Presentation to OAUG - SIG

Atlanta
21-Oct-2005


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2
Inter Company Transactions


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3
Agenda
Overview of Inter-Company Transactions
Organization Structure
Business case Solution



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4
Movement of Goods :
Between Divisions belonging to Same Legal Entity
Across more than one Legal Entities within US
Across Many International Subsidiaries

Single face to Customer (One Selling Company Multiple Internal Supply Companies)
Selling Company Books Order & Raises Bills on Customer
Supply Company drop-ship goods directly to Customer warehouse.
Intercompany Billing between Selling and Supply company.

Multiple Selling Companies Single Supply Companies

Multiple Selling Companies Multiple Supply Companies

Cross Charging for Goods & Services across Projects

Inter-project Billing between projects owned by different legal entity.

Intercompany Journals

Shared Bank Accounts across Legal Entity :
To receive Customer payments
To disburse Supplier Payments
Inter-company Transactions


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5
Business Case

Single face to Customer
Single Selling Company Multiple Supply
Companies
Multiple Selling Companies Multiple Supply
Companies




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6
Why Single Face to Customer ?
Customer desired a single ITO faceOne Brand
Customer
LE 1 LE 2 LE 3 LE 4 LE 5 LE 6
Customer
LE 1
LE-3 LE-2
LE-4
LE-1
LE-3
LE-4
LE-5
LE-6
LE-2
Customers
1. What the
customer was
seeing
beforemultiple
legal entities, no
single interface
2. Multiple businesses servicing a single customer
ordertime consuming internal negotiations
3. Multiple
acquisitionsmany
faces to the customer.
ITO / Application
confusion etc.


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7
Parent Company
Finance
Legal HR IT
New Organizational / Legal Entity Structure

Primary Objectives

Single Face to
Customer
Compliant Legal
Structure &
Branding
Rationalize multiple
USA Benefit Plans
Re-align people to
operational owners
Single ITO Platform


Leadership


Commercial Statutory Entity - CSE
(Selling Company Customer facing)




LE - 3


LE - 2


Product
Line

LE - 1

Future
Acquisitions
(US / Non-US)

New Simplified Organization / LE Structure

Product
Line

Home Base Statutory Entities - HBSE
(Supplying Company Fulfillment Center)



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8
Oracle Solution :
Multi Org Structure & Transaction Flow (Within US)
USD
Set of Books
LE - US
Selling OU Supplying OU
Average
Cost
Entity 1
Average
Cost -
Entity - 4
Average
Cost-
Entity - 3
Average
Cost
Entity 2
S
a
l
e
s

O
r
d
e
r

S
h
i
p
m
e
n
t

A
R

I
n
v
o
i
c
e

IC - AP
IC-AR
Sub - Inv Sub - Inv Sub - Inv Sub - Inv
Legal
Entity
Operating
Unit
Set of
Books
Inventory
Organization
Sub-
Inventories
..


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9
Oracle Solution :
Multi Org Structure & Transaction Flow (Intl. Outside US)
USD
Set of Books
LE - US
Selling OU Supplying OU
Average
Cost
Entity 1
Average
Cost -
Entity 4
Average
Cost-
Entity 3
Average
Cost
Entity 2
Sub - Inv Sub - Inv Sub - Inv Sub - Inv
Legal
Entity
Operating
Unit
Set of
Books
Inventory
Organization
Sub-
Inventories
Non-USD
Set of
Books
LE
Non-US
Supplying
OU
Average
Cost
Entity 5
Sub - Inv
S
a
l
e
s

O
r
d
e
r

MRC
USD
Set of
Books
MRC
Consolidation Set of Books
(Financial Consolidation + I/C Elimination)


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10
Oracle Solution : Process Flow Diagram
Supply Chain Model - Selling Company (Order Management)
CSE
Selling
OU
HBSE
Supplying
OU
Book
Order
Create
Receiver
Project
Generate
Progress
Bill Cycle
from
Receiver
Project to
Customer
Run
Create Inter-
company
AP Invoice

Auto
invoice
Import

Ship Goods
to
Customer
Auto
Invoice
Import Inter-
company
Manual Automatic
Inter-
company
Invoice
Settlement
&
Elimination
Manual or
Automatic
Run
Create Inter-
company
AR Invoice
Custom
Program
updates the
Inter-Co Inv
Amount
Import
Inter-
Company
AP invoice
Select One of the Fulfillment Org
as Shipping Warehouse on Sales
Order


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11
Oracle Solution : Process Flow Diagram
Manufacturing Model - Selling Company (Project Accounting)
CSE
Selling
OU
HBSE
Supplying
OU
Book Order
Create
Receiver
Project
Generate
Progress
Bill Cycle
From Receiver
Project
Import
Inter-
company
AP Invoice
Generate
Final
Bill and
Recognize
Revenue

Accumulate
Cost against
Provider
Project


Ship Goods to
Customer
Generate an
Intercompany
AR invoice on
CSE from
Provider
Project
Manual Automatic
Inter-
company
Invoice
Settlement
&
Elimination
Manual or
Automatic
Book
Order
Select One of the Fulfillment
Org as Shipping Warehouse
on Sales Order
Create
Receiver
Project


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12
Oracle Solution : Setup Details & Customization Details
Selling Company

Module Involved :
OM, AR, AP, INV )
Supply Chain Model
Define Intercompany Customer &
Supplier
Create Intercompany Relationship in
Inventory Module
Setup Auto-accounting Rule in AR
Setup AR Transaction Type and link to
Order Transaction Type.
Create Custom Program to calculate
Transfer price and update AR Auto
invoice Interface table.
Modules Involved :
(OM,PA, INV, AR, AP)
Manufacturing
Define Intercompany Customer & Supplier
Define Implementation option in PA (Internal
Billing)
Define Billing extension. (Optional)
Set up Automatic Billing (Optional).
Setup Auto-accounting Rule in PA
Setup Auto-accounting Rule in AR
Setup AR Transaction Type and link to Order
Transaction Type.
Define and link Receiver project & Provider
project. (Required)
Create custom program in AP to handle one to
many Supplier relationship.


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13
Operational Structure Process Flow &
Accounting
Order Booking
Intercompany AR
Invoice
Order Assignment
(Internal Demand)
Ship to Customer
Invoice to Customer
CSE Books order from Customer
CSE Assigns order to appropriate HBSE
business @ Established TP
HBSE business drop-ships parts to
Customer Warehouse.
CSE raises Invoices to Customer.
HBSE raises an Inter-company AR invoice
on CSE @ agreed Transfer Price.
Make / Buy
HBSE makes or buys Parts
Intercompany AP
Invoice
Intercompany
Settlement &
Elimination
CSE creates an Inter-company AP invoice
on HBSE @ agreed Transfer Price
Intercompany Revenue (HBSE) is
eliminated with COGS (CSE)
Due From & Due To Elimination
No Accounting Entries
Dr. Due From CSE (HBSE LE)
Cr. Internal Revenue (HBSE LE)
No Accounting Entries
Dr. COGS (HBSE LE)
Cr. Inventory (HBSE-LE)
Dr. External Receivables (CSE-LE)
Cr. External Revenue (CSE LE)
Dr. Inventory (HBSE-LE)
Cr. Cash (HBSE-LE)
Dr. Internal COGS (CSE-LE)
Cr. Due To HBSE (CSE LE)
a) I/C Revenue & COGS Elimtn
b) DF/ DT Elimination


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14
Contact Information
Name : Hari Mundhra
E-Mail : hari.mundhra@ge.com
Phone : +1-678-844-4062
www.genpact.com


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15
Disclaimer
This presentation was prepared exclusively for the benefit and
internal use of Genpact in order to indicate, on a preliminary
basis, the feasibility of a possible transaction or transactions
and does not carry any right of publication or disclosure to any
other party. This presentation is incomplete without reference
to, and should be viewed solely in conjunction with, the oral
briefing provided by Genpact. Neither this presentation nor
any of its contents may be used for any other purpose without
the prior written consent of Genpact.