Inter Company Invoicing

across Legal Entities within

Operating unit
Adwait Marathe.
Director, Projects Development
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Program
Agenda
Business Issue
User Stories
Requirement Summary
Proposed Solution Flow
Use Case Dry Run
Business Issue
Global organizations operating through multiple
legal entities execute projects across the world.
Resources owned by one legal entity may be used
by a project being executed by another legal entity or
payments made by one legal entity on behalf of
another.
Transactions across legal entities are subject to
statutory compliance e.g. generation of legal
documents, assessment of tax etc.
Business Issue
Organization Structure
Financial (LE) and Organization (LOB)
Business Issue
Scenarios
In Scope
LE2 incurs and pays for expenditure for a project that is owned by
LE1.
(For example, a Supplier Invoice for material or services: LE2 enters into
a contract with a supplier to supply goods/services to a project that
belongs to LE1)
LE1 uses resources fromLE2
(For example, an employee of LE2 works on a project executed by LE1)
Out of Scope
LE2 transacting on behalf of LE1 using resources fromLE3 is not a
common scenario as per customers feedback.
Business Issue
Pain Points / Success Criteria
Pain Points Success Criteria
Ensuring accounting is compliant when resources are used
from another Legal Entity
Ensure the right Legal Entity is determined
Generation of accounting at granularity
required for monitoring and
reconciliation
Statutory compliance with respect to legal documentation
when crossing Legal Entities
Generation of legal documents with
applicable taxes
Reconciling Inter Company Transactions Settlement and reconciliation of
intercompany documents and balances
Align with EBS direction for LE in R12
Business Issue
Value
Drive value in projects by using the best resources without risk of
statutory non-compliance by:
Automatically and accurately deriving the LEs
(Provide the ability to) Automatically account for I/C
transactions
(Provide the ability to) Automatically determine taxes for I/C
transactions
Minimize cost of reconciling intercompany transactions
Lower Implementation Cost in setting up for handling intercompany
transactions
Reduce the cost of training users because of intuitive usability
User Stories
As Finance Manager define the terms (transfer price) for resources
owned by one LE being used by another LE within the group for
compliance with internal policies
As Project Manager I need to identify and reconcile costs incurred by
other LEs on my project to confirmproject profitability is maintained
As Accountant confirm legal documentation is generated for
intercompany transactions for statutory compliance
Requirements Summary
1. Associate legal entity to Project
2. Identify legal entity for transactions e.g. Expenditure Items,
Revenue, Invoice
3. Define transfer price for resources owned by LE1 used by
LE2
4. Generate legal documents for intercompany transactions
including the applicable taxes
5. Generate accounting by legal entity
6. Reconcile intercompany transactions by legal entity / project
Proposed Solution Flow
Set-up
Costing and
Accounting
Intercompany
Invoicing
Implementation level option to turn the feature on.
Provider receiver controls to be enhanced to be defined
between OU/LE combination.
Organizations to be mapped to LE in LE, If organization is not
mapped to LE, default LE to be used of an OU
Proposed Solution Flow
Set-up
Costing and
Accounting
Intercompany
Invoicing
Enhance Cross Charge Identification process to consider LE
from org(project and expenditure)
Add additional columns on Expenditure item to facilitate
additional grouping for IC invoicing
Populate additional attributes on expenditure items during
cross charge identification. This to be carried forward throughout
the processing of documents
Provider and receiver LE to be added as sources for
Accounting
Proposed Solution Flow
Set-up
Costing and
Accounting
Intercompany
Invoicing
Generation of IC invoices for IC projects specified in provider
receiver controls
IC invoice process to use additional grouping criteria's
specified, in addition to the one specified at provider receiver
controls
Add post extension for IC invoicing
Enhance existing Internal Payables Invoice Attributes Override
Extension to support overriding supplier site and few other
attributes
Use case Dry Run Set-ups
Legal Entity Organization Division Project Resource
LE1 Org1 D1
LE1 Org1.1 D1
LE1 Org1.1.1 D1 E1
LE1 Org1.1.2 D1 Project3 E2
LE1 Org1.2 D1
LE2 Org2 D2
LE2 Org2.1 D2 Project2
LE2 Org2.2 D2
LE2 Org2.2.1 D2 Project4
LE2 Org2.2.2 D2
Project1
Project5
LE1 Org3 D2 E3
Dry Run Cost Transactions
Emp
provider
Org
Project Amount
E1 Org1.1.1 Project1 1000
E2 Org1.1.2 Project2 3000
E3 Org3 Project2 4000
E3 Org3 Project1 5000
E3 Org3 Project3 2000
E1 Org1.1.1 Project4 6000
E1 Org1.1.1 Project5 1500
provider
LE
receiver
Org
receiver
LE
CC
type
LE1 Org2.2.2 LE2 IC
LE1 Org2.1 LE2 IC
LE1 Org2.1 LE2 IC
LE1 Org2.2.2 LE2 IC
LE1 Org1.1.2 LE1 IC
LE1 Org2.2.1 LE2 IC
LE1 Org2.2.2 LE2 IC
ICGroup
D1
D1
D2
D2
D2
D1
D1
Dry Run IC Invoicing - Scenario 1
Provider
OU
ProviderL
E
Receiver
OU
Receiver
LE ICProject
IC
Grouping Extension
ABC LE1 ABC LE2
ICfrmLE1
toLE2 None
NoIC
GroupExtn
Invoice
Number Description Amount
1 LE1 LE2 20500
Dry Run IC Invoicing - Scenario 2
Provider
OU
ProviderL
E
Receiver
OU
Receiver
LE ICProject
IC
Grouping Extension
ABC LE1 ABC LE2
ICfrmLE1
toLE2
Cross
Charge
Project
NoIC
GroupExtn
Invoice
Number Description Amount
1 Project1 6000
2 Project2 7000
3 Project4 6000
4 Project5 1500
Dry Run IC Invoicing - Scenario 3
Provider
OU
ProviderL
E
Receiver
OU
Receiver
LE ICProject
IC
Grouping Extension
ABC LE1 ABC LE2
ICfrmLE1
toLE2
Cross
Charge
Project
Populate
Division
Invoice
Number Description Amount ICGroup
1 Project1 D1 1000 D1
2 Project1 D2 5000 D2
3 Project2 D1 3000 D1
4 Project2 D2 4000 D2
5 Project4 D1 6000 D1
6 Project5 D1 1500 D1
Dry Run IC Invoicing - Scenario 4
Provider
OU
ProviderL
E
Receiver
OU
Receiver
LE ICProject
IC
Grouping Extension
ABC LE1 ABC LE2
ICfrmLE1
toLE2 None
Receiver
Organization
Invoice
Number Description Amount ICGroup
1 Org2.2.2 7500 Org2.2.2
2 Org2.1 7000 Org2.1
3 Org2.2.1 6000 Org2.2.1
Dry Run IC Invoicing - Scenario 5
Provider
OU
ProviderL
E
Receiver
OU
Receiver
LE ICProject
IC
Grouping Extension
ABC LE1 ABC LE2
ICfrmLE1
toLE2 None Division
Invoice
Number Description Amount ICGroup
1 D1 11500 D1
2 D2 9000 D2
Questions
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