Intercompany Invoicing

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Transcript of Intercompany Invoicing

What Accountants Should Know About Intercompany Invoicing

Oracle E-Business Suite:Coping with EBS Intercompany InvoicingEric Guethereguether@gmail.com

ObjectivesExplore intercompany (I/C) invoicing topics and issues not addressed in the Inventory Users GuideLearn tips for coping with I/C invoicing in areas of:ReconciliationSchedulingG/L DatingError DetectionValuation

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Presentation ScopeIn ScopeShipments to fulfill customer sales orders Loosely referred to as internal drop shipmentsSimple pricing of I/C invoices from price listsEBS 11i functionality; applicable to Release 12Out of ScopeStep-by-step configurationInternal Sales Order / Internal Req-specific scenariosGlobal Purchase Agreement-specific scenariosExternal Drop Shipments (EBS SO spawns a PO)Advanced Pricing to value intercompany invoices3

Intercompany Invoicing OverviewStandard functionality in EBS 11i and R12Produces 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 OUI/C Receivables (A/R) invoice in the shipping OUBill an internal customer, the selling OUI/C Payables (A/P) invoice in the selling OUPay an internal supplier, the shipping OU4

Classic Intercompany Invoicing Flow5

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

Typical Accounting for Classic I/C InvoicingStepEventOperating UnitTypical AccountingValued At1Order Entry / Booking: Japan OU Customer SO sourced from U.S. InventoryJapan SalesNo accounting transactionn/a2Product Shipment from U.S. Inventory directly to Japan Customer: Sales Order Issue / Issue From StoresU.S. MFGDr Cost of Goods Sold (COGS) Cr Finished Goods [Staging] InventoryNot an intercompany transactionStandard Cost3Generate Customer Invoice via AR AutoInvoiceJapan SalesDr Accounts Receivable Cr Sales RevenueNot an intercompany transactionSales Order Price4Create Intercompany A/R InvoiceU.S. MFGDr Intercompany Receivables Cr Intercompany SalesTransfer Price5Create Intercompany A/P InvoiceUse Account Generator WF to code the debit to Intercompany COGS if account default is inadequateJapan SalesDr [Intercompany] COGS Cr Intercompany PayablesTransfer Price6Receive Customer PaymentJapan SalesDr Cash Cr Accounts ReceivableNot an intercompany transactionSales Order Price7aRecord Payment Against Intercompany PayableJapan SalesDr Intercompany Payables Cr Cash [or I/C Netting acct.]Transfer Price7bReceive Payment for Intercompany Receivable [or record I/C netting]U.S. MFGDr Cash [or I/C Netting acct.] Cr Intercompany ReceivablesTransfer Price

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Intercompany Relation7

ReconciliationHow do you ensure the completeness of all intercompany Payables invoices?Each I/C Receivable should have matching I/C PayableNo reconciliation report provided in Oracle EBS8

Reconciliation: Discoverer Worksheet9

Tip # 1: Discoverer Worksheet Create a custom Discoverer worksheet for every existing intercompany relationUse a custom SQL script to query I/C A/R invoices and any matching I/C A/P invoicesSample script provided in white paper on My Oracle Support site or upon e-mail request10

Intercompany A/P Invoice NumberingPrior 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 uniquenessExample: I/C A/P invoice # 47391-32 created to match I/C A/R invoice # 47391The SQL script provided in the white paper can accommodate matching to A/P invoice #s with or without the suffix11

I/C Invoicing Concurrent ProgramsFour separate concurrent programs must run to produce I/C A/R and A/P invoices:Create Intercompany AR Invoices in the INV moduleAutoinvoice Master Program for Intercompany source in the Receivables moduleCreate Intercompany AP Invoices in the INV moduleExpense Report Import for Intercompany source in the Payables moduleThe 2nd, 3rd & 4th programs are dependent on predecessor12

Tip # 2: Daily SchedulingDont wait until month-end to generate a whole months worth of intercompany invoices!Schedule the four concurrent programs to run dailyReason: Errors can be detected & resolved more quickly through frequent scheduling13

Example of Daily Scheduling List14

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

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Header Description Parameter 16

Description on Imported Invoice17

Error DetectionRequest status does not necessarily indicate whether errors occurred with some recordsFor 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 rejectedDo not just monitor at month-end!Reason: Daily scheduling wont minimize issues at month-end if monitoring is only done at month-endPeople should be responsible for periodic monitoring errors with these scheduled requests18

Typical Detection MethodsCreate Intercompany AR InvoicesWarning request status indicates transaction errorsUser must review the log file to identify error messagesAutoinvoice Master ProgramRequest status will be Normal even if records error outReview the output file of spawned Autoinvoice Import Program request for rejected record countError records can be monitored by querying the RA_INTERFACE_ERRORS_ALL tableI/C autoinvoice errors are not so common19

Log File from Warning Request20

Typical Detection Methods [continued]Create Intercompany AP Invoices Request status will be Normal even if records error outUser must review the log file to identify error messagesContains separate counts for records selected, processed, and rejectedExpense Report ImportRequest status will be Normal even if records error outUser must review the output file to detect errors in the Exceptions Report section21

Tip # 4: Alert for Warning RequestsCreate an Oracle Alert to detect Create Intercompany AR Invoices requests that ended with a Warning statusSample alert script provided in white paper available upon e-mail requestCommon reason for Warning: Missing transfer priceFor example, log file will indicate APP-INV-05706: Warning: Cannot retrieve transfer price for the item LASER123. Warning: Cannot create invoice line22

Example of Oracle Alert E-Mail23

Scheduling Issue: Unique BatchIssue in EBS prior to release 11.5.8Payables invoice batch names must be unique within an operating unit if batch control is enabledBug 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 createdSubsequent runs will fail, because they will attempt to create the same batch nameResolved in release 11.5.8 and patch 3114322; request concatenates the batch_id to batch name24

G/L Dating Issue: Payables OptionsSetting GL Date Basis to System Date is appropriate for trade payables but not for intercompany payablesWould cause some I/C A/P invoices to have G/L dates different from their corresponding I/C A/R invoicesCould push an I/C A/P invoices G/L date into another G/L periodIf 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 Date25

G/L Date Basis Option in Selling OU26

No Solution Offered in EBSNeither 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 bugsBug 2359320 INCIAP INTERCOMPANY INVOICING PICKING UP WRONG DATEBug 3104204 AP INTERCOMPANY INVOICES HAVE A DIFFERENT GL DATE FROM AR INVOICES27

Unofficial Tip: Custom TriggersKeep the GL Date Basis set to System Date in the selling OU if desired for trade payablesAdd 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_ALLAP_INVOICE_DISTRIBUTIONS_ALLCustom triggers guarantee that the G/L dates of I/C A/P and A/R invoices matchAdd triggers at your own risk!28

Example of Custom Trigger for One Table29

PaymentsOracle EBS 11i offers no automation:For corporate netting of I/C A/R and A/P invoicesTo apply cash collections to I/C receivables when a payment is recorded against I/C A/P invoicesOne intercompany cash collection could be for hundreds or thousands of I/C A/R invoices depending on shipping volumes30

ValuationTwo methods for valuing intercompany invoices:Static price list in Order Mgmt. moduleAdvanced Pricing engine rules for more complexityStatic price list for an internal customer is defined within the customers bill-to location31

Price List Chosen for Customer Site32

Transfer Price List33

Basis for Selecting a Transfer PriceThe Create Intercompany AR Invoices request selects a transfer price based on which price is effective as of the system dateRequest run system date = I/C A/R inv. creation dateThe G/L date of the I/C invoice has no bearing on the transfer price selection34

Example of Transfer Price SelectionI/C A/R invoice for item LASER123G/L date: 01-APR-2007Invoice date: 01-APR-2007If this I/C A/R invoice were created on:01-APR-2007, it would be valued at the $1,320 price05-APR-2007, it would be valued at the $1,100 priceIssue: Some companies want the invoice to be priced at the