11g Release 1 (11.1.3)
Part Number E20384-03
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Oracle® Fusion
Applications Project Management Implementation Guide 11g Release 1 (11.1.3) Part Number E20384-03 |
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This chapter contains the following:
Manage Transfer Price Schedules
Extensions for Define Transfer Pricing
Create rules to determine how transfer prices are calculated for cross-charge transactions that require borrowed and lent processing or intercompany billing processing. Transfer price calculation can be based on the raw cost, burdened cost, or revenue of the cross-charged transaction.
To set up transfer price rules, you need to understand the following components:
Transfer price rule attributes
Transfer price determination logic
Transfer price extensions
To create a transfer price rule, you specify the rule name and description, and define these attributes:
Type: Valid transfer price rule types are Labor or Nonlabor.
Transfer Price Basis: The basis for transfer price calculation. Transfer price basis options are:
Raw cost
Burdened cost
External recognized revenue
Calculation Method: Transfer price calculation methods are:
Basis only: Use the transfer price with no further adjustments
Apply burden schedule: Specify the name of an existing burden schedule to apply to the basis
Apply rate schedule: Specify the name of an existing rate schedule to apply to the basis
Burden Schedule: The burden schedule to apply to the transfer price basis if the transfer price calculation method is to apply a burden schedule. You can select any burden schedule from any set.
Rate Schedule: The rate schedule to apply to the transfer price basis if the transfer price calculation method is to apply a rate schedule. You can select any rate schedule from any set.
Markup or Discount Percentage: A rate to apply to the transfer price amount that the rule calculates.
The following table lists the valid combinations of transfer price basis and calculation methods, and the calculation logic used to determine transfer price amounts based on transfer price rules.
|
Transfer Price Basis |
Calculation Method |
Calculation Logic |
Transfer Price Transaction Currency |
|---|---|---|---|
|
Raw cost |
Basis only |
Raw cost with no multipliers applied |
Same as transaction currency of expenditure item |
|
Raw cost |
Apply burden schedule |
Burden multipliers are applied to raw cost |
Same as transaction currency of expenditure item |
|
Raw cost |
Apply rate schedule |
If the rate schedule has a markup, the markup is applied to raw cost If the rate schedule has a multiplier, the multiplier is applied to the amount |
Currency of the rate schedule |
|
Burdened cost |
Basis only |
Burdened cost with no multipliers applied |
Same as transaction currency of expenditure item |
|
Burdened cost |
Apply burden schedule |
Burden multipliers are applied to burdened cost |
Same as transaction currency of expenditure item |
|
Burdened cost |
Apply rate schedule |
Rate multipliers are applied to burdened cost |
Currency of the rate schedule |
|
External recognized revenue |
Basis only |
External recognized revenue with no multipliers applied |
Regular recognized revenue in ledger currency, which is an attribute of the expenditure item |
Set up the following transfer price extensions as needed:
The Transfer Price Determination Extension is called at the beginning of the pricing calculation to bypass the transfer price amount that is calculated using the standard transfer price rule. If you use this extension, the transfer price amount is calculated and cross-charge transactions are created based on the extension logic.
The Transfer Price Override Extension is called at the end of the pricing calculation to override the transfer price amount that is calculated using the standard transfer price rule. The calculated transfer price amount is a parameter to the extension. If you use this extension, the transfer price amount is calculated and cross-charge transactions are created based on the extension logic.
The Transfer Price Currency Conversion Override Extension overrides the default currency conversion attributes defined in the cross-charge implementation options for the business unit.
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.
|
Feature Name |
Description |
|---|---|
|
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.
Note
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.
Restriction
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:
Bill rate
Burden rate
Transfer price
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.
Use these examples to understand how to configure cross-charge options on bill plans and revenue plans to achieve various interproject and intercompany billing scenarios.
To share one cross-charge rule or rate between one provider business unit and any receiver business unit, and all projects associated with the contract, configure your contract billing information as follows:
|
Bill Plan |
Bill Rate Schedule |
|---|---|
|
Bill Plan 1 |
Assign the bill rate schedule you want to use for the contract (provider) business unit to this bill plan. |
To share one cross-charge rule or rate between one provider and receiver business unit, and all projects associated with the contract, configure your contract billing information as follows:
|
Bill Plan |
Bill Rate Schedule |
|---|---|
|
Bill Plan 1 |
Assign the bill rate schedule you want to use for the provider business unit to this bill plan. |
|
Bill Plan 2 Note All contract lines associated with the receiver projects can use this bill plan. |
Assign the bill rate schedule you want to use for the receiver business unit to this bill plan. |
To override a cross-charge rule or rate between a provider and receiver business unit for one project, configure your contract billing and contract line details as follows:
|
Bill Plan |
Schedules and Overrides |
Associated Projects |
|---|---|---|
|
Bill Plan 1 |
Create a rate override for the contract line associated with the receiver project. |
Project level |
If a resource is assigned to multiple roles and has more than one rate on a project, you may need to create an override at the project task level. To override a cross-charge rule or rate between a provider and receiver business unit, for the task on a specific project, configure your contract billing and contract line details as follows:
|
Bill Plan |
Schedules and Overrides |
Associated Projects |
|---|---|---|
|
Bill Plan 1 |
Create a job rate override for the contract line associated with the receiver project. |
Task level |
If you are invoicing for a contractors, you may want to create an override at the resource level. To override a cross-charge rule or rate between a provider and receiver business unit, for a specific resource on a project, configure your contract billing and contract line details as follows:
|
Bill Plan |
Schedules and Overrides |
Associated Projects |
|---|---|---|
|
Bill Plan 1 |
Create a person rate override for the contract line associated with the receiver project. |
Task level |
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.
Note
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.
Determines how Oracle Fusion Projects calculates the transfer price for cross-charge transactions. Each rule contains the following attributes that you define.
Type of transaction to which the rule applies: labor or nonlabor
Basis for the cross-charge transaction: raw cost, burdened cost, or revenue amount
Method used to calculate the transfer price: rate schedule, burden schedule, or no further adjustment
Markup or discount percentage to apply to the transfer amount calculated by the rule
Range of dates when you can use the rule
Yes. You can assign any rate schedule to a transfer price rule, regardless of the project rates set assigned to the bill rate schedule.
Yes. You can assign any rate schedule to a transfer price rule, regardless of the project rates set assigned to the bill rate schedule.
Transfer price schedules contain the rules to determine the transfer price amount for transactions charged from a provider organization to a receiver organization. You create different transfer price schedules to use for various combinations of legal entities, business units, and organizations. You can create different schedules to use different rules for various projects and tasks between the same pairs of provider and receiver organizations. For example, you can define one schedule that contains the rules for capital projects and another for contract projects.
Before you set up transfer price schedules, you must set up organizations and transfer price rules.
Transfer price schedule lines contain details about the provider and receiver organization, labor transfer price rule and markup or discount percentage, nonlabor transfer price rule and markup or discount percentage, and amount type.
A transfer price schedule can contain provider and receiver organizations from any organization classification that is relevant to projects. The available organization classifications are determined at implementation when setting up organization hierarchies and classifications. If you do not select a receiver organization, the transfer price schedule applies to any receiver organization that receives transactions from the specified provider organization.
A labor rule is valid transfer price rule with a type of labor. A nonlabor rule is a valid transfer price rule with a type of nonlabor. A transfer price schedule must contain either a labor or nonlabor rule, or both. You can assign a markup or discount percentage to each transfer price rule to apply to the transfer price amount that the rule calculates.
You assign cost transfer or revenue transfer as the amount type for the transfer price calculation.
A transfer price schedule should be determined based on whether the cross-charge transaction is processed using the borrowed and lent processing method or the intercompany billing method. If you use the borrowed and lent processing method, a transfer price schedule should be assigned to the receiver task or the project. If you use the intercompany billing method, the bill and the revenue plan can have a transfer price schedule.
Note
The interproject billing method does not use transfer price calculation logic. Only the billing methods based on bill rate schedule or burden rate schedule are allowed for interproject billing.
You can define a transfer price schedule at any organization level and legal entity level. Oracle Fusion Projects uses the following logic to identify the appropriate schedule line:
If a transfer price schedule line exists for the provider organization (the project expenditure organization) and the receiver organization (the project and task owning organization), then the corresponding rule is used to calculate the transfer price.
Note
The project expenditure organization hierarchy is defined in the implementation options for the provider business unit. The project and task owning organization hierarchy is defined in the implementation options for the receiver business unit.
If a schedule line is not found in the previous step, the application checks for a line with the provider organization and a receiver parent organization.
If the receiver organization has multiple intermediate parents and schedule lines are defined for more than one of the parents, the schedule line defined for the lowest level parent takes precedence over schedule lines defined for parents higher in the organization hierarchy.
If a schedule line is not found in the previous step, the application checks for a line with the provider parent organization and receiver parent organization.
If the provider organization has multiple intermediate parents and schedule lines are defined for more than one of the parents, the schedule line defined for the lowest level parent takes precedence over schedule lines defined for parents higher in the organization hierarchy.
Note
If there is a schedule line with only a provider organization, and another schedule line with both provider and receiver organizations, the application gives precedence to the schedule line with both provider and receiver organizations.
If there is a schedule line with only a provider organization, and another schedule line with the provider organization and the receiver parent organization, the application gives precedence to the schedule line with the provider organization and the receiver parent organization.
If a schedule line is not found in the previous step, the application checks for the default line for the transfer price schedule.
If a schedule line is not found in the previous step, the process results in an error.
Use these examples to understand how to configure cross-charge options on bill plans and revenue plans to achieve various interproject and intercompany billing scenarios.
To share one cross-charge rule or rate between one provider business unit and any receiver business unit, and all projects associated with the contract, configure your contract billing information as follows:
|
Bill Plan |
Bill Rate Schedule |
|---|---|
|
Bill Plan 1 |
Assign the bill rate schedule you want to use for the contract (provider) business unit to this bill plan. |
To share one cross-charge rule or rate between one provider and receiver business unit, and all projects associated with the contract, configure your contract billing information as follows:
|
Bill Plan |
Bill Rate Schedule |
|---|---|
|
Bill Plan 1 |
Assign the bill rate schedule you want to use for the provider business unit to this bill plan. |
|
Bill Plan 2 Note All contract lines associated with the receiver projects can use this bill plan. |
Assign the bill rate schedule you want to use for the receiver business unit to this bill plan. |
To override a cross-charge rule or rate between a provider and receiver business unit for one project, configure your contract billing and contract line details as follows:
|
Bill Plan |
Schedules and Overrides |
Associated Projects |
|---|---|---|
|
Bill Plan 1 |
Create a rate override for the contract line associated with the receiver project. |
Project level |
If a resource is assigned to multiple roles and has more than one rate on a project, you may need to create an override at the project task level. To override a cross-charge rule or rate between a provider and receiver business unit, for the task on a specific project, configure your contract billing and contract line details as follows:
|
Bill Plan |
Schedules and Overrides |
Associated Projects |
|---|---|---|
|
Bill Plan 1 |
Create a job rate override for the contract line associated with the receiver project. |
Task level |
If you are invoicing for a contractors, you may want to create an override at the resource level. To override a cross-charge rule or rate between a provider and receiver business unit, for a specific resource on a project, configure your contract billing and contract line details as follows:
|
Bill Plan |
Schedules and Overrides |
Associated Projects |
|---|---|---|
|
Bill Plan 1 |
Create a person rate override for the contract line associated with the receiver project. |
Task level |
Changes to transfer price rules and schedules affect only future transactions. To change a previously processed transaction, you must manually adjust the transaction.
Use the Transfer Price Determination Extension to derive the transfer price for a cross-charge transaction. If a price is not derived, the application uses the standard transfer price process.
The Distribute Borrowed and Lent Amounts process and Generate Invoices process call the extension before calling the standard transfer price determination process.
The extension is identified by the following items:
|
Extension Component |
Name |
|---|---|
|
Body template |
pjc_client_extn_cc_tp.pkb |
|
Specification template |
pjc_client_extn_cc_tp.pkh |
|
Package |
PJC_CLIENT_EXTN_CC_TP |
|
Procedure |
determine_transfer_price |
Important
Do not change the name of the extension procedure or parameters. Also, do not change the parameter types or parameter order in the procedure. After you write a procedure, compile it and store it in the database.
The system validates that you provided a value for only one of the following output audit parameters:
x_bill_rate
x_bill_markup_percentage
If a value is not valid, a rejection message appears in the process execution report.
The extension procedure specifies a transfer price for the transaction being processed. If this extension returns a valid value for the transfer price, Oracle Fusion Projects uses that value as the transfer price instead of computing the transfer price.
Use the Transfer Price Override Extension to override the price derived by the standard transfer price process.
The Distribute Borrowed and Lent Amounts process and Generate Invoices process call the extension after calculating the transfer price based on the transfer price rules and schedules.
The extension is identified by the following items:
|
Extension Component |
Name |
|---|---|
|
Body template |
pjc_client_extn_cc_tp.pkb |
|
Specification template |
pjc_client_extn_cc_tp.pkh |
|
Package |
PJC_CLIENT_EXTN_CC_TP |
|
Procedure |
override_transfer_price |
Important
Do not change the name of the extension procedure or parameters. Also, do not change the parameter types or parameter order in the procedure. After you write a procedure, compile it and store it in the database.
The system validates that you provided a value for only one of the following output audit parameters:
x_bill_rate
x_bill_markup_percentage
If a value is not valid, a rejection message appears in the process execution report.
The extension procedure overrides the transfer price for a transaction.
Use this extension to override the default attributes used to convert the transfer price from the transaction currency to the functional currency.
The Distribute Borrowed and Lent Amounts process and Generate Invoices process call the extension after the processes calculate the transfer price. The cross-charge transaction implementation options for the business unit determine the default conversion attributes.
The extension is identified by the following items:
|
Extension Component |
Name |
|---|---|
|
Body template |
pjc_client_extn_cc_tp.pkb |
|
Specification template |
pjc_client_extn_cc_tp.pkh |
|
Package |
PJC_CLIENT_EXTN_CC_TP |
|
Procedure |
override_curr_conv_attributes |
Important
Do not change the name of the extension procedure or parameters. Also, do not change the parameter types or parameter order in the procedure. After you write a procedure, compile it and store it in the database.
Oracle Fusion Projects validates that the values returned by the extension meet all conversion requirements.
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