Oracle intercompany invoicing setups

This process creates invoices in the expense express tables with a unique import source name and is processed by the Oracle Payables Invoices Import Process. The following section discusses the accounting practices for intercompany invoicing. An invoice batch source indicates the source of invoices you transfer to Oracle Receivables. It also determines how auto invoice processes an invoice. All intercompany invoices the create intercompany AR invoice process generates use the predefined batch source intercompany.

Modifying this invoice batch source may cause unexpected failures during auto invoice. Note: Auto accounting uses sales credit records to construct distribution accounts based on sales representative. If you use sales representative in one or more account segment assignments for a particular operating unit, set the Allow Sales Credit Flag to yes for the intercompany batch source in that operating unit.

The system record the transaction at transfer price, and uses the bill-to-site and the currency of the selling operating unit.

For example, if the selling operating unit is located in the UK, and the shipping operating unit is located in the US, create the intercompany invoice in British Pounds, and convert to US dollars. If the freight, handling, duty, and insurance charges are not in the same currency as the transfer price list, you must create another intercompany invoice.

For advanced accounting, and procuring, this is only applicable if the pricing options in the transaction flow are set to transfer price. The accounts for the intercompany accounts receivable invoice are built using AutoAccounting. The system uses an open interface to import records into Oracle Receivables. Individual account segments may come from different sources, and the combination must be allowed in the shipping organization ledger.

Salesperson Account Segment: The system derives the salesperson account segment from the accounts assigned to the no sales credit default. Standard Lines Segment: The system derives the standards lines segments from the item master sales account for your items.

However if freight is not an item, and it is a header-level charge on the invoice, the system derives the account segments from the standard memo line intercompany freight.

Invoice Type Segment: The system derives the invoice type segment from the invoice type you identified in the Intercompany Relations window for transactions between operating units. If you need to apply tax to intercompany invoices, you must set up identical tax structures tax codes and rates in Oracle Payables and Oracle Receivables.

This allows Oracle Receivables Invoices to mirror correctly into intercompany Oracle Payables invoices. Before closing accounting periods in Oracle Inventory, Oracle Receivables and Oracle Payables, process all outstanding intercompany shipments including, but not limited to, posting to Oracle General Ledger.

The system records the transaction in the currency of the intercompany accounts receivable invoice. If AR invoice currency differs from the ledger currency of the selling operating unit, then the system converts the currency to the ledger currency of the selling operating unit and uses the exchange rate that corresponds to the invoice line general ledger date.

Typically segments are sourced from a combination of constant values and the cost of goods sold from the selling unit. Freight Account: Oracle Inventory uses the freight account you defined on the Intercompany Relations window for the corresponding selling and shipping organizations. Intercompany Payable Invoice: The intercompany payable comes from the liability account associated with the shipping organization created in the selling organization payables system.

Because more than one payable site can exist for a supplier, the system uses the site you defined on the Intercompany Relations window.

The intercompany invoicing program uses the advanced pricing engine to derive the invoice price for an item. The advanced pricing setup enables you to define which rules, based on price list, the system uses to derive invoice price for an item.

To use this feature you must set the following profile option. Otherwise, the system uses the static price from the selling operating unit price list. You set this profile option at site level. When you set this profile option to Yes, you can use the Advance Pricing engine for intercompany invoicing. Note: You must purchase a separate license for Advanced Pricing. If you set this profile without a license, you are not able to use advanced pricing.

The following figure depicts the intercompany invoicing process with or without Oracle Advanced Pricing. Before using the pricing logic, the intercompany invoicing program looks for an external API to return a price for the items on the order. If the API does not return a value, and if you set the Advanced Pricing profile option to yet, the pricing logic attempts derive the price from the price list using the Advanced pricing engine.

If the advanced pricing engine finds the price for the item in one of the price lists, the intercompany invoicing program processes the record and moves on to the next record. If Oracle Advanced Pricing cannot find a correct price for the item, the intercompany invoicing program logs an error message for that records, and moves to the next record.

You can uses order management to create a static price list. Oracle Inventory has the ability to call an external API to support custom-specific complex pricing logic written by the customer or a third party. You must set up pricing rules to use the advanced pricing engine for intercompany invoicing. If you do not setup rules, the system picks the invoice price from a static price list. There are two seeded relationships between request type and source codes. The first one is between request type intercompany and source system inventory.

The second relationship is between request type intercompany and source system advanced pricing. These mappings enable you to create price lists that are common to intercompany invoicing and sales order invoicing. Similarly, you may decide to create separate price lists for intercompany invoicing. You do this by using the system source code of inventory. If you want to use separate price lists for intercompany invoicing, disable the mapping between intercompany and Advanced Pricing, otherwise if the pricing engine finds a better fit for the price list defined under Advanced Pricing, it returns that price list.

You can use the defined global structure to define mapping rules for qualifier attributes and pricing attributes for price lists. The global structure is based on the information that is captured and available in a sales order or an internal sales order record. All seeded default rules are defined using this global structure. A customer located in the UK purchases computers from a sales division in the United Kingdom.

The shipping warehouse located in an operating unit in the United States ships the computers from a US warehouse to the customer in the UK, and records the cost in US dollars. The following figure describes the steps you use in intercompany invoicing for a sales order.

The following table describes the Intracompany Organization as a Provider:. AR invoice is created in Operations AR business unit which is the receivables business unit of the Provider. Customer is the one assigned to Vision Operations Legal Entity. Supplier is the one also assigned to Vision Operations Legal Entity. The following table describes the required Customer Supplier Assignments Setup.

Supplier must have a site with Primary Pay site purpose enabled in Administration AP business unit. Previous Next JavaScript must be enabled to correctly display this content.

This chapter contains the following: System Options Define Organizations Invoicing Options Balancing Rules Allocations Examples to Configure Intercompany Organizations System Options Intercompany System Options Define intercompany system options to set up intercompany processing rules at the enterprise level, based on your specific business needs.

For example, to: Enforce an enterprise-wide currency or allow intercompany transactions in local currencies. Allow receivers to reject intercompany transactions. Determine the minimum transaction amount that is processed. System Options Changing and saving a system option has no effect on intercompany transactions already in progress.

The system options are: Intercompany Batch Numbering The intercompany batch numbering option defines whether to use system generated or manual transaction batch numbering. Choose one of the following options to create intercompany batch numbers: System Generated: Generates intercompany batch numbers. Manual: Lets you manually enter the batch number. Intercompany Currency Standardize transaction processing by selecting an intercompany currency. Minimum Transaction Amount The minimum transaction amount represents a minimum threshold intercompany transaction amount.

Conversion Rate Type Select a conversion rate type that is used when transferring foreign currency intercompany transactions to General Ledger, Receivables and Payables. Note: The foreign currency intercompany transactions are not stored in the ledger currency in the Intercompany module.

Intercompany Transaction Types Use intercompany transaction types to manage the processing of intercompany transactions. Intercompany Period Status If you chose to use an intercompany calendar on your Systems Options, you can open and close periods by transaction type on the Intercompany Period Status page. Intercompany periods can't be closed if there are transactions for that period in one of these status: Sent Error Received Before closing the period, you must move these transactions to the next period.

Define Organizations Manage Intercompany Organizations The Manage Intercompany Organizations task lets you define intercompany organizations and assign them to a legal entity. Legal Entity Each intercompany organization must be associated with a legal entity, but you can associate more than one organization to a legal entity. Receivables and Payables Business Units The available business units are those associated with the ledger to which the selected legal entity belongs.

Invoicing Options Customer and Supplier Assignment The intercompany customer and supplier assignments are used to derive the customers and suppliers for intercompany invoicing. Customer Account Assign a unique customer account to the legal entity of the organization that receives and approves intercompany transactions. Supplier Assign a unique supplier to the legal entity of the organization that initiates intercompany transactions.

Intercompany Receivables Assignments Use Oracle Fusion Intercompany to generate invoices for intercompany transactions. Defining Receivables Assignments Set up your receivables assignments by mapping an intercompany transaction type and a receivables business unit to the receivables transaction type and receivables memo line.

Balancing Rules Intercompany Balancing Rules You use Intercompany balancing rules to generate the accounts required to balance journals that are out of balance by legal entity or primary balancing segment values.

Caution: After you create an Intercompany balancing rule, you can't modify them. But you can end date an existing rule and create a new rule. Defining Intercompany Balancing Rules You can define intercompany balancing rules at these levels: Primary balancing segment Legal entity Ledger Chart of accounts The rules are evaluated in the order shown.

Using Chart of Accounts Rules for Intercompany Use chart of accounts rules for intercompany balancing. Specific journal source and journal category Specific journal source and journal category of Other Journal source of Other and specific journal category Journal source of Other and journal category of Other.

Additional Intercompany Balancing and Clearing Company Options Additional Intercompany Balancing and Clearing options are used to balance the second balancing segment or the third balancing segment or both, when a transaction is unbalanced by one of these segments but is already balanced by the primary balancing segment. Additional Intercompany Balancing and Clearing options include these settings: Intercompany Receivables and Intercompany Payables accounts: You can use as the accounts as the template to build balancing accounts for balancing segment 2 and balancing segment 3 when the journal is already balanced by primary balancing segment.

Clearing Company Options You can choose to set clearing company options to balance a many-to-many journal. Clearing Company Condition: Choose when to use a clearing company. Use clearing company only for intracompany journals. Use clearing company for all many-to-many journals. Clearing Company Source: Choose how the clearing company value is derived for your balancing lines, from these options: Default clearing balancing segment value.

Example of Intercompany Balancing Rules This topic provides examples of intercompany balancing rules and the intercompany balancing lines generated. Intercompany Balancing Rules Precedence In this example the legal Entity InFusion Textiles intercompany manufacturing activities are tracked separately from its non-manufacturing activities.

Examples of Using Chart of Accounts Rules for Intercompany Balancing The following are some examples using chart of accounts rules for Intercompany balancing. One-to-One Balancing: Example In these scenarios, you choose to track intercompany balancing for companies with values , and to separate intercompany accounts.

Note: Balancing summarizes across a legal entity and first performs intercompany balancing using the lowest primary balancing segment value within the legal entity. In the following example, and are assigned to the same legal entity so first is used to perform intercompany balancing. Then balancing is performed for and , that is, the primary balancing segments within a legal entity.

Many-to-Many Balancing: Example In this section, we look at many-to-many primary balancing segment value journals and many-to-many legal entity journals.

Condition Source Value Use clearing company for all many-to-many journal Default clearing balancing segment value Line Account Debit Credit Description Notes 1 10 2 20 3 14 4 16 5 16 Ledger Intercompany balancing line First, Line 4, the largest credit is balanced against line 2, the largest debit 6 16 Ledger Intercompany balancing line First, Line 4, the largest credit is balanced against line 2, the largest debit 7 4 Ledger Intercompany balancing line Remainder of line 2 is balanced against line 3, which is the next largest credit amount 8 4 Ledger Intercompany balancing line Remainder of line 2 is balanced against line 3, which is the next largest credit amount 9 10 Ledger Intercompany balancing line Finally, line 1 is balanced against the remainder of line 3.

Example of Additional Intercompany Balancing and Clearing Options This topic provides examples of additional intercompany balancing and clearing options, the setup required, and the journal before and after balancing.

Additional Intercompany Balancing Segment Options In this scenario the enterprise has the second balancing segment and the third balancing segment enabled for its chart of accounts. Intercompany Transaction Type Select the type of transactions that are grouped together and are identified by the type of intercompany transaction. This option appears only for cross-ledger allocations. Use Suspense Account Not Applicable Post allocation transactions to the suspense account, if one exists.

Note: If you select to process cross-ledger allocations using the suspense account, Journal Import processes the allocation lines. Intercompany will evaluate the rules in the following order.

Primary balancing segment rules Legal entity level rules Ledger level rules Chart of accounts rules If there is no matching rule at the lower levels, then intercompany will use the chart of accounts rule.

Example In this scenario you choose to track your intercompany sales for the farming and textile companies separately from other intercompany activities.

Cross-Ledger Allocations Journals can be for a single ledger or multiple ledgers within a ledger set. Settings That Affect Allocations General Ledger Allocations For the Generate General Ledger Allocations process, set the parameters listed in the following table to create allocation journals: Parameter Description Rule or Rule set Select the rule or rule set to create allocation lines.

Post Allocations Select to automatically post allocation journals after they have been imported. Parameter Description Rule or Rule set Select the rule or rule set to create allocation calculations. Intercompany Transaction Type Select the transaction type to be used to create the intercompany transactions. Examples of Cross-Ledger Allocations You can process cross-ledger allocations by choosing to create them as general ledger journals or intercompany transactions. Intercompany Allocation Entries At month end the accountant allocates a portion of any centrally incurred expenses across all organization units that contribute to, or benefit from, that expenditure, based upon a calculation that represents a reasonable allocation of how that expense should be split.

Generate Intercompany Allocations Submit the Generate Intercompany Allocations process to create intercompany transactions. FAQs for Manage Intercompany Allocations How can I use social networking to discuss intercompany allocation adjustments with cost center owners? Here's how you use the social feature: Navigate to the Intercompany Transactions work area. Search for the intercompany transaction. Upload the allocation spreadsheet for them to review.

Related Topics What does social networking have to do with my job. Examples to Configure Intercompany Organizations Example of Intercompany Organization Configuration This topic provides examples of intercompany organizations with various options.

Note: The Intercompany module leverages the Invoicing and Customer features in Receivables to generate invoices for intercompany transactions. The Supplier feature in Procurement and the Payables Invoicing feature are leveraged to record the invoice in Payables. Intercompany Organization Configuration: Example In this example, Vision Corporation has two legal entities, Vision Operations legal entity and Vision Services legal entity which provide goods and services to each other. The following figure illustrates the Customer And Supplier assignments.

Primary Balancing Segment. Second Balancing Segment. Company CO. Cost Center CC. Product PROD. Account ACCT. Intercompany IC. Intercompany Balancing Line. Ledger Intercompany Balancing Line. Ledger Intercompany balancing line. Create and Book Sales Order:. Release the Order and Ship the Item.

Release and ship the order. Then notice the transaction status as 'Shipped' or 'Interfaced' on Shipping Transactions form as shown below. Run Workflow Background process. Responsibility: Vision Japan Inventory Responsibility. Responsibility: Vision Japan Receivables Responsibility.

Create Intercompany AR Invoice. Responsibility: Vision Operations Inventory Responsibility. Import Intercompany AR invoice. Invoice and recognize revenue based on hours worked by resources, and expenses incurred. The resources allowed on the contract are project manager, senior consultant, and junior consultant. To share revenue for the consultant from Paris, you must create an intercompany contract. Your corporate policy dictates that borrowed resources from different legal entities or business units receive 70 percent of the standard job bill rate.

The following table summarizes the setup of key contract and project features. Select an invoice method with a rate-based invoice method classification , and associate it with the contract lines. Enter the transfer price schedule on the bill plan.

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

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