Oracle EBS: Intercompany Invoicing

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Oracle EBS ERP user group presentation. Originally presented in April 2007 at the COLLABORATE 07 conference in Las Vegas. Addresses EBS 11i but relevant to R12!

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  • Oracle EBS Tutorial (Videos and Books) $19 http://www.dbmanagement.info/Tutorials/Oracle_EBS.htm
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  • http://www.dbmanagement.info/Tutorials/Oracle_EBS.htm
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  • Thanks for posting. very usefull document. Can you please send the query to match AR/AP Invoice for 11i (11.5.10.2) to sheshagiri.rao12@gmail.com
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  • very useful and thank you for sharing!
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  • very useful.... Thanks for sharing.

    Need help about the error that you mentioned in this presentation. I am getting the similar error
    APP-INV-05706: Warning: Cannot retrieve transfer price for the item
    Would like to know what needs to be done to resolve it. I would certainly appreciate your help.
    I am setting up intercompany for the first time.....
    Regards,
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Oracle EBS: Intercompany Invoicing

  1. 1. Oracle E-Business Suite:<br />Coping with EBS Intercompany Invoicing<br />Eric Guether<br />eguether@gmail.com<br />
  2. 2. Objectives<br />Explore intercompany (I/C) invoicing topics and issues not addressed in the Inventory User’s Guide<br />Learn tips for coping with I/C invoicing in areas of:<br />Reconciliation<br />Scheduling<br />G/L Dating<br />Error Detection<br />Valuation<br />2<br />
  3. 3. Presentation Scope<br />In Scope<br />Shipments to fulfill customer sales orders <br />Loosely referred to as “internal drop shipments”<br />Simple pricing of I/C invoices from price lists<br />EBS 11i functionality; applicable to Release 12<br />Out of Scope<br />Step-by-step configuration<br />Internal Sales Order / Internal Req-specific scenarios<br />Global Purchase Agreement-specific scenarios<br />“External” Drop Shipments (EBS SO spawns a PO)<br />Advanced Pricing to value intercompany invoices<br />3<br />
  4. 4. Intercompany Invoicing Overview<br />Standard functionality in EBS 11i and R12<br />Produces intercompany invoices for “internal” drop shipments when SOs are sourced across operating units (OUs):<br />SO entered in a selling (OU)<br />Shipment for SO is sourced from an org linked to a different OU, the shipping OU<br />I/C Receivables (A/R) invoice in the shipping OU<br />Bill an internal customer, the selling OU<br />I/C Payables (A/P) invoice in the selling OU<br />Pay an internal supplier, the shipping OU<br />4<br />
  5. 5. Classic Intercompany Invoicing Flow<br />Note: Child not created until Parent record has been Transacted and Costed<br />5<br />
  6. 6. Typical Accounting for Classic I/C Invoicing<br />6<br />
  7. 7. Intercompany Relation<br />7<br />
  8. 8. Reconciliation<br />How do you ensure the completeness of all intercompany Payables invoices?<br />Each I/C Receivable should have matching I/C Payable<br />No reconciliation report provided in Oracle EBS<br />8<br />
  9. 9. Reconciliation: Discoverer Worksheet<br />9<br />
  10. 10. Tip # 1: Discoverer Worksheet <br />Create a custom Discoverer worksheet for every existing intercompany relation<br />Use a custom SQL script to query I/C A/R invoices and any matching I/C A/P invoices<br />Sample script provided in white paper on My Oracle Support site or upon e-mail request<br />10<br />
  11. 11. Intercompany A/P Invoice Numbering<br />Prior to release 11.5.9, the I/C A/P invoice # equaled the I/C A/R invoice #<br />Starting in 11.5.9, the A/P invoice # has a suffix (dash + shipping OU’s org ID) to ensure uniqueness<br />Example: I/C A/P invoice # 47391-32 created to match I/C A/R invoice # 47391<br />The SQL script provided in the white paper can accommodate matching to A/P invoice #s with or without the suffix<br />11<br />
  12. 12. I/C Invoicing Concurrent Programs<br />Four separate concurrent programs must run to produce I/C A/R and A/P invoices:<br />“Create Intercompany AR Invoices” in the INV module<br />“Autoinvoice Master Program” for Intercompany source in the Receivables module<br />“Create Intercompany AP Invoices” in the INV module<br />“Expense Report Import” for Intercompany source in the Payables module<br />The 2nd, 3rd & 4th programs are dependent on predecessor<br />12<br />
  13. 13. Tip # 2: Daily Scheduling<br />Don’t wait until month-end to generate a whole month’s worth of intercompany invoices!<br />Schedule the four concurrent programs to run daily<br />Reason: Errors can be detected & resolved more quickly through frequent scheduling<br />13<br />
  14. 14. Example of Daily Scheduling List<br />14<br />
  15. 15. Tip # 3: Meaningful Description<br />Use meaningful Header Description values when submitting the “Create Intercompany AR Invoices” or “Create Intercompany AP Invoices” programs<br />Reason: Parameter value becomes the invoice description<br />15<br />
  16. 16. Header Description Parameter <br />16<br />
  17. 17. Description on Imported Invoice<br />17<br />
  18. 18. Error Detection<br />Request status does not necessarily indicate whether errors occurred with some records<br />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<br />Do not just monitor at month-end!<br />Reason: Daily scheduling won’t minimize issues at month-end if monitoring is only done at month-end<br />People should be responsible for periodic monitoring errors with these scheduled requests<br />18<br />
  19. 19. Typical Detection Methods<br />“Create Intercompany AR Invoices”<br />Warning request status indicates transaction errors<br />User must review the log file to identify error messages<br />“Autoinvoice Master Program”<br />Request status will be Normal even if records error out<br />Review the output file of spawned Autoinvoice Import Program request for rejected record count<br />Error records can be monitored by querying the RA_INTERFACE_ERRORS_ALL table<br />I/C autoinvoice errors are not so common<br />19<br />
  20. 20. Log File from Warning Request<br />20<br />
  21. 21. Typical Detection Methods [continued]<br />“Create Intercompany AP Invoices”<br />Request status will be Normal even if records error out<br />User must review the log file to identify error messages<br />Contains separate counts for records selected, processed, and rejected<br />“Expense Report Import”<br />Request status will be Normal even if records error out<br />User must review the output file to detect errors in the Exceptions Report section<br />21<br />
  22. 22. Tip # 4: Alert for Warning Requests<br />Create an Oracle Alert to detect “Create Intercompany AR Invoices” requests that ended with a Warning status<br />Sample alert script provided in white paper available upon e-mail request<br />Common reason for Warning: Missing transfer price<br />For example, log file will indicate “APP-INV-05706: Warning: Cannot retrieve transfer price for the item LASER123. Warning: Cannot create invoice line”<br />22<br />
  23. 23. Example of Oracle Alert E-Mail<br />23<br />
  24. 24. Scheduling Issue: Unique Batch<br />Issue in EBS prior to release 11.5.8<br />Payables invoice batch names must be unique within an operating unit if batch control is enabled<br />Bug 2366334: If an “Expense Report Import” request is scheduled to run repeatedly, each submission will have the same batch name parameter value (won’t be unique)<br />A/P batch from 1st request run will be created<br />Subsequent runs will fail, because they will attempt to create the same batch name<br />Resolved in release 11.5.8 and patch 3114322; request concatenates the batch_id to batch name<br />24<br />
  25. 25. G/L Dating Issue: Payables Options<br />Setting GL Date Basis to System Date is appropriate for trade payables but not for intercompany payables<br />Would cause some I/C A/P invoices to have G/L dates different from their corresponding I/C A/R invoices<br />Could push an I/C A/P invoice’s G/L date into another G/L period<br />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 Invoice<br />I/C A/P Invoice’s G/L Date =<br />I/C A/P Invoice’s Invoice Date =<br />I/C A/R Invoice’s Invoice Date =<br />I/C A/R Invoice’s G/L Date<br />25<br />
  26. 26. G/L Date Basis Option in Selling OU<br />26<br />
  27. 27. No Solution Offered in EBS<br />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]<br />Issue raised in numerous Oracle Support bugs<br />Bug 2359320 – INCIAP INTERCOMPANY INVOICING PICKING UP WRONG DATE<br />Bug 3104204 – AP INTERCOMPANY INVOICES HAVE A DIFFERENT GL DATE FROM AR INVOICES<br />27<br />
  28. 28. Unofficial Tip: Custom Triggers<br />Keep the GL Date Basis set to System Date in the selling OU if desired for trade payables<br />Add custom triggers to two Payables tables to override the A/P invoice’s G/L date [only for intercompany invoices!], inserting its invoice date value:<br />AP_INVOICES_ALL<br />AP_INVOICE_DISTRIBUTIONS_ALL<br />Custom triggers guarantee that the G/L dates of I/C A/P and A/R invoices match<br />Add triggers at your own risk!<br />28<br />
  29. 29. Example of Custom Trigger for One Table<br />29<br />
  30. 30. Payments<br />Oracle EBS 11i offers no automation:<br />For corporate netting of I/C A/R and A/P invoices<br />To apply cash collections to I/C receivables when a payment is recorded against I/C A/P invoices<br />One intercompany cash collection could be for hundreds or thousands of I/C A/R invoices depending on shipping volumes<br />30<br />
  31. 31. Valuation<br />Two methods for valuing intercompany invoices:<br />Static price list in Order Mgmt. module<br />Advanced Pricing engine rules for more complexity<br />Static price list for an internal customer is defined within the customer’s bill-to location<br />31<br />
  32. 32. Price List Chosen for Customer Site<br />32<br />
  33. 33. Transfer Price List<br />33<br />
  34. 34. Basis for Selecting a Transfer Price<br />The “Create Intercompany AR Invoices” request selects a transfer price based on which price is effective as of the system date<br />Request run system date = I/C A/R inv. creation date<br />The G/L date of the I/C invoice has no bearing on the transfer price selection<br />34<br />
  35. 35. Example of Transfer Price Selection<br />I/C A/R invoice for item LASER123<br />G/L date: 01-APR-2007<br />Invoice date: 01-APR-2007<br />If this I/C A/R invoice were created on:<br />01-APR-2007, it would be valued at the $1,320 price<br />05-APR-2007, it would be valued at the $1,100 price<br />Issue: Some companies want the invoice to be priced at the new price ($1,100) based on the G/L date regardless of the invoice creation date<br />35<br />
  36. 36. Potential Valuation Issue<br />Dilemma: How do you ensure that intercompany invoices with G/L date in:<br />March 2007 are valued at the old transfer prices?<br />April 2007 are be valued at the new prices?<br />36<br />
  37. 37. Tip # 5: Control the Valuation Cutoff<br />Use the Cost Cutoff Date (CCD) functionality in EBS Inventory to indirectly control the I/C invoice valuation cutoff<br />Introduced in EBS release 11.5.7<br />Controlled by one simple Inventory parameter date<br />Defers the costing of any MTL transactions in the org with G/L date on or after the cost cutoff date value<br />37<br />
  38. 38. Inventory Org Parameter: Cost Cutoff Date <br />38<br />
  39. 39. CCD Impact on I/C Invoice Valuation<br />Set CCD to 01-APR-2007 to defer the costing of April-dated shipments until perhaps April 6th<br />I/C invoices for April-dated shipments will not be created & valued so long as their ‘Sales Order Issue’ shipment transactions remain uncosted<br />The cost cutoff date indirectly defers I/C A/R invoice creation through the Parent-Child dependency<br />Deferring the I/C invoice creation also postpones the transfer price selection<br />39<br />
  40. 40. Cost Cutoff Date Impact on a SO Issue<br />40<br />
  41. 41. Additional Resources<br />I/C Invoicing for Internal Reqs / Internal Orders: Han Kolbe presentation [2006 NorCal OAUG Seminar on Intercompany Transactions]<br />COGS Account Generator for I/C Payables: John Peters presentation [2006 NorCal OAUG Seminar on Intercompany Transactions]<br />“Overview of Intercompany Invoicing” Oracle white paper by Sharma Manda[Oracle Support doc # 336129.1]<br />“Internal Drop-Shipping: Multi-Org Inter-company Invoicing in 11.5.10” by David S. McCurry [OAUG COL’06 white paper presentation]<br />“Multiple Organizations in Oracle Applications” Oracle white paper, Appendix B – “Using The Account Generator to Generate the Intercompany COGS Account” [Oracle Support doc # 226456.1]<br />“11i Cost Cutoff Date to Retroactively Cost Transactions” by Eric Guether [NorCal OAUG 2007 Training Day presentation and Oracle Support doc # 432515.1 ]<br />41<br />
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