Intercompany Process Overview
Classification: Internal
ICP (Intercompany Process) for R2.0
What is Intercompany Process ? Scope for R2.0 for concurrent Accounting
• Various types of Intercompany Recharges are performed – Non-operational IC recharges :
Operational as well as Non-Operational between group entities • ROE
i.e. Agency to Liner, Agency to Agency, Agency to LNS etc. FX gain or loss generated due to difference in the timing of
collection of dues from the customer and remittance of the
• Sometimes AR is posted and AP is missed to be posted and same to Liner from agencies.
vice-versa or if they are posted with different values which • Agency Remuneration (TNMM)
causes a ICP Plug in Month End reporting. Agency remuneration recharge from Agency to Liner based on
the TNMM (Transaction net margin method).
• SLA Recharges
FTE and non-FTE based recharges between group entities.
Fixed Amount recharges
What is Concurrent Accounting? Variable Amount (Fixed percentage) recharges
• To cover this Intercompany Plugs, NFTP is bringing the Adhoc recharges
concept of “CONCURRENT ACCOUNTING” i.e.
simultaneous accounting of both AR and AP documents in
relevant entities with same posting attributes ensuring both
documents are in sync.
• For R2.0, Concurrent accounting is envisaged for:
Both entities on S4 Platform
Entities across S4 and ECC platforms
Classification: Internal
ICP Process in Nutshell
1 4a
Task Trigger via CLOCO Intercompany FICA- AR +
OR BRF+ table Charge code
Attachment of Tax Invoice
input accessed and Service
Manually for Reversals & Supporting Document
by the program Catalogue input
2 3 4 5 6
Calculation of Base Email Notification
Calculation of Recharge Creation of Billable Items Task Completion
Amount for Recharge with Invoice will be
Amount (BITS) Update in CLOCO
within the Program sent
4b
3a
Intercompany FI- AP Once the CLOCO Task is completed –
Creation of Attachment
(in S4 or Legacy ECC) + User can view:
explaining Calculation
Attachment of Tax Invoice 1. Error Log, if any
Logic
& Supporting Document 2. Successful Documents posted with
document number
Classification: Internal
Key Process changes in ICP Process
FI-CA AR vs FI-AR
• ICP Solution in S4 is based on AR invoice being posted through FI-CA module.
• FI-CA invoice is posted using a charge code which is the basis for Transfer pricing applicability and tax determination through tax engine.
• FI-CA solution helps to auto generate tax invoice as a standard output on FI-CA invoice.
• Access restriction on reversal of FICA documents directly. Reversal has to be done through ICP Program itself.
Introduction of Service Catalogue and standard transfer pricing mark up for all SGA services
• Transfer Pricing team has introduced % based mark up for all recharges based on Transfer pricing norms defined at each country level.
• The nature of service being service type as defined for transfer pricing and tax determination, is created as a charge code in the S4 Hana.
• Reference and other details relevant for transfer pricing reporting updated in header text and document text data for easy identification viz. nature of recharge,
%markup.
Reduction in the number of SLA recharges
• With new SGA policy for recharges removing the need to have intra company recharges within entities, there is a significant reduction in the overall number of
recharges.
• Also the policy has introduced a threshold limit of USD 5000 for any recharges, i.e., recharges for value lower than that are not required to be recharged.
TNMM recharge directly to HSUD Liner
• With Gollum merger of HSUD agencies into ML agencies, these entities will be required to do a recharge to HSUD liner for TNMM. Since both HSUD and
agency entity is on same platform, recharge will be done directly to HSUD Liner instead of routing this through ML.
Execution of SLA tasks through Financial Closing Cockpit (FCC) task
• In S4 a separate task list (weekly and monthly) has been created for ICP COE team to execute SLA recharges through FCC task.
• Provides a log to the user running the task with details of the posted documents in both entities and if there were errors in posting.
Classification: Internal
Service Catalogue in S4 for ICP
Service Catalogue
• A Service Catalogue is list of all the Service Types (based on Tax Applicability and TP Requirements) which needs to be
recharged to other entity. This Service Catalogue data will be linked to the SLA Repository.
This Service Catalogue will have:
1. All Service Types like Legal Fees, Audit Fees, Salary Recharges etc. will be part of Service Catalogue based on the Tax
Applicability and Transfer Pricing requirements.
2. Applicable Transfer Price (%) for each Service Type will be part of Service Catalogue. There is a provision to maintain Transfer
Price at the Global as well as Country Level as applicable.
3. This Service Catalogue will have “Charge Codes” required for generating ICP Invoice.
• Charge Code: This is nothing but a Material to be used to derive proper GL Accounts in Billing, Tax and other various
reporting parameters.
• A new Charge Code to be raised in MDG (Master Data Governance) and will be interfaced to S4.
• A Charge Code is linked to UNSPSC Code to determine the correct applicability of the Tax based on the type of Service
through Tax Engine.
Classification: Internal
Solution Overview and key features
Solution Overview
• Automated program - A single automated program to post all non-operational IC recharges in scope for R2.0 using the Financial Closing Cockpit task for
running the program.
• Flexible Usage - Easy and flexible Business Framework Rules (BRF+) implemented to update tables related to SLA, TNMM and ROE. It can be extended to new
company codes as those are onboarded to S4 Hana platform.
• Integration with FICA Module - The main key functionality for ICP lies with FICA postings i.e. all AR postings will be performed in FICA and AP postings in
FI-AP.
• Service Catalogue – maintains Transfer Pricing mark up applicable for each service defined as a charge code which are used for Non-Ops/ICP Recharges.
Key Features
• Concurrent AR and AP accounting with imbedded controls of Intercompany transactions related to SLAs, Rate of Exchange and Remuneration (TNMM)
recharges will be enabled via a suite of solutions encompassing S4 HANA (FI-CA, FI-AP) and SAP BRF+.
• Automated calculation of recharge amount - Calculation of the variable recharge amount in case of ROE/ TNMM/ SLA Variable amount fixed percentage
directly in the program based on BRF+ tables data.
• Cost Object in FICA – Enabling the Cost Object posting like cost center in Bit Structure of FICA to post on Primary Cost Element.
• Tax invoice: Usage of FICA solution allows standard template to be created for tax invoice generated as a part of the solution reducing effort for invoices
generated manually through excel in ECC.
• Calculation Sheet – A calculation sheet attached with each posting providing supporting documentation for recharge amount calculation.
• Charge Codes – representing a common repository of services rendered (each service created as a Charge code) to determine the relevant applicable Transfer
pricing norms and tax applicability for both AR and AP postings.
• Reversal within ICP – To ensure the AR and AP postings remain in sync, ICP posting cannot be reversed directly, instead a Credit Memo to be raised and
concurrent postings to happen within AR and AP.
• Payment related master data – Payment terms, Payment method and other payment related data can be maintained for each transaction at BRF+ table level in
case it differs from values maintained at master data level.
• Notification email: A notification email will be sent to both AR and AP teams on posting as well as reversal of any transactions.
• System Integration - Integration between S4 Hana and ML ECC via API synchronous call to perform concurrent ICP postings for the entities which are not yet
LIVE in S4 like Company Code 1000 Maersk A/S (Not Applicable for DAMCO FACT System).
Classification: Internal
