R12 Intercompany Flow

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R12 Intercompany Flow with Complete Setups and Functionality

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R12 Intercompany Flow

  1. 1. NCOAUG 2009 Intercompany Flow Ravi Sagaram
  2. 2. Agenda <ul><li>Introduction </li></ul><ul><li>Intercompany (IC) Shipping Flows </li></ul><ul><ul><li>2 OUs </li></ul></ul><ul><ul><li>3 OUs </li></ul></ul><ul><ul><li>IR ISO Process </li></ul></ul><ul><li>Intercompany (IC) Procurement Flows </li></ul><ul><ul><li>2 OUs </li></ul></ul><ul><ul><li>3 OUs </li></ul></ul><ul><li>Questions and Answers </li></ul>
  3. 3. Introduction <ul><li>It is quite common now a days for companies to do business globally taking the advantage of cost, operations, tax benefits etc. These companies use Multiple Orgs and Multiple OUs for their operations. </li></ul><ul><li>When one OU offers goods to another OU, it may call for intercompany transaction flow. The financial ownership in these cases may not follow the physical flow of the goods. </li></ul><ul><li>Intercompany transaction flow establishes relationship between the physical flow of the goods and the financial flow </li></ul>
  4. 4. Introduction Cont… <ul><li>Oracle applications provides mainly 2 types of intercompany transaction flows. </li></ul><ul><ul><li>Shipping Flow </li></ul></ul><ul><ul><li>Procurement Flow </li></ul></ul><ul><li>In the shipping flow, intercompany flow is generated automatically when the booking OU is different from the shipping OU. </li></ul><ul><li>In the procurement flow, Intercompany flow is generated automatically when the purchasing OU is different from the receiving OU </li></ul><ul><li>Intercompany Invoicing is generated automatically by the system in the above cases </li></ul>
  5. 5. Inter Company Shipping Flow <ul><li>INTERCOMPANY SHIPPING FLOW </li></ul>
  6. 6. Inter Company Shipping Flow <ul><li>Intercompany Transaction flow for shipping is triggered when the Booking OU of a sales order is different from the shipping OU </li></ul><ul><li>Booking OU books sales orders. The shipping OU ships goods to the customers directly. </li></ul><ul><li>The Shipping OU records an Intercompany AR Invoice against the Selling OU at the transfer price. </li></ul><ul><li>The Selling OU records Intercompany AP invoice for the payment. </li></ul><ul><li>These two invoices are recorded by the system using the intercompany transaction flow </li></ul>
  7. 7. Inter Company Shipping Flow Sample Org Structure used in the examples Set of Books Legal Entity Operating Unit Inventory Org 1.2.3….
  8. 8. Inter Company Shipping Flow India Booking OU China Shipping OU <ul><li>Flow with 2 OUs </li></ul><ul><li>Order is Booked in one OU </li></ul><ul><li>It is shipped out of a different OU </li></ul>
  9. 9. Inter Company Shipping Flow India Booking OU US OU China Shipping OU <ul><li>Flow with 3 OUs </li></ul><ul><li>Order is Booked in one OU </li></ul><ul><li>It is shipped out of a different OU </li></ul><ul><li>There is a financial OU in between these two OUs </li></ul>
  10. 10. Inter Company Shipping Flow with 2 OUs <ul><li>Material Transactions Flow with 2 OUs </li></ul>US Booking OU China Shipping OU Customer Physical Sales Order Issue Logical Sales Order Issue Logical IC Sales Issue Logical IC Shipment Receipt
  11. 11. Inter Company Shipping Flow with 3 OUs <ul><li>Material Transactions Flow with 3 OUs </li></ul>India Booking OU China Shipping OU Customer Physical Sales Order Issue Logical Sales Order Issue Logical IC Sales Issue US Intermediate OU Logical IC Sales Issue Logical IC Shipment Receipt Logical IC Shipment Receipt
  12. 12. Inter Company Shipping Flow Logical Material Transactions <ul><li>Logical Material Transactions with 2 OUs </li></ul>
  13. 13. Inter Company Shipping Flow Financial Flow with 2 OUs <ul><li>Financial Flow with 2 OUs </li></ul>US Booking OU China Shipping OU Customer IC AR in China OU against US OU @ Tr Price IC AP in US OU against China OU @ Tr Price AR invoice to Customer
  14. 14. Inter Company Shipping Flow Financial Flow with 3 OUs <ul><li>Financial Flow with 3 OUs </li></ul>India Booking OU China Shipping OU Customer IC AR in China OU on US OU @ Tr Price IC AP in US OU on China OU @ Tr Price AR invoice to Customer US Financial OU IC AR in US OU on India OU @Tr Price IC AP in India OU on US OU @ Tr Price
  15. 15. Inter Company Shipping Flow– Transfer Price India Booking Org China Shipping Org IC Trxs flow between China and US OUs @$110 (transfer price) Cost = $100 Markup = $10 Transfer Price = $110 Cost = $110 Customer Price = $120 Transfer Price with 2 OUs
  16. 16. Inter Company Shipping Flow – Transfer Price India Booking Org US China Shipping Org IC Trxs flow between China and US @ $110 IC Trxs flow between US and India @ $120 Cost = $100 Markup = $10 Transfer Price = $110 Cost = $110 Markup = $10 Transfer Price = $120 Cost = $120 Customer Price = $130 Transfer Price with 3 OUs
  17. 17. Inter Company Shipping Flow Financial Transactions OU-USA Financial OU IC Accrual 110 IC COGS 110 Inventory 110 OU-India Booking OU Inventory $110 Clearing $110 OU China Shipping OU IC COGS($100) Inventory $100 DR CR IC Receivables $110 IC Revenue) $110 IC Payable $110 IC Rec 120 IC Rev 120 Inventory 120 Clearing $120 COGS $120 Inventory $120 IC Accrual $120 IC Payable $120 Rec $130 Rev $130 DR DR CR CR 1 2 1 1 3 4 1 1 5 6 <ul><li>Logical IC Issue in China OU + Logical IC receipt in US + Logical IC issue in US to India OU + Logical Receipt in India OU + Logical Issue to Customer </li></ul>2) Auto Invoice in OU China 3) Import AP Invoice in US OU 4) Run Auto Invoice in US OU 5) Import AP Invoice in India OU 6) Run Auto Invoice in India OU
  18. 18. Inter Company Shipping Flow – Transfer Price <ul><li>Transfer Price Logic </li></ul><ul><li>Use External API </li></ul><ul><li>Use Advanced Pricing </li></ul><ul><li>Use Static Price List attached to the ‘Bill To’ customer or Customer Site </li></ul>
  19. 19. Inter Company Shipping Flow Transfer Price External API CREATE OR REPLACE package body MTL_INTERCOMPANY_INVOICES as /* $Header: INVICIVB.pls 120.2 2006/03/29 05:41:10 sbitra noship $ */ function get_transfer_price (I_transaction_id in number, I_price_list_id in number, I_sell_ou_id in number, I_ship_ou_id in number, O_currency_code out NOCOPY varchar2, x_return_status OUT NOCOPY VARCHAR2, x_msg_count OUT NOCOPY NUMBER, x_msg_data OUT NOCOPY VARCHAR2, I_order_line_id IN NUMBER default null) return number is l_transfer_price number := 0; begin O_currency_code := null; x_return_status := FND_API.G_RET_STS_SUCCESS; x_msg_count := 0; x_msg_data := null; if (I_ship_ou_id = 81 and I_sell_ou_id = 147) then begin select nvl(unit_selling_price,0) * 4 into l_transfer_price from oe_order_lines_all where line_id = I_order_line_id; exception when others then null; end; end if; if l_transfer_price <> 0 then O_currency_code := 'USD'; return(l_transfer_price); else return (NULL); end if; exception when others then raise; end get_transfer_price; <ul><li>API MTL_INTERCOMPANY_INVOICES.GET_TRANSFER_PRICE </li></ul><ul><li>If the external API returns value greater > 0 for the transfer Price, then the value returned by the API is used for the transfer price </li></ul><ul><li>If the return value is 0 or null, then the system will ignore this value and look for other conditions to get the transfer price </li></ul><ul><li>You can use this API to easily plug in variable transfer price like cost + x% or based on customer selling price etc. This is a very powerful API and can be used easily without much customization. </li></ul>
  20. 20. Inter Company Shipping Flow Transfer Price Advanced Pricing <ul><li>Profile ‘INV: Advanced Pricing for Intercompany Invoice’ decides the usage of advanced pricing </li></ul><ul><li>Set the profile to ‘Yes’ in the from OU for using the advanced pricing </li></ul><ul><li>If the profile is set to No, then the system will use the static price from the price list associated with the Bill to Address of the IC Customer </li></ul><ul><li>In the advanced pricing, use the qualifiers for the system to figure out the price list to be used. </li></ul>
  21. 21. Inter Company Shipping Flow Setups <ul><li>Setup Intercompany Transaction Flow for shipping </li></ul><ul><li>Inventory  Setup  Organizations  Intercompany Transaction Flow </li></ul><ul><li>In the Shipping Flow, Start OU represents the shipping Org and end OU represents the Booking OU. </li></ul><ul><li>Advanced accounting has to be checked for creating logical transactions and IC invoices and for defining more than one node in the shipping flow. Without advanced accounting checked, we can create IC flow only between 2 OUs. </li></ul><ul><li>An inventory Organization should be defined and associated with all the OUs in the nodes even if there is no physical flow of inventory. This is to create logical inventory transactions </li></ul>
  22. 22. Inter Company Transaction Flow -- Setup <ul><li>In the Intercompany relations, specify the IC AR invoice customer, invoice type, IC COGS A/C and Currency Code. Similarly specify the IC AP supplier, supplier site, Inventory Accrual AC and Expense Accrual Account </li></ul><ul><li>The currency for the IC invoices can be of the </li></ul><ul><ul><li>To operating unit, </li></ul></ul><ul><ul><li>or from OU </li></ul></ul><ul><ul><li>or order currency </li></ul></ul>
  23. 23. Inter Company Shipping Flow with IRISO Hongkong OU IR US OU ISO Shipping OU <ul><li>IR ISO Process </li></ul><ul><li>System is designed only for 2 OUs in IR ISO Process </li></ul><ul><li>The transfer type in the shipping networks should be setup to Intransit to enable the intercompany invoicing for IR ISO process </li></ul><ul><li>Also the Internal Order Required Option should be checked in the shipping networks to enable the intercompany flow for the IRISO Process </li></ul>
  24. 24. Inter Company Shipping Flow with 2 OUs Process Flow From Payables responsibility of the Selling OU, run the ‘Create Intercompany AP Invoices’ 6 Then run the program ‘Payables Open Interface Import’ from Payables responsibility. This will create IC AP Invoices in the selling OU. 7 Ship Sales Order 2 On successful completion of the above program, run the ‘Auto Invoice Master Program’ from the receivables responsibility. This will create IC AR Invoice 5 From the receivables responsibility, run the program ‘Create Intercompany AR Invoices’. This will create records in the auto invoice interface tables 4 Run the Material Transaction Manager and Cost Manager 3 Book Sales Order 1 Shipping OU Selling OU Step#
  25. 25. Inter Company Shipping Flow with 3 OUs Process Flow From the receivables responsibility, run the program ‘Create Intercompany AR Invoices’. This will create records in the auto invoice interface tables 8 From Payables responsibility of the Selling OU, run the ‘Create Intercompany AP Invoices’. 10 On successful completion of the above program, run the ‘Auto Invoice Master Program’ from the receivables responsibility. This will create IC AR Invoice 9 Then run the program ‘Payables Open Interface Import’ from Payables responsibility. This will create IC AP Invoices in the intermediate OU. 7 From Payables responsibility of the intermediate OU, run the ‘Create Intercompany AP Invoices’. Intermediate OU 6 Then run the program ‘Payables Open Interface Import’ from Payables responsibility. This will create IC AP Invoices in the selling OU. 11 Ship Sales Order 2 On successful completion of the above program, run the ‘Auto Invoice Master Program’ from the receivables responsibility. This will create IC AR Invoice 5 From the receivables responsibility, run the program ‘Create Intercompany AR Invoices’. This will create records in the auto invoice interface tables 4 Run the Material Transaction Manager and Cost Manager 3 Book Sales Order 1 Shipping OU Selling OU
  26. 26. Inter Company Shipping Flow Programs for creation of IC AR invoices Parameters for the program ‘Create Intercompany Invoices’ Parameters for Auto Invoice
  27. 27. Inter Company Shipping Flow Programs for creation of IC AP invoices <ul><li>Parameters for ‘Create Intercompany AP Invoices’ </li></ul><ul><li>Parameters for ‘Payables Open Interface Import’ </li></ul>
  28. 28. Intercompany Procurement Flow <ul><li>INTERCOMPANY PROCUREMENT FLOW </li></ul>
  29. 29. Inter Company Procurement Flow <ul><li>Purchase Order is Booked in one OU and Goods are received in a different OU with an Intermediate OU for accounting. </li></ul>US Purchasing OU Hongkong OU China Shipping OU IC Trxs flow between China and HK OUs @transfer price IC Trxs flow between US and HK OUs @transfer price Supplier US Places PO On Supplier Goods shipped to China OU directly Supplier sends Invoice to US OU
  30. 30. Inter Company Procurement Flow Financial Flow with 3 OUs <ul><li>Material Flow with 3 OUs </li></ul>US Purchasing OU China Receiving OU Supplier Logical Receipt of goods Logical Issue of goods PO is raised On the Supplier Hongkong Intermediate OU Logical Receipt of goods Logical Issue of goods Supplier ships The Goods Logical Receipt of goods
  31. 31. Inter Company Procurement Flow Financial Flow with 3 OUs <ul><li>Financial Flow with 3 OUs </li></ul>US Purchasing OU China Receiving OU Supplier IC AP in China OU on HK OU @ PO/Tr Price IC AR in HK OU on China OU @ PO/Tr Price PO is raised On the Supplier Hongkong Intermediate OU IC AP in HK OU on US OU @PO/Tr Price IC AR in US OU on HK OU @ PO/Tr Price Supplier ships The Goods AP Invoice In US OU On Supplier
  32. 32. Inter Company Procurement Flow Setups <ul><li>Procurement Flow Setup (Intercompany Transaction Flow) </li></ul><ul><li>Navigation Inventory  Setup  Organizations  Intercompany Transaction Flow </li></ul><ul><li>The Start OU is the Receiving OU </li></ul><ul><li>The End OU is the Procuring OU </li></ul><ul><li>Pricing Options are at PO price or transfer Price </li></ul><ul><li>Check the Advanced Accounting for generating IC transactions Flow even for one node. </li></ul>
  33. 33. Inter Company Procurement Flow Setups <ul><li>You can define Multiple nodes </li></ul><ul><li>For each OU pair in a node, you can define the AR invoice details and AP invoice details </li></ul><ul><li>The Currency code can be of from OU, or to OU or can be of currency of PO </li></ul>
  34. 34. Questions and answers <ul><li>Questions and Answers </li></ul>
  35. 35. Contact Information <ul><li>Ravi Sagaram </li></ul><ul><li>[email_address] </li></ul><ul><li>[email_address] </li></ul><ul><li>630-849-9888 mobile </li></ul>

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