Inter Company Invoicing

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Oracle E-Business Suite: Coping with EBS Intercompany Invoicing

Objectives Explore intercompany (I/C) invoicing topics and issues not addressed in the Inventory Users Guide Learn tips for coping with I/C invoicing in areas of: Reconciliation Scheduling G/L Dating Error Detection Valuation

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Presentation Scope In Scope Shipments to fulfill customer sales orders Loosely referred to as internal drop shipments Simple pricing of I/C invoices from price lists EBS 11i functionality; applicable to Release 12

Out of Scope Step-by-step configuration Internal Sales Order / Internal Req-specific scenarios Global Purchase Agreement-specific scenarios External Drop Shipments (EBS SO spawns a PO) Advanced Pricing to value intercompany invoices

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Intercompany Invoicing Overview Standard functionality in EBS 11i and R12 Produces intercompany invoices for internal drop shipments when SOs are sourced across operating units (OUs): SO entered in a selling (OU) Shipment for SO is sourced from an org linked to a different OU, the shipping OU

I/C Receivables (A/R) invoice in the shipping OU Bill an internal customer, the selling OU

I/C Payables (A/P) invoice in the selling OU Pay an internal supplier, the shipping OU

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Classic Intercompany Invoicing Flow

Note: Child not created until Parent record has been Transacted and Costed

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Typical Accounting for Classic I/C InvoicingStep 1 2 Event Order Entry / Booking: Japan OU Customer SO sourced from U.S. Inventory Product Shipment from U.S. Inventory directly to Japan Customer: Sales Order Issue / Issue From Stores Operating Unit Japan Sales U.S. MFG Typical Accounting No accounting transaction Dr Cost of Goods Sold (COGS) Cr Finished Goods [Staging] Inventory Not an intercompany transaction Dr Accounts Receivable Cr Sales Revenue Not an intercompany transaction Dr Dr Intercompany Receivables Cr Intercompany Sales [Intercompany] COGS Cr Intercompany Payables Valued At n/a Standard Cost

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Generate Customer Invoice via AR AutoInvoice

Japan Sales

Sales Order Price Transfer Price Transfer Price Sales Order Price Transfer Price Transfer Price

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Create Intercompany A/R Invoice Create Intercompany A/P InvoiceUse Account Generator WF to code the debit to Intercompany COGS if account default is inadequate

U.S. MFG Japan Sales Japan Sales

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Receive Customer Payment

Dr

Cash Cr Accounts Receivable Not an intercompany transaction Dr Dr Intercompany Payables Cr Cash [or I/C Netting acct.] Cash [or I/C Netting acct.] Cr Intercompany Receivables

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Record Payment Against Intercompany Payable Receive Payment for Intercompany Receivable [or record I/C netting]

Japan Sales U.S. MFG

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Intercompany Relation

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Reconciliation How do you ensure the completeness of all intercompany Payables invoices? Each I/C Receivable should have matching I/C Payable

No reconciliation report provided in Oracle EBS

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Reconciliation: Discoverer Worksheet

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Tip # 1: Discoverer Worksheet Create a custom Discoverer worksheet for every existing intercompany relation Use a custom SQL script to query I/C A/R invoices and any matching I/C A/P invoices Sample script provided in white paper on My Oracle Support site or upon e-mail request

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Intercompany A/P Invoice Numbering Prior to release 11.5.9, the I/C A/P invoice # equaled the I/C A/R invoice # Starting in 11.5.9, the A/P invoice # has a suffix (dash + shipping OUs org ID) to ensure uniqueness Example: I/C A/P invoice # 47391-32 created to match I/C A/R invoice # 47391

The SQL script provided in the white paper can accommodate matching to A/P invoice #s with or without the suffix

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I/C Invoicing Concurrent Programs Four separate concurrent programs must run to produce I/C A/R and A/P invoices:1) Create Intercompany AR Invoices in the INV module 2) Autoinvoice Master Program for Intercompany source in the Receivables module 3) Create Intercompany AP Invoices in the INV module 4) Expense Report Import for Intercompany source in the Payables module

The 2nd, 3rd & 4th programs are dependent on predecessor

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Tip # 2: Daily Scheduling Dont wait until month-end to generate a whole months worth of intercompany invoices! Schedule the four concurrent programs to run daily Reason: Errors can be detected & resolved more quickly through frequent scheduling

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Example of Daily Scheduling List

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Tip # 3: Meaningful Description Use meaningful Header Description values when submitting the Create Intercompany AR Invoices or Create Intercompany AP Invoices programs Reason: Parameter value becomes the invoice description

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Header Description Parameter

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Description on Imported Invoice

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Error Detection Request status does not necessarily indicate whether errors occurred with some records For 3 of the 4 concurrent programs (except Create Intercompany AR Invoices), the request status will be Normal even if the output or log file indicates some records were rejected

Do not just monitor at month-end! Reason: Daily scheduling wont minimize issues at month-end if monitoring is only done at month-end People should be responsible for periodic monitoring errors with these scheduled requests

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Typical Detection Methods Create Intercompany AR Invoices Warning request status indicates transaction errors User must review the log file to identify error messages

Autoinvoice Master Program Request status will be Normal even if records error out Review the output file of spawned Autoinvoice Import Program request for rejected record count Error records can be monitored by querying the RA_INTERFACE_ERRORS_ALL table I/C autoinvoice errors are not so common

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Log File from Warning Request

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Typical Detection Methods [continued] Create Intercompany AP Invoices Request status will be Normal even if records error out User must review the log file to identify error messages Contains separate counts for records selected, processed, and rejected

Expense Report Import Request status will be Normal even if records error out User must review the output file to detect errors in the Exceptions Report section

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Tip # 4: Alert for Warning Requests Create an Oracle Alert to detect Create Intercompany AR Invoices requests that ended with a Warning status Sample alert script provided in white paper available upon e-mail request

Common reason for Warning: Missing transfer price For example, log file will indicate APP-INV-05706: Warning: Cannot retrieve transfer price for the item LASER123. Warning: Cannot create invoice line

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Example of Oracle Alert E-Mail

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Scheduling Issue: Unique Batch Issue in EBS prior to release 11.5.8 Payables invoice batch names must be unique within an operating unit if batch control is enabled Bug 2366334: If an Expense Report Import request is scheduled to run repeatedly, each submission will have the same batch name parameter value (wont be unique) A/P batch from 1st request run will be created Subsequent runs will fail, because they will attempt to create the same batch name

Resolved in release 11.5.8 and patch 3114322; request concatenates the batch_id to batch name24

G/L Dating Issue: Payables Options Setting GL Date Basis to System Date is appropriate for trade payables but not for intercompany payables Would cause some I/C A/P invoices to have G/L dates different from their corresponding I/C A/R invoices Could push an I/C A/P invoices G/L date into another G/L period

If GL Date Basis for I/C A/P invoices were set to Invoice Date, then their G/L Date would always match the G/L Date of their I/C A/R InvoiceI/C A/P Invoices G/L Date =

I/C A/P Invoices Invoice Date =I/C A/R Invoices Invoice Date = I/C A/R Invoices G/L Date

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G/L Date Basis Option in Selling OU

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No Solution Offered in EBS Neither EBS 11i or R12 offer a way to vary the GL Date Basis of A/P invoices based on source type [Intercompany vs. non-Intercompany] Issue raised in numerous Oracle Support bugs Bug 2359320 INCIAP INTERCOMPANY INVOICING PICKING UP WRONG DATE Bug 3104204 AP INTERCOMPANY INVOICES HAVE A DIFFERENT GL DATE FROM AR INVOICES

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Unofficial Tip: Custom Triggers Keep the GL Date Basis set to System Date in the selling OU if desired for trade payables Add custom triggers to two Payables tables to override the A/P invoices G/L date [only for intercompany invoices!], inserting its invoice date value: AP_INVOICES_ALL AP_INVOICE_DISTRIBUTIONS_ALL

Custom triggers guarantee that the G/L dates of I/C A/P and A/R invoices match Add triggers at your own risk!

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Example of Custom Trigger for One Table

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Payments Oracle EBS 11i offers no automation: For corporate netting of I/C A/R and A/P invoices To apply cash collections to I/C receivables when a payment is recorded against I/C A/P invoices

One intercompany cash collection could be for hundreds or thousands of I/C A/R invoices depending on shipping volumes

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Valuation Two methods for valuing intercompany invoices: Static price list in Order Mgmt. module Advanced Pricing engine rules for more complexity

Static price list for an internal customer is defined within the customers bill-to location

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Price List Chosen for Customer Site

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Transfer Price List

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Basis for Selecting a Transfer Price The Create Intercompany AR Invoices request selects a transfer price based on which