Applications Project Management Implementation Guide
11g Release 1 (11.1.2)
Part Number E20384-02
This chapter contains the following:
Update Cross-Charge Options on Project Business Unit
Update Cross-Charge Options on Contract Business Unit
Oracle Fusion Projects provides two methods to process cross-charge transactions.
Borrowed and Lent Accounting: Creates accounting entries that move an amount equal to the transfer price between the provider and receiver organizations within a legal entity. There is no formal internal invoice created with this method. Costs or revenue are shared based on transfer price rules.
Use the Borrowed and Lent processing method to apply cross-charge transactions within a business unit or between business units.
Intercompany Billing: Enables the provider organization to present a formal invoice based on the transfer price to the receiver organization and receive payment for services rendered and materials supplied. You can use this processing method between legal entities.
You must set up the contract business unit to use the Intercompany Billing processing method.
This section describes the project business unit options for setting up cross-charge transactions for sharing costs and revenue within and between business units in the same legal entity.
Select the date type, either transaction date or project accounting date, and rate type that the system uses by default to determine the conversion rate to convert the transfer price amount from the transaction currency to the ledger currency.
You can override the default values by using the Transfer Price Currency Conversion Override extension.
The method of creating cross-charge transactions can be different for transactions within a business unit than the method used across business units. You can choose either the Borrowed and Lent Processing method of creating cross-charge transactions, or specify that no cross-charge transactions will be created.
The processing method that you specify for cross-charge transactions between business units is the default method used between the provider business unit and any other receiver business unit. You can override the default processing method for specific receiver business units.
If you delete the override of the default processing method for a specific receiver business unit, you must manually adjust transactions to reflect the deleted controls.
Before you can set up the cross-charge options during business unit implementation to enable cross-charge transactions within a business unit and between business units, you must complete prerequisite setup steps.
You must define the following objects before you can create cross-charge transactions.
Legal entities, including setting up accounting and associating the balancing segment values to the legal entity.
Business units with the project accounting business function.
Organizations and organization hierarchies that will share resources.
The application uses the project expenditure organization hierarchy, and the project and task owning organization hierarchy, to determine the transfer price defined for the provider organization and receiver organization combination.
You can implement the Borrowed and Lent processing method of creating cross-charge transactions after defining the following objects.
Transfer price rule and schedule
Either a rate schedule or burden schedule, based on the transfer price rule
For the Intercompany Billing processing method of creating cross-charge transactions, set up at least one of the following schedules.
Transfer price rule and schedule
Intercompany billing creates internal invoices and accounting entries to pass costs and share revenue across organizations on an intercompany billing contract. A provider organization performs work and charges it a project owned by the receiver organization. The provider organization creates an invoice in Oracle Fusion Receivables and the receiver organization imports the invoice from Oracle Fusion Payables. Accounting entries for revenue are created between the organizations.
Interproject billing creates internal invoices for costs incurred between a provider project and a receiver project defined on an interproject billing contract. The provider project generates an Oracle Fusion Receivables invoice, which the receiver project receives as an Oracle Payables invoice.
To use intercompany billing or interproject billing , your implementation team must configure a number of distinct features within Oracle Fusion Enterprise Contracts. These features work in cohesion with financial and project features to create internal invoices and transfer revenue between organizations.
Select the intercompany billing option on a contract type to identify a contract as enabled for intercompany billing. This option permits editing of the internal billing options of contracts of that contract type. These internal billing options include the attributes required to create the intercompany payables invoice such as expenditure type, expenditure organization, receiver project, receiver task, and the provider business unit.
Select the interproject billing option on a contract type to identify a contract as enabled for interproject billing. This option permits editing of the internal billing options of contracts of that contract type. These internal billing options include the attributes required to create the interproject payables invoice such as expenditure type, expenditure organization, receiver project, and the receiver task.
Review and update the customer contract management business function options to control the processing of interproject billing. This table lists the internal billing options that must be defined for the contract business unit.
Invoice Numbering Method
Invoice Batch Source
Specify the invoice batch source for the interproject contract invoices that are transferred to Oracle Fusion Receivables.
After you create an internal contract, link a contract line to the receiver project and task. This allows for the cross-charge transactions that are charged to the project and task to be billed from the provider business unit to the receiver business unit.
By default, the receiver project is also the associated project for the contract line, and you cannot add another associated project or change the associated project for that contract line. However, the associated task and receiver task can be different, so you can select another associated task for the project if necessary.
The receiver project must have the same legal entity as the internal customer.
Only one receiver project can be linked to a contract line. The intercompany invoice generation process automatically groups invoice lines by the contract lines. Interproject invoices have a fixed format.
To use the intercompany billing or interproject billing functionality, your implementation team must configure a number of distinct features within Oracle Fusion Projects. These features work in cohesion with contract and financial features to create internal invoices and revenue transfers between organizations.
Define internal invoice formats for invoices generated by intercompany or interproject billing contracts. The invoice formats control the grouping of transactions on invoice lines for intercompany contracts. Specify the grouping options to summarize expenditure items and events, and the fields that should be displayed on the invoice line. Create different invoice formats for intercompany labor, nonlabor, and event billing.
If you want the invoice format to be used for both customer and internal invoices, enable the invoice format for customer invoices and internal invoices.
All internal invoices must have a fixed format. Enable the fixed format feature to prevent the rearranging or regrouping invoice line details on intercompany invoices.
Define invoice methods and revenue methods to determine the calculation method of invoice and revenue amounts for intercompany contracts during invoice generation and revenue recognition. Enable the invoice methods and revenue methods for intercompany billing.
Select from the following labor and nonlabor schedule types that are available for rate-based intercompany invoice generation and revenue recognition:
Enter resource formats and resource types for the intercompany billing resource structure that is shared by business units. This billing resource breakdown structure defines the types of resources that can be referenced on billing controls for intercompany and interproject contracts.
Create a receiver project in the receiver business unit.The receiver project can be a project that is linked to both and external contract (for external billing) and intercompany contract (for creating internal cross-charge transactions). The receiver business unit receives the supplier invoices.
Each receiver project can receive invoices from multiple internal contracts or from multiple contract lines of the same contract.
Enable the tasks on the receiver project that can be used for interproject billing and to allow cross-charge transactions.
Create a provider project to use during interproject billing. Each receiver project can have one or more provider projects. The provider project can be in the same business unit or a different business unit as the receiver project.
Expenditures are charged to the provider project during interproject billing scenarios.
Yes, but only if you must derive rates for an intercompany contract based on an organization hierarchy structure instead of the bill rates defined on a bill plan.
The contract line and bill plan architecture enables you to can specify a different bill plan for each provider and receiver organization. Select a bill rate or burden rate schedule for each of your contract's bill plans. However, if your rates are defined at a very granular level, you may need to derive rates for an organization hierarchy structure using transfer price rules.
If you do not see the internal billing features on a contract, check the attributes on the contract type. The internal billing options of a contract are only visible if the contract type is designated as either intercompany or interproject.