Boston that is visible globally. This will ensure that
this vendor site: conversion of legacy data for each operating unit will
As this US Inventory: encounter valid, active setup data when imported
responsibility, set up into the applications.
• Selling = UK
the following
intercompany • Shipping = US Certain setups that come with the applications,
relationship: seeded data, will need to be copied into any new
operating units each time one is created. This is
Fig. 9: Chart to organize all combinations of operating
done by a program called "Replicate Seed Data". Be
units for intercompany setups.
sure that this completes successfully. Examples of
seeded data include: the "Intercompany" invoice
batch source, the "Intercompany Freight" memo line,
and the "No Sales Credit" salesperson in Oracle
VIII. Implementation Tips and Issues Receivables.

System Administration: Defining Responsibilities All Applications: Clearing Interfaces

When creating responsibilities specifically for
scheduling or shipping, be sure to assign the Order
Entry application, as opposed to Manufacturing.
Shipping functions (Pick Release, Ship Confirm) are
performed using Oracle Order Entry. If profile
options have been set at the application level for
Order Entry, then the person performing shipping
tasks would not pick up these profile option settings
if their responsibility had been attached to Oracle
Manufacturing.
System Administration: Profile Options
If the profile option HR: Business Group is incorrect
or missing for your Inventory responsibility, then
you will have difficulty retrieving information about
the organizations you created using this
responsibility.
The value for this profile option, the business group,
is stored in the organization table when the
organization was first created. It needs to reflect the
correct business group to which the inventory
organization belongs.
End-of-month procedures need to be reviewed, to
ensure that all eligible records have been processed
through each of the sales order and intercompany
invoicing steps prior to closing any periods.
Interface tables which are empty may become filled
once these records have been processed.
As an example (refer to Fig. 6), if a sales order ships
10 items and 2 fail the Inventory Interface due to
invalid COGS account assignments, the remaining 8
items will still proceed into the Inventory Interface
table and get picked up by Inventory's Transaction
Manager. These 8 items would then be placed into
the Receivables interface tables by the "Create
Intercompany AR Invoices" program. Once
imported into AR by AutoInvoice, the intercompany
AR invoice will be created with 8 lines. Since 2 of
the original lines have shipped but not yet come
through INV and AR, the financial periods (in AR)
should not be closed.
End-of-month procedures should include the
reporting of intercompany shipments in Oracle
Order Entry, to anticipate records waiting to pass
through the Inventory, Receivables, and Payables
interfaces.

Page: 19

All Applications: Measuring Performance
As part of your implementation project, you will
need to identify reporting requirements for each
application. Consider any special requirements
involving intercompany invoicing. For example:
• Daily reporting (orders, shipments, invoices, GL
account balances)
• Exception reporting (Oracle Order Entry's
Process Exception report, Oracle Receivables'
AutoInvoice Execution Report)
• Custom reports / inquiries
• Setup Checks
Inventory: Choosing a Shipping Organization
The Intercompany Relations setup allows for one
combination of Selling Operating Unit and Shipping
Warehouse at any given time. In our example, the
UK can only choose the New York warehouse out of
the three warehouses available in the US operating
unit. To select a different warehouse, you must first
do so in the 'Define Intercompany Relations' screen
(along with other related setups, including creating
the warehouse as a payable site as a UK Payables
responsibility).
Receivables: Payment Terms, Tax Codes
As mentioned in the setup section, the spelling and
case of Payment Terms and Tax Codes/Tax Names
used for intercompany invoicing should be consistent
between AR and AP, across all operating units.
Receivables: Reviewing the Intercompany AR
Invoice
Notice that the intercompany AR invoice has a bill-
to address but no ship-to address. This is due to the
fact that since certain data is partitioned by operating
unit, the US organization does not have visibility to
the UK organization's customer addresses --
therefore the end customer does not appear as a ship-
to on the intercompany invoice. (The bill-to is the
UK organization itself.)
Certain freight-related information, however, does
appear on the invoice, including: Waybill Number,
Carrier, Freight Charges, FOB Point, and Freight
Account.
Other Issues
The manual "Multiple Organizations in Oracle
Applications" provides further discussion on the
scope and limitations of transactions in multi-org.
Refer to the "Technical Overview" chapter to obtain
more information corresponding to the version of
Oracle applications which you are using.
IX. Conclusion
This paper describes intercompany invoicing within
the context of the total sales order process, from
order entry through shipping the product and
invoicing the customer. Since the process as a
whole involves many departments in different
operating units, the underlying transactions
performed using Oracle applications need to be
carefully planned and managed. The large amount
of data that needs to be set up must be carefully
managed as well.
Taken alone, the number of steps involved with
setting up intercompany invoicing are few: creating
the internal customer and vendor sites, preparing the
automated accounting features, establishing the links
between operating units (the "intercompany
relations"), and scheduling additional concurrent
programs.
However, intercompany invoicing cannot be taken
alone. In order to validate your setups, you will need
to run orders through the entire sales order process --
i.e., you will need to perform solid integration
testing involving the OE, AR, AP, and INV
applications across each pair of operating units.
By describing the business processes, system
transactions, and setup information related to the
sales order / intercompany invoicing process as a
whole, these tasks will hopefully be made easier for
your ERP project.
Page: 20
Acknowledgments
The author would like to acknowledge the following
people for their assistance:
Etan Spierer and Carol Borison of Oracle
Corporation,
Pattabhi Sudindra and Anitha Murthy of Waypointe
Information Technologies, Inc., and
Tiina Huhtamaki, Marco Nieuwenhuizen, Kersten
Wagschal, Robin Casson, and Ken McHugh.
Resources
Multiple Organizations in Oracle Applications,
Release 10.7 - CD Part Number A50831-01
Release 11.0 - CD Part Number A60725-02
1
Logistics Network Modeling: Designing a Network
Strategy, Arthur D. Little, Inc., Charles R. Marge,
1991.
About the Author
Phyllis Doig is a Senior Principal Consultant with
Oracle Corporation, and has been implementing
Oracle applications since 1995 including Order
Entry, Receivables, Inventory and Multi-Org.
Phyllis graduated from Stevens Institute of
Technology with a BE in Mechanical Engineering,
and from the University of Virginia with a Master of
Business Administration. She brings to Oracle
several years of experience in engineering, business
operations, and Oracle database administration.
* * *
Addendum
November 18th, 1998
This section has been added to incorporate
comments and questions that have come about since
the paper was originally presented at the Fall 1998
OAUG conference in Honolulu.
A. Additional Tips and Issues
Salescredits on the Intercompany Invoice
Is it true that the only salesperson you can use on the
intercompany invoice is the one called 'No Sales
Credit' with id = -3? This is important when
AutoAccounting is set up to use the salesperson to
determine the source of certain account segments.
Or, does sales credit (and therefore the account
segments in AutoAccounting) come from any
salesperson that existed on the original sales order?
Ans. Yes, it is true that the intercompany invoice
only uses the salesperson whose id is -3. However,
you can change its name from 'No Sales Credit' to
something more appropriate.
Intercompany AR Crediting
What type of credit memo is used to generate an
intercompany credit?
Ans. An intercompany AR credit transaction is
essentially an invoice with the sign reversed. It uses
the same transaction type as the intercompany AR
invoice -- i.e., the transaction type that is designated
on the "Define Intercompany Relations" setup form.
When setting up this transaction type using Oracle
Receivables, be sure to set the "Creation Sign" field
as being "Any Sign", in order to be able to use it for
both invoices and credit memos!
Freight and Currency Issues
Why do some transactions result in a separate
intercompany AR invoice for freight?
Ans. Multiple intercompany AR invoices may be
generated due to the currency of the freight /
handling /duty / insurance charges that were entered
on the pick slip during shipment confirmation.
The currency of these charges comes from the
original sales order's price list currency. The
currency of the intercompany AR invoice comes
from the transfer price list. If different, then a
separate invoice will be generated -- one for each
currency.
Page: 21

TAX: Inventory Item for Freight
When using an inventory item for freight (rather
than a memo line), how do you handle the situation
of having different names for this item in different
operating units? Is this profile option required to
have the same value for different responsibilities?
Ans. Not knowing, I would recommend that you test
two scenarios: (1) Use different values for the
profile option TAX: Inventory Item for Freight at the
responsibility level. The log file of the Create
Intercompany AR Invoices report will indicate
whether there are any errors. (2) Set the item
attribute "Description" at the item/org level, and
have different values for the item's description in
each organization.
OE: Item Validation Organization
Must the profile option OE: Item Validation
Organization refer to a single item master
organization?
Ans. No. This profile option can refer to different
organizations.
If AutoAccounting sources some segments from the
item, it can only use the Sales Account assigned to
the item master (not the item/org level). Therefore,
when using intercompany invoicing between
countries (UK sells to Germany, shipping from US),
you may need to use different values for OE: Item
Validation Organization if the charts of accounts
differ.
With VAT tax, the VAT code is taken from the item.
However, each country sets it's own rates of VAT.
Again, the Item Validation Organization would need
to be different for each country in order to choose the
appropriate VAT tax code.
Invoice Printing
Is the printing of intercompany AR and AP invoices
required for the transactions to proceed through the
respective interfaces?
Ans. No. The diagram "Transaction Flow: Sales
Order Cycle with Intercompany Invoicing" (Fig. 6)
includes the steps "AR: Print Invoice" and "AP:
Print Invoice", but these are not required steps.
B. Troubleshooting the Interfaces
To actually set up and test intercompany invoicing
features, you will need to run a sales order fully
through its cycle and then follow the steps for
generating the intercompany AR and AP invoices.
This can become tricky during integration testing,
when both setups and raw data are in a state of flux.
Listed below are common issues that you may want
to consider when troubleshooting records in the
interface tables.
From OE into INV interface tables
(running OE's Inventory Interface program)
• FlexBuilder or the Account Generator is looking
to a source (order type, item, organization) for
the COGS account, but the account has not yet
been assigned to its source.
• One of the segments of the COGS account has
been disabled in GL, and is no longer available.
• COGS segments exist on the source and are
valid, but the desired code combination is no
longer valid.
• Item Status is changed to prevent transactions in
Inventory.
• Item control information is missing (lot, serial,
revision).
From INV interface tables into INV
(running the Inventory manager)
• OE features are set up to allow shipment even
without onhand quantities, but Inventory
features do not allow negative inventory.
• Subinventory and/or locator are wrong.
• Item/subinventory restriction is changed while
the record is in the interface.
• Inventory period is not yet open.
Between OE and INV for return processing
(running OE's RMA Interface program)
• Depending on the order cycle requirements, the
RMA interface (if not already scheduled with
automatic resubmission) may need to be run
Page: 22
 twice: once for the return information to be
communicated to Inventory, and once for the
item's acceptance in Inventory to be
communicate back to OE. If this is not done,
then the order line cycle status will show as
being interfaced, but not yet accepted.
• OE: Source Code is not set; should be ORDER
ENTRY.
• Inspection is required and was not performed.
• Same COGS issues as with the original sales
order.
From OE into AR interface tables
(running OE's Receivables Interface program)
• Order is on hold.
• Order line is on hold.
• Receivables Interface is not running.
• Invoice Source is not set up correctly (OE
Import Standard or Intercompany). It will not
even show in the list of values when you run the
Receivables interface program.
From AR interface tables into AR
(running AR's AutoInvoice programs)
• AutoAccounting is looking to a source (item,
salesrep, transaction type… ) for the necessary
accounts, but the account is not yet assigned to
its source.
• The account segments or the resulting code
combination are not valid.
• Salesperson's accounts or territory are incorrect.
• The tax code or tax authority has not been set up
yet.
• The appropriate Remittance Address assignment
does not exist, corresponding to your invoice's
bill-to address requirements.
Into AR interface tables
(running INV's Create Intercompany AR Invoices
program) * These comments added 5/4/00. PD.
• Ensure that the Transaction Manager is running
before you run “Create Intercompany AR
Invoices”. One user found that while they were
able to complete this program and produce a
record in the AR interface tables, they could not
import the record (using AR’s AutoInvoice
Import) into AR. With the manager down, a
record had been created in INV’s pending
transactions interface. By clearing the record
from the pending transactions interface, they
could successfully import into AR.
• TIP: The ID of the record in the “Create
Intercompany AR Invoices” request log equals
the material transaction ID (helpful for
researching issues).
Into AP interface tables
(running INV's Create Intercompany AP Invoices
program)
• Payment Term in AP does not exist or does not
match the spelling/case of the payment term in
AR on the intercompany AR invoice.
• Same issue for the Tax Name in AP / Tax Code
in AR.
• Missing or invalid supplier accounts.
• Missing or invalid freight accounts.
• Inconsistent profile option settings amongst
multiorg responsibilities (especially INV:
Intercompany Currency Conversion -- the
conversion type of the intercompany invoice.
Cannot be 'User'.)
Page: 23
Appendix A: Setup Steps Including Intercompany Invoicing
Considerations
SELLING OPERATING UNIT:
SHIPPING OPERTING UNIT:
Note: The comments shown in italics may refer to either one-time setups for intercompany transactions, or to data
specific to the scenario you are testing.
System Administration
Step Step Name
1 Create Responsibilities
2a Maintain Profile Options
2b Maintain Profile Options
3 Assign Organization
Access
UK
US
Responsible Navigation/ Coordinating
Comments Module
SysAdm SYS: Security, Responsibilities, Define ALL
For our example, you will need:
System Administrator
UK Order Entry Administrator
UK Receivables User
UK Payables User
UK General Ledger Manager
UK Inventory Manager
US Order Entry Administrator
US Receivables User
US Payables User
US General Ledger Manager
US Inventory Manager
SysAdm SYS: Profile, System ALL
For our example:
MO: Operating Unit
GL Set of Books Name
OE: Set of Books
OE: Item Validation Organization
HR:Business Group
INV: Intercompany Currency Conversion
Tax: Allow Override of Tax Code
Tax: Invoice Freight as Revenue
Tax: Inventory Item for Freight
SysAdm Run 'Multi-Org Setup Validation Report'
SysAdm INV: Setup, Organizations, Org Access INV
Page: 24
Inventory
Step Step Name Responsible Navigation/ Coordinating
Comments Module
1 Set of Books GL Refer to GL setup for the entire SOB setup procedures. ALL

For intercompany invoicing, consider:

1) Accounting Flexfield Combinations - what GL accounts are required
for intercompany transactions? (See "Accounting" section of this
paper.) Ensure that valid values and code combinations exist.

2) Define Daily Conversion Rates - maintain conversion rates for

currencies involved with the intercompany transactions, if not already
maintained for all other transactions.
2 Item Flexfield INV INV: Setup, Flexfields, Key, Segments ALL
Find: ‘System Items’
3 Item Categories Flexfield INV INV: Setup, Flexfields, Key, Segments MFG
Find: ‘Item Categories’
4 Item Catalog Group INV INV: Setup, Flexfields, Key, Segments OE
Flexfield Find: ‘Item Catalogs’
5 Stock Locator Flexfield INV INV: Setup, Flexfields, Key, Segments OE, MFG
Find: ‘Stock Locators’
6 Account Alias Flexfield INV INV: Setup, Flexfields, Key, Segments GL
Find: ‘Account Alias’
7 Sales Order Flexfield OE See OE setup. INV
8 Locations INV INV: Setup, Organizations, Locations PO, OE, AP
9 Employees PO Refer to PO setup. INV, ECO
10 Calendar Exception Sets INV INV: Setup, Organizations, Calendar Exception Templates ALL
11 Organization Calendar INV INV: Setup, Organizations, Calendars OE, AR
12 Organizations INV INV: Setup, Organizations, Organizations OE
13 Inventory Parameters INV INV: Setup, Organizations, Organization OE,GL
14 Receiving Options PO INV: Setup, Organizations, Organizations INV
15 Change Organizations INV
16 Picking Rules INV INV: Setup, Rules, Picking OE
17 ATP Rules INV INV: Setup, Rules, Available to Promise OE
18 Planners MRP INV: Setup, Planners INV
19 UOM Classes INV INV: Setup, Units of Measure, Classes PO, OE
20 UOM INV INV: Setup, Units of Measure, Units of Measure PO, OE
UK> Ensure that the appropriate UOM exist for the items being
ordered.
21 UOM Conversions INV INV: Setup, Units of Measure, Conversions PO, OE
US > Ensure that conversions exist for going between the transaction
and base UOM's for the items being ordered.
22 UOM Interclass INV INV: Setup, Units of Measure, Conversions PO, OE
Conversions
23 Subinventories INV INV: Setup, Organizations, Subinventories MRP, OE
24 Stock Locators INV INV: Setup, Organizations, Stock Locators PO, WIP
25 Item Attribute Controls INV INV: Setup, Items, Attribute Controls ALL
26 Categories INV INV: Setup, Items, Categories, Category Codes MFG, PO, OE,
UK/US> If maintained at the item/org level, ensure that valid category MKTG
codes exist and that the item is assigned to categories in the UK (for OE
reporting) and the US (for INV reporting).
27 Category Sets INV INV: Setup, Items, Categories, Category Sets MFG, PO, OE,
MKTG
28 Default Category Sets INV INV: Setup, Items, Categories, Default Category Sets MFG, PO, OE,
MKTG
29 Statuses INV INV: Setup, Items, Status Codes MFG, OE
30 Catalog Groups OE See OE setup. INV
31 Item Types INV INV: Setup, Items, Item Types OE

Page: 25
32 Item Templates INV INV: Setup, Items, Templates OE, AR, MFG
33 Cross-Reference Types INV INV: Items, Manufacturer’s Part Numbers, (B) Parts OE
34 Delete Constraints BOM/INV INV: Setup, Item, Delete Constraints
35 Cost Types COST INV: Setup, Costs, Cost Types
36 Cost Activities COST INV: Setup, Costs, Activities
37 Material Sub-elements COST INV: Setup, Costs, Sub-elements, Material
38 Material Overheads COST INV: Setup, Costs, Sub-elements, Overheads
39 Default Material Overhead COST INV: Setup, Costs, Sub-elements, Defaults
Rates
40 Freight Carriers OE See OE setup. INV, PO
41 Organization Shipping INV INV: Setup, Organizations, Shipping Networks OE
Networks
42 Account Aliases INV INV: Setup, Account Alias WIP, COST
43 Transactions Source Types INV INV: Setup, Transaction s, Source Types
44 Transaction Types INV INV: Setup, Transactions, Type WIP, OE
45 Transaction Reasons INV INV: Setup, Transactions, Reasons
46 Purchasing Options PO INV: Setup, Receiving, Purchasing
47 Accounting Periods INV INV: Accounting Close Cycle, Inventory Accounting Periods
48 Interface Managers INV INV: Setup, Transactions, Interface Managers
SYSADM: Concurrent, Managers, Administer
49 Set Profile Options INV INV: Setup, Profiles System OE
50 Items INV INV: Items, Master Items… Organization Items ALL
UK, US> Ensure that the item is enabled in both places and that
item/attribute settings are appropriate for the respective operating unit.
Example: Is the item orderable and invoiceable in the UK (for the
German order), invoiceable the US (for the intercompany invoice), and
transactable in the US (for the sales order issue)? Are the correct
COGS and Sales Accounts assigned s needed?
51 Org Access INV or SYS INV: Setup, Organizations, Organization Access MFG
52 Intercompany Relations INV INV: Setup, Organizations, Intercompany Relations

US> Set up the link for Selling from the UK / Shipping from the US:
• AR Customer / Site = UK Global Computers. Pick the
appropriate bill-to site that you set up in the US Receivables
system for this customer.
• AR Transaction Type = the Invoice Type that will be used for
your intercompany invoices to the UK. The Invoice Type was set
up in US Receivables.
• AP Vendor / Site = US Global Computers. Pick the appropriate
payable site that you set up in the UK Payables system for this
vendor.
• AP Freight Account = the account for freight on intercompany
AP invoices, where line type = FREIGHT.
• AP Revalue Average = Y or N (if using average costing, this will
revalue the avg cost in the UK when creating the intercompany
AP invoice)

Page: 26
Order Entry
Step Step Name - Description Responsible Substep Description/ Coordinating
Comments Module
1a Set of Books GL See GL setup. OE, AR
1b Set of Books Sys Admin -Assign the set of books to all RT responsibilities. Depends on
responsibility.
2a Stock Locator Flexfield INV See INV setup. OE
2b Stock Locator Flexfield OE SYSADM: Profile, System INV
OE: Inventory Stock Location
2c Sales Order Flexfield OE OE: Setup, Financials, Flexfields, Key, Segments INV
Find 'Sales Order Flexfield '
SYSADM: Profile, System
OE: Source Code
2d Item Flexfield INV See INV setup. OE
2e Item Flexfield OE SYSADM: Profile, System INV
OE: Item Flexfield
OE: Item Flexfield Entry Method
OE: Item View Method
2f Territory Flexfield OE OE: Setup, Financials, Flexfields, Key, Segments AR, GL
Territory Flexfield
2g Sales Tax Location OE OE: Setup, Financials, Flexfields, Key , Segments AR
Sales Tax Location Flexfield
2h Item Category INV See INV setup. OE, GL
2i Item Catalog INV See INV setup. OE
3a Inventory Organizations INV See INV setup. OE
3b Inventory Organizations OE/Sys SYSADM: Profiles, System INV
OE: Item Validation Organization.
4 Profile Options OE/ Sys SYSADM: Profiles, System INV
5 Payment Terms AR See AR setup. AP, OE
6 Invoicing and Accounting AR See AR setup. OE
Rules
7 Transaction Types AR See AR setup. OE, GL
8 AutoAccounting AR See AR setup. OE, INV
9 Territories OE OE: Setup, Sales, Territories AR
10 Customer Profile Classes AR See AR setup. OE
11 Invoice Sources AR See AR setup. OE
12 AutoInvoice Line Ordering AR See AR setup. OE
13 AutoInvoice Grouping AR See AR setup. OE
Rules
14 Navigation Preference Sets OE N/A
15a QuickCodes OE OE: Setup, QuickCodes, Order Entry INV (Shipping)
15b QuickCodes AR OE: Setup, QuickCodes, Receivables OE
15c QuickCodes OE OE: Setup, QuickCodes, Manufacturing MRP
16 Freight Carriers OE OE: Setup, Shipping, Freight, Carriers INV
UK> Carriers should be set up using the item master organization.
17 Units of Measure OE See INV setup. INV
18 Order Number Sources OE OE: Setup, Orders, Sources
19 Order Import Sources OE OE: Setup, Orders, OrderImport PO
20 Freight Charges OE OE: Setup, Shipping, Freight, Charges AR, Shipping
21 Shipping Document OE OE: Setup, Shipping, Choose Printers Shipping
Printers UK> Create the Picking, Shipping document sets needed for the
intercompany shipment (out of the US warehouse) to your end
customer; assign to printers located in the US warehouse for these
document sets, so that they will print in the US.
22 Sales Credit Types OE OE: Setup, Sales, Credit Types AR
23 Order Cycles OE OE: Setup, Orders, Cycles, Cycles AR, INV, PO,
UK> Create an order cycle for the end customer order, including any GL
Approvals that may apply.

Page: 27
24 Order Security OE OE: Setup, Rules, Security Shipping, INV
25 Item Information INV See INV setup. OE
26 Enter Items INV See INV setup. OE
27 Configurations INV, OE See BOM setup. MFG
28 Pricing OE OE: Pricing, Price Lists AR
UK> Create the end customer's Price List. Enter the items on the Price
List. Attach it to the customer, site, agreement, order type, or whatever
is appropriate for the Standard Value Rule Set on the end customer's
Order Type.
US> Create the US transfer Price List. Assign items to it. Attach it to
the bill-to site of the customer that is your UK organization.
29 Salespersons AR See AR setup. OE, GL
30 Customers AR See AR setup. OE
31 Agreements OE OE: Customers, Agreements AR
32 Value Rules OE OE: Setup, Rules, Values AR, Shipping,
INV
33 Order Types OE OE: Setup, Orders, Types MFG, AR, GL
UK> Create an Order Type for the German customer's order. Assign a
Standard Value Rule Set. Ensure that the Shipping Information zone
identifies the appropriate default information for your order, and the
Financial Information zone has the appropriate Invoice Type for the
German customer's invoice.
34 Discounts OE OE: Pricing, Discounts AR

UK > Create any discounts applicable to the end customer, and attach
them to the end customer's price list.
35 Credit Checking OE OE: Setup, Rules, Credit AR
36 Set up Flexbuilder (COGS OE OE: Setup, Financials, Flexfields, FlexBuilder, Assign INV
account)
-- the Account Generator in US> Define and assign the sources of each COGS account segment for
R11 the shipment out of the NY Distribution Center, whether coming from
the item, order type, or other source. Ensure that procedures are in
place to maintain the se segment values. For example, if segment 2
always comes from the item, ensure that the person maintaining items
knows what value of COGS to provide.

UK> Define and assign the sources of each Intercompany COGS

account segment for the Intercompany AP Invoice transaction. Ensure
that procedures are in place to maintain these segment values.
37 Holds OE OE: Setup, Orders, Holds Shipping, INV
38 Notes OE OE: Setup, Orders, Note Categories Shipping, INV,
OE: Setup, Orders, Notes AR
39 Document Sets OE OE: Setup, Shipping, Document Sets Shipping, INV
40 Descriptive Flexfields OE OE: Setup, Financials, Flexfields, Descriptive, Segments Various, AR
41 Tax Codes and Rates AR See AR setup. OE, GL
42 Tax Exceptions (item) AR See AR setup. OE, GL
Tax Exemptions (item or
customer)

Page: 28
Accounts Receivable
Step Step Name - Description Responsible Substep Description/ Coordinating
Comments Module
1 Set up the financial set of GL See GL setup. OE, AR
books.
2 Set up Flexbuilder AR See AR System Options setup or use FlexBuilder. OE
(accounts for foreign xchg
rate gains and losses or
finance charges)
3a Item Flexfields INV See INV setup. OE, AR
3b Item Flexfields AR AR: Item Flexfield Mode
4 Organizations INV See INV setup OE, AR
5 Territory Flexfield OE See OE setup. AR, GL
6 Sales Tax Location OE See OE setup. AR
Flexfield
7 Flexible Address Formats AR Use seeded formats. OE
8 Define Countries and AR AR: Setup, System, Countries OE
Territories
9 Line Transaction Flexfield AR AR: Setup, Financials, Flexfields, Descriptive , Segments… Find OE, INV
‘Line Transaction Flexfield’
10 AutoCash Rule Sets AR AR: Setup, Receipts, Autocash Rule Sets
11 QuickCodes AR AR: Setup, System, Quickcodes

12 AutoInvoice Line Ordering AR AR: Setup, Transactions, AutoInvoice, Line Ordering OE

13 AutoInvoice Grouping AR AR: Setup, Transactions, AutoInvoice, Grouping Rules OE
Rules
14 System Options AR AR: Setup, System, System Options OE, GL
US> The value for "Require Salesreps" must be No. Also do this for
the UK, if you are testing the opposite scenario (Order from US, ship
from UK).
15 Payment Terms AR AR: Setup, Transactions, Payment Terms PO, AP
US> Ensure that payment terms used on the intercompany AR invoice
also exist with the same spelling and case in the UK Payables system.
16 Accounting Rules AR AR: Setup, Transactions, Rules INV, OE
17 Open Periods AR AR: Control, Accounting, Open/Close Periods GL, OE
UK, US> Open periods for your shipment date.
18 AutoAccounting AR AR: Setup, Transactions, AutoAccounting OE, INV, GL
UK > Identify sources for each segment of the accounts built within
Oracle Receivables for your end customer invoice. Ensure that the
sources are assigned account segment values.
US> Same. AutoAccounting rules will be set up, whether for
intercompany or standard invoices. Be sure that the appropriate
accounts will be built for your intercompany scenario (i.e., check any
segments that would come from the intercompany invoice's type).
19 Cash Basis Accounting AR Skip if not used. GL
20 Transaction Types AR AR: Setup, Transactions, Transaction Types OE
UK> Create an Invoice Type for your end customer invoice. Ensure
that it has valid accounting information (if applicable) and Credit
Memo Type assigned.
US> Create an Invoice Type for your intercompany invoice for billing
the UK organization. Assign a Credit Memo Type to handle returns
and credits. If you do not tax your UK office, set 'Tax Calculation' to
No. Be sure this Invoice Type is assigned in the Intercompany
Relations screen for the UK/US scenario.

Page: 29
21 Invoice Sources AR AR: Setup, Transactions, Sources OE
UK> Create a valid Invoice Source for standard customer invoices
(typically this is OE Import Standard).
US> Ensure that the Invoice Source (Intercompany) exists for the
intercompany invoice.The AutoInvoice Data Validation parameters are
usually all id's (similar to OE Import Standard). If you have no
AutoAccounting segments dependent upon the Salesperson, then set the
field "Allow Sales Credit" to No; and ensure that the System Option
field "Require Salesreps" is also No.
22 Collectors AR AR: Setup, Collections, Collectors
23 Adjustment Limits AR AR: Setup, Transactions, Adjustment Limits SYSADM
(users)
24 Remittance Banks AR AR: Setup, Receipts, Bank AP
25 Distribution Sets AR AR: Setup, Receipts, Distribution Sets GL
26 Receivables Types AR AR: Setup, Receipts, Receivable Activity GL

27 Receipt Classes AR AR: Setup, Receipts, Classes GL

28 Payment Methods AR " GL
29 Receipt Sources AR AR: Setup, Receipts, Receipt Sources GL
30 Aging Buckets AR AR: Setup, Collections, Aging Buckets
31 Statement Cycles AR AR: Setup, Print, Statement Cycles
32 Statement Messages AR Accept defaults or add new.
33 Dunning Letters AR Accept defaults or add new.
34 Dunning Letter Sets AR Accept defaults or add new.
35 Territories OE See OE setup. AR, GL
36 Salespeople AR AR: Setup, Transactions, Salespersons OE, GL
UK> Add Salespersons who will receive credit for the end customer
sales order.
US> Review any salesperson-dependent accounting on the 'No Sales
Credit' salesperson, since this will be used on the intercompany invoice.
37 Profile Options AR SYSADM: Profile, System OE
38 Tax Codes and Rates AR AR: Setup, Tax, Codes OE, GL
UK> Ensure that the appropriate codes and rates exist for the end
customer invoice.
US> If applying Tax Codes to the UK bill-to site, ensure that any codes
set up here EXACTLY match the names of tax codes in the UK
Payables system (spelling and case). This is only needed for tax codes
that may apply to intercompany transactions.
39 Customer Profile Classes AR AR: Customers, Profile Class OE
UK> Maintain the profile class assigned to your end customers.
US> Maintain the profile class assigned to your UK operating unit.
For example, you may not want to perform credit check or send
statements to the UK operating unit; ensure that the profile class is set
up this way.
40 Customers AR AR: Customers, Standard OE
UK> Create the German Customer, Address, Bill-To / Ship-To and
assign a Profile Class. Ensure that the address has a valid Tax
Authority and Remit-To Assignment. Ensure that any defaults from
OE's Standard Value Rule Set which are sourced from the customer
have values for the German Customer or Address. Assign any Tax
Codes as needed.
US> Create the UK operating unit as a Customer, including the
Address, Bill-To, and Profile Class. The Address should have a valid
Tax Authority and Remit-To Assignment. Attach Tax Codes as
needed. To the Bill-To, attach your Transfer Price List and Payment
Terms.
41 Remit-To Addresses AR AR: Setup, Print, Remit-To Addresses
UK> Create a Remit-To assignment corresponding to the German
customer's bill-to site.
US> Create a Remit-To assignment corresponding to the UK office's
bill-to site.
42 Customer Relationships AR AR: Customers, Standard (Alt Region: Relationships) OE
43 Customer Banks AR AR: Setup, Receipts, Banks GL
If performing automatic receipts, set up bank, bank account, GL
account, and transfer file information.

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44 Lockboxes AR AR: Setup, Receipts, Lockboxes, Lockboxes GL
Provide lockbox number, batch source, bank information, and
cash account for automatic lockbox receipts.
45 Transmission Format AR AR: Setup, Receipts, Lockboxes, Transmission Formats GL
Choose default, or design lockbox file formats.
46 Receipt Programs AR AR: Setup, Receiipts, Automatic Receipts GL
Provide name and file information for automatic receipts
processing.
47 UOM Classes INV See INV setup. OE, AR
48 UOM INV See INV setup. OE, AR
49 Memo Lines AR AR: Setup, Transactions, Memo Lines GL, INV
US> Review the Memo Line that comes seeded and is called
Intercompany Freight. Ensure that it has a revenue account assigned
(even if AutoAccounting does not look to the Standard Line for any
segments of the Freight account).
50 Tax Exceptions AR AR: Setup, Tax, Exceptions AR
51 Tax Exemptions AR AR: Setup, Tax, Exemptions AR
52 Document Sequencing AR

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Accounts Payable
Step Step Name – Description Responsible Substep Description/ Coordinating
Comments Module
1 Choose a primary Set of Books. GL See GL setup. OE, AR
2 Define Payment Terms AP AP: Setup, Invoice, Payment Terms PO,AR
3 Define Matching Tolerances AP AP: Setup, Invoice, Tolerances
4 Define Tax Names and Groups AP AP: Setup, Tax, Names, … … AR
AP: Setup, Tax, Withholding, … …

UK> Tax Codes that may be used on the intercompany

AP invoice must match the case and spelling of Tax
Codes set up in AR (those which may appear on
intercompany AR invoices).
5 Define Approval Codes AP AP: Setup, Invoice, Approvals
6 Define Distribution Sets AP AP: Setup, Invoice, Distribution Sets GL
7 Define Vendor and AP QuickCodes AP AP: Setup, QuickCodes, Payables PO
8 Define Add’l Payment Programs and AP AP: Setup, Payment, Formats
Formats AP: Setup, Payment, Programs
9 Define Payment Interest Rates AP Optional; AP: Setup, Payment, Interest Rates
10 Define Expense Report Types AP AP: Setup, Invoice, Expense Report Templates
11 Define Employee QuickCodes AP AP: Setup, QuickCodes, Employee
12 Enter Locations INV See INV setup. PO, INV
13 Enter Employees PO See PO setup. PO
14 Define Reporting Entities AP AP: Setup, Tax, Reporting Entities
15 Define Income Tax Regions AP AP: Setup, Tax, Regions
16 Define Financial Options and Defaults AP AP: Setup, Options, Financials PO, GL
17 Define Systems Options and Defaults AP AP: Setup, Options, Payables PO, GL
18 Set Up Flexible Address Formats AR See AR setup. AP
19 Maintain Countries and Territories AP AP: Setup, Countries
20 Define Bank Accounts AP AP: Setup, Payment, Banks
21 Open Accounting Periods AP AP: Setup, Calendar, Accounting, AP Accounting
Periods
22 Define Report Sets AP AP: Other, Requests, Set
23 Define Expense Detail and Invoice AP AP: Setup, Invoice, Distribution Detail Report
Aging Report Formats
24 Define AutoClear Format for AP
Automatic Payment Reconciliation
25 Define Period Types and Periods for AP AP: Setup, Calendar, Accounting, Special Calendar
Key Indicators, RecurringPayments, AP: Setup, Calendar, Accounting, Aging Periods
and Withholding Taxes
26 Implement Budgetary Control AP AP: Other, Profile, Budgetary Control Group
27 Implement Sequential Numbering AP AP: Other, Profile, Sequential Numbering
28 Define Descriptive Flexfields AP AP: Setup, Flexfields, Descriptive
29 Set Profile Options AP AP: Other, Profile
30 Enter Vendors AP AP:
UK> Create the US Operating Unit as a vendor with a
payable site as their address. Assign Liability Account.
Again, be wary that any Tax Codes and Payment Terms
which may be assigned to the vendor site should match
the spelling and case of those set up in the US Receivables
system for intercompany invoicing.

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