2.1. Intercompany Invoicing Cycle
When a sales order is entered in an operating unit, and if the shipping warehouse is part of a separate operating unit (may also belong to another SOB), then the goods can be shipped from the said shipping organization and the selling organization generates a customer invoice. Also the system automatically records an intercompany sale between the shipping organization and the selling organization by generating intercompany invoices. This is called Intercompany invoicing.
After entering the order in Selling operating unit, you can pick release and ship confirm the order from Shipping Operating unit. Then the following programs need to be run to ensure necessary Intercompany invoices are created ..
- Launch the Cost Manager in Inventory > Setup > Transactions > Interface Managers. If it is not active then go to Tools and Launch Manager. Intercompany Invoices will not be generated unless this manager is active.
- In Shipping OU run ‘Create Intercompany AR Invoices’. Ensure that the items shipped have a price for ‘Internal Price List’.
- In Shipping OU run ‘Receivables AutoInvoice Program’
- In Selling OU run ‘Create Intercompany AP Invoices’. Ensure that the conversion rates between the functional currencies of above SOBs exist for the current date and GL period is open in both OUs.
- In selling OU run ‘Expense Report Import’ (Payables)
2.1.1. Transaction Steps
Create an Order in ‘Vision Operations’ OU and schedule it from D1 warehouse under ‘Singapore Distribution Centre’ OU as ..
After Pick release and shipconfirm the order, the delivery associated with the line is closed as ..
- The Create Intercompany AR Invoices process creates invoice lines for order shipment transactions in Oracle Inventory where the shipping warehouse does not belong to the order entry operating unit.
- The Oracle Receivables AutoInvoice program processes the records inserted into the interface tables by the Create Intercompany AR Invoices process.
- Find the AR Invoice that has been generated in Shipping OU by querying for source ‘Intercompany’ and optionally by the Sales Order.
- Create Intercompany AP Invoices process creates records in Payable invoices interface tables.
- The Oracle Payables ‘Expense Report Import’ program processes the records inserted into the interface tables by the Create Intercompany AP Invoices process. All invoices created by the Create Intercompany AP Invoices program have Intercompany as their source.
- Find the Payables Invoice that has been generated in Selling OU by querying for supplier and today’s date.
- The customer invoice automatically gets created if the ‘Workflow background process’ is running. Find it in Selling OU by querying for the transaction source as ‘ORDER ENTRY’ and with a date range.
2.2. Set up steps
The below set-up steps are necessary for proper functioning of Intercompany invoicing cycle ..
- Define a customer and customer site in the selling operating unit.
- Define a supplier and supplier site in the shipping operating unit.
- Define Intercompany Relations
- Define price for the items in ‘Internal Price list’
The organization itself is defined as a customer ‘Vision’, having a customer site in the selling operating unit as ..
The organization itself is defined as a supplier ‘Vision’, with a supplier site in the shipping operating unit as ..
Define Intercompany Relations as ..
Define price for the items in ‘Internal Price list’ ..
Create Organization HierarchyNav: Inventory → Setup → Organization → Hierarchy
Organization Name is Source Organization
Subordinates is Destination OrganizationNote: You can add more than one subordinates(Destination Organization)Run Request : Item Organization AssignmentNav: View → Requests → Submit New Requests → Single Requests → Item Organization Assignment
Source Organization = From Organization
Hierarchy Origin = Destination Organization
Hierarchy = Which you created Organization Hierarchy name
Category set Name = At least one Category set name required.
Request Count = 1
|Material||An asset account that tracks material cost. For average costing, this account holds your inventory and intransit values. Once you perform transactions, you cannot change this account.|
|Material Overhead||An asset account that tracks material overhead cost.|
|Resource||An asset account that tracks resource cost.|
|Overhead||An asset account that tracks resource and outside processing overheads.|
|Outside processing||An asset account that tracks outside processing cost.|
|Expense||The expense account used when tracking a non-asset item.|
|Sales||The profit and loss (income statement) account that tracks the default revenue account.|
|Cost of Goods Sold||The profit and loss (income statement) account that tracks the default cost of goods sold account.|
|Purchase Price Variance||The variance account used to record differences between purchase order price and standard cost. This account is not used with the average cost method.|
|Inventory A/P Accrual||The liability account that represents all inventory purchase order receipts not matched in Accounts Payable, such as the uninvoiced receipts account.|
|Invoice Price Variance||The variance account used to record differences between purchase order price and invoice price. This account is used by Accounts Payable to record invoice price variance.|
|Encumbrance||An expense account used to recognize the reservation of funds when a purchase order is approved.|
|Average Cost Variance||
Under average costing with negative quantity balances, this account represents the inventory valuation error caused by issuing your inventory before your receipts.
Inter-Organization Transfer Accounts
Defining Other Account Parameters
Subinventory General Ledger Account Fields
Note that in Figure 3.1 – Intercompany Transaction Flow, physical goods never flow through intermediate operating unit. Oracle creates ‘Logical Material Transactions’ between the operating units, based on which intercompany invoices between multiple operating units are raised.
Customer and Supplier relationship
Intercompany invoicing is widely used in multinational organizations. Sometimes you will find that these companies engage in a customer – supplier relationship.
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