8Intercompany Setup

This chapter contains the following:

Manage Intercompany System Options

Define intercompany system options to set up intercompany processing rules at the enterprise level, based on your specific business needs.

To maintain consistency throughout an enterprise, intercompany transaction processing rules should be defined at the enterprise level. By standardizing these rules, an enterprise can minimize disputes, decrease processing time, and cut administrative costs.

Before setting up intercompany system options, you must determine how to process your intercompany transactions. For example, to:

  • Enforce an enterprise-wide currency or allow intercompany transactions in local currencies.

  • Allow receivers to reject intercompany transactions.

  • Determine the minimum transaction amount that is processed.

System Options

Changing and saving a system option has no effect on intercompany transactions already in progress. Intercompany system options only affect new intercompany transactions, and are not retroactive to any transactions previously entered.

The system options are:

  • Intercompany Batch Numbering

    The intercompany batch numbering option defines whether to use system generated or manual transaction batch numbering. Choose one of the following options to create intercompany batch numbers:

    • System Generated: Generates intercompany batch numbers.

    • Manual: Lets you manually enter the batch number.

  • Intercompany Currency

    Standardize transaction processing by selecting an intercompany currency. Intercompany transactions created in the Intercompany module are always entered in this currency. This simplifies transaction processing, and eliminates foreign conversion rate fluctuation risks. If you select an Intercompany currency, that currency is defaulted into the Minimum Transaction Currency field. It overwrites any other currency in that field and the field cannot be updated.

  • Minimum Transaction Amount

    The minimum transaction amount represents a minimum threshold intercompany transaction amount. This amount prevents the submission of immaterial transactions for small amounts that do not add value. To implement this rule, you must first select an Intercompany currency. That currency is defaulted into the minimum transaction currency for processing intercompany transactions. These two system options ensure that when comparing a transaction amount to the minimum transaction amount, the two numbers are entered in the same currency, allowing for an accurate comparison.

  • Conversion Rate Type

    Select a conversion rate type that is used when transferring foreign currency intercompany transactions to General Ledger, Receivables and Payables.

    Note: The foreign currency intercompany transactions are not stored in the ledger currency in the Intercompany module.
  • Allow Receiver to Reject Transaction

    Use this system option to determine if receivers of intercompany transactions can reject transactions or not. For example, if your company policy requires intercompany transactions be approved, but does not allow receivers to reject the transactions, then you can set this system option to No.

  • Intercompany Calendar and Period Type

    You can have an intercompany calendar that is separate from the general ledger calendar. This ensures that the opening and closing of intercompany periods can be controlled separately from the general ledger calendar. You can limit the creation of intercompany transactions by using the intercompany calendar to close periods by transaction type. For example, you can prevent users from creating intercompany sales transactions beyond the 20th of each month by closing the period for that transaction type on the 20th, but keep the period open for the other transaction types until the 25th of the month..

    Select a calendar from the available general ledger calendars in the list of values.

    To update the intercompany calendar to use a different general ledger accounting calendar, the intercompany period status for all intercompany transaction types must either be Never Opened or Closed.

    The Period Type value is predefined from the selected accounting calendar and cannot be updated. It indicates the type of period defined for that calendar.

  • Default Transaction Type

    Select a transaction type that will default when new intercompany batches are created.

  • Summarize Distributions for Receivables Invoicing

    Specify this option while setting up the Intercompany System Options by selecting a Yes or No. When you select Yes, the provider distribution lines are summarized to generate one receivables invoice line. Intercompany passes the Transaction description to the receivables invoice line. Note that the accounting of the receivables invoice still shows each provider line separately.

    When you select No for the Summarize Distribution for Receivables Invoicing option, each provider distribution line is passed to Receivables to be generated as a separate receivables invoice line. In this case, Intercompany passes each Provider Line description to the receivables invoice line.

Use intercompany transaction types to manage the processing of intercompany transactions. When you create an intercompany transaction you must select an intercompany transaction type.

The attributes of the transaction type determine how the intercompany transaction is processed. A transaction type helps you to specify if a transaction is transferred directly to General Ledger or if it requires invoicing in Receivables and Payables. The transaction type also determines if a transaction requires manual approval.

You can only change the transaction type if all existing transactions for that transaction type are either in the New or Complete status. So for all transactions that are in not in the New or Complete status, you must process them until they are in the Complete status. After the status is complete, you can change the transaction type.

Use the Manage Intercompany Transaction Types task from the Setup and Maintenance work area to set up and maintain intercompany transaction types.

Intercompany Period Status: Explained

If you chose to use an intercompany calendar on your Systems Options, you can open and close periods by transaction type on the Intercompany Period Status screen. Intercompany periods cannot be closed if there are transactions for that period that are in the Sent, Error, or Received status. These transactions must be swept to the next period before closing the period.

Manage Intercompany Organizations

The Manage Intercompany Organizations task allows you to define intercompany organizations and assign them to a legal entity. The intercompany organization can act either as a provider or a receiver in an intercompany transaction.

Optionally assign a receivables and payables business unit to the organization if you require invoice generation. Invoices are generated in Oracle Fusion Receivables and Oracle Fusion Payables for the business units specified.

You can initiate an intercompany transaction only for those organizations that you have access to. If a new organization is added after the application is configured, the intercompany accountant or administrator should ensure that access is given to the appropriate users.

An organization can be disabled if there are no open transactions, and all transactions for that organization are either in a New or Complete status.

Legal Entity

Each intercompany organization must be associated with a legal entity, but you can associate more than one organization to a legal entity.

Receivables and Payables Business Units

The available business units are those associated with the ledger to which the selected legal entity belongs. This assignment is optional, but is needed when the organization is engaged in intercompany activity requiring intercompany invoices.

If you enter the wrong receivables or payables business units, you can still correct them as long as the organization is not yet used in an intercompany transaction, regardless of the transaction status.

Define Invoicing Options

The intercompany customer and supplier assignments are used to derive the customers and suppliers for intercompany invoicing. You can associate a legal entity with either a customer account or supplier, or both. Each legal entity can only have one customer account and one supplier assigned to it.

Customer Account

Assign a unique customer account to the legal entity of the organization that receives and approves intercompany transactions. The customer account type must be Internal and it must have an active bill-to site with primary selected. Each customer account can have multiple sites each associated with a different receivables business unit. This allows invoicing for the customer in a variety of receivables business units.

Supplier

Assign a unique supplier to the legal entity of the organization that initiates intercompany transactions. The supplier must have an active primary pay site. Each supplier can have multiple sites, each associated to a different payables business unit.

Use Oracle Fusion Intercompany to generate invoices for intercompany transactions.

Defining Receivables Assignments

Set up your receivables assignments by mapping an intercompany transaction type and a receivables business unit to the receivables transaction type and receivables memo line. Oracle Fusion Receivables will use the receivables transaction type and the receivables memo line to process intercompany transactions transferred to the receivables application. You can configure specific receivables transaction types, and receivables memo lines, that you use for each intercompany transaction type for a receivables business unit.

Manage Intercompany Balancing Rules

Intercompany balancing rules are used to generate the accounts needed to balance journals that are out of balance by legal entity or primary balancing segment values. You specify the intercompany receivables and intercompany payables accounts that you want to use as the template for building the intercompany receivables and intercompany payables accounts. The intercompany balancing feature then uses these rules to generate the accounts of the balancing lines it creates.

Journals lines are first summarized by the legal entity and are balanced by the legal entity. Since a legal entity can have many primary balancing segment values, it is possible that a journal could have multiple lines for a legal entity with different primary balancing segment values. In that case, when intercompany balancing is done, the lowest primary balancing segment value within each legal entity in the journal is used. After this, balancing occurs across balancing segment values within each legal entity.

These same rules are also used to generate the intercompany receivables account and intercompany payables account of transactions entered in the Intercompany module.

The intercompany balancing rules are also used to generate the intercompany receivables account for the provider side of an intercompany transaction. The balancing rules also used to generate the intercompany payables account for the receiver side of an intercompany transaction.

Defining Intercompany Balancing Rules

You can define intercompany balancing rules at the following levels:

  1. Primary balancing segment

  2. Legal entity

  3. Ledger

  4. Chart of accounts

The rules are evaluated in the order shown. For example, you can define a Primary Balancing Segment rule and a Legal Entity level rule. If both rules can be used to balance a particular journal, the Primary Balancing Segment rule is used, as it has a higher precedence.

You have flexibility in defining your intercompany balancing rules. You can have a simple setup in which you define one rule for your chart of accounts. This rule is used for all intercompany balancing for all ledgers that use this chart of accounts. Alternatively, you can have a more granular set of rules. For example, you can define a different rule for each legal entity and one chart of accounts rule to cover any gaps in your rule definitions. You can gain even more granularity by defining rules for specific journal and category combinations or intercompany transaction types.

Using Chart of Accounts Rules for Intercompany

Use chart of accounts rules for intercompany balancing. You have flexibility in defining your intercompany balancing rules with the setup of a single chart of accounts rule to use for all ledgers that use this chart of accounts. When you create a chart of accounts rule, you specify the chart of accounts, intercompany receivables, and intercompany payables accounts you want to use, as well as the source and category. It is recommended that the intercompany receivables account be an asset type account, and the intercompany payables account be a liability type account.

You can define rules that are applied to a specific source and category, such as Payables and Invoices, or a specific intercompany transaction type, such as Intercompany Sales. Alternatively, you can choose to create rules for all sources and categories by selecting the source of Other and the category of Other.

Intercompany Balancing will then evaluate the journal source and journal category combination in determining which rule to use for balancing. The order of precedence is as follows.

  • Specific journal source and journal category

  • Specific journal source and journal category of Other

  • Journal source of Other and specific journal category

  • Journal source of Other and journal category of Other

Additional Intercompany Balancing and Clearing Company Options

Additional Intercompany Balancing and Clearing options are used to balance the second balancing segment or the third balancing segment or both, when a transaction is unbalanced by one of these segments but is already balanced by the primary balancing segment. This option is defined for a ledger but you can create rules for various Source and Category combinations.

Additional Intercompany Balancing and Clearing options include the following settings:

  • Intercompany Receivables and Intercompany Payables accounts: You can use as the accounts as the template to build balancing accounts for balancing segment 2 and balancing segment 3 when the journal is already balanced by primary balancing segment.

  • Summarization options: You can choose to summarize lines within a legal entity before balancing lines are generated by choosing the Summary Net option. Alternatively choose the Detail options so lines are not summarized before balancing within a legal entity. Note that summarization always applies to balancing lines generated in a cross legal entity scenario.

  • Clearing company options: Oracle recommends always setting clearing company options to handle many-to-many journals as this avoids balancing failing during General Ledger Posting or Subledger Accounting Create Accounting process.

Clearing Company Options

You can choose to set clearing company options to balance a many-to-many journal. Set the following options to manage your clearing company balancing.

  • Clearing Company Condition: Choose when to use a clearing company.

    • Use clearing company only for intracompany journals.

    • Use clearing company for all many-to-many journals.

    • Error out if many-to-many journal. This is the default value for this option.

  • Clearing Company Source: Choose how the clearing company value is derived for your balancing lines, from the following options:

    • Default clearing balancing segment value.

    • Manually entered clearing balancing segment value. Note that if you select Manually entered clearing balancing segment value, you will need to manually enter a value in the create journals screen. This option will not work for subledger accounting entries as they do not have a field on the user interface to enter this value.

  • Clearing Company Value: If you selected Default clearing balancing segment value for Source, you must select a primary balancing segment value in this field. This is the value used to balance your intracompany or many-to-many journals.

This topic provides examples of intercompany balancing rules and the intercompany balancing lines generated. These rules are used to generate the accounts needed to balance journals that are out of balance by legal entity or primary balancing segment values.

Intercompany Balancing Rules Precedence

In this example the legal Entity InFusion Textiles intercompany manufacturing activities are tracked separately from its non-manufacturing activities. In order to achieve this legal entity level rules are defined specifically between the legal entity InFusion Textiles and the two manufacturing legal entities, InFusion Products (East) and InFusion Products (West). A chart of accounts rule is created to cover all other intercompany activities.

Setup

  • InFusion USA Chart of Accounts as shown in the following table.

Segment Name Company (CO) Cost Center (CC) Division (DIV) Account (ACCT) Intercompany (IC)

Segment Qualifier

Primary Balancing Segment

Second Balancing Segment

Third Balancing Segment

Account

Intercompany Segment

  • Ledger, Legal Entity, Primary Balancing Segment Value Assignments as shown in the following table.

Ledger Legal Entity Primary Balancing Segment Value

InFusion USA

InFusion Farms

3100, 3200, 3300, 3400, 3500

InFusion USA

InFusion Textiles

4000

InFusion USA

InFusion Products (East)

5000

InFusion USA

InFusion Products (West)

6000

InFusion USA

 

1000, 9000

  • Chart of Accounts Rule as shown in the following table.

Rule Number Chart of Accounts AR Account AP Account Source Category Transaction Type

1

InFusion USA Chart of Accounts

1000 - 000 - 0000 - 13050 - 0000

1000 - 000 - 0000 - 21050 - 0000

Other

Other

None

  • Legal Entity Level Rule as shown in the following table.

Rule No. From Legal Entity To Legal Entity AR Account AP Account Source Category Transaction Type

2

InFusion Textiles

InFusion Products (West)

1000 - 000 - 0000 - 13020 - 0000

1000 - 000 - 0000 - 21020 - 0000

Other

Other

None

3

InFusion Textiles

InFusion Products (East)

1000 - 000 - 0000 - 13030 - 0000

1000 - 000 - 0000 - 21030 - 0000

Other

Other

None

  • Journal Balancing

    • Journal before Balancing as shown in the following table.

Line Line Type Legal Entity CO CC DIV ACCT IC Debit Credit

1

Expense

InFusion Farms

3100

100

1200

52330

0000

150

 

2

Expense

InFusion Products (East)

5000

100

1200

52340

0000

200

 

3

Expense

InFusion Products (West)

6000

200

1300

52345

0000

300

 

4

Liability

InFusion Textiles

4000

500

1300

40118

0000

 

650

  • Journal Balancing

    • Journal after Balancing as shown in the following table.

Uses Rule Line Line Type Legal Entity CO CC DIV ACCT IC Debit Credit

 

1

Expense

InFusion Farms

3100

100

1200

52330

0000

150

 

 

2

Expense

InFusion Products (East)

5000

100

1200

52340

0000

200

 

 

3

Expense

InFusion Products (West)

6000

200

1300

52345

0000

300

 

 

4

Liability

InFusion Textiles

4000

500

1300

40118

0000

 

650

1

5

IC AR

InFusion Textiles

4000

500

1300

13050

3100

150

 

1

6

IC AP

InFusion Farms

3100

100

1200

21050

4000

 

150

3

7

IC AR

InFusion Textiles

4000

500

1300

13030

5000

200

 

1

8

IC AP

InFusion Products(East)

5000

100

1200

21050

4000

 

200

2

9

IC AR

InFusion Textiles

4000

500

1300

13020

6000

300

 

1

10

IC AP

InFusion Products (West)

6000

200

1300

21050

4000

 

300

The following are some examples using chart of accounts rules for Intercompany balancing.

One-to-One Balancing: Example

In these scenarios, you choose to track intercompany balancing for companies with values 3000, and 4000 to separate intercompany accounts. You will set up specific rules at the primary balancing segment value level for this. A chart of accounts rule is created for all other intercompany activity.

Setup

InFusion USA Chart of Accounts as shown in the following table.

Segment Qualifier Primary Balancing Segment Balancing Segment 2 Segment Segment Intercompany Segment

Segment Name

Company

(CO)

Cost Center

(CC)

Product

(PROD)

Account

(ACCT)

Intercompany

(IC)

Ledger, Legal Entity, and Primary Balancing Segment Value Assignments as shown in the following table.

Ledger Legal Entity Primary Balancing Segment Value

InFusion USA

InFusion Farms

3000

InFusion USA

InFusion Textiles

4000

InFusion USA

InFusion Production

5000

InFusion USA

 

1000, 9000

Rule No. 1: Chart of Accounts Rule as shown in the following table.

  • Chart of Accounts: InFusion USA

  • Source: Other

  • Category: Other

  • Transaction Type: None

IC Account CO CC PROD ACCT IC

AR Account

1000

000

0000

13010

0000

AP Account

1000

000

0000

21010

0000

Rule No. 2: Primary Balancing Segment Rules as shown in the following table.

  • From Ledger and To Ledger: InFusion USA

  • From Primary Segment Value: 3000

  • To Primary Segment Value: 4000

  • Source: Other

  • Category: Other

  • Transaction Type: None

IC Account CO CC PROD ACCT IC

AR Account

1000

000

0000

13011

0000

AP Account

1000

000

0000

21011

0000

Rule No. 3: Primary Balancing Segment Rule as shown in the following table.

  • From Ledger and To Ledger: InFusion USA

  • From Primary Segment Value: 3000

  • To Primary Segment Value: 5000

  • Source: Other

  • Category: Other

  • Transaction Type: None

IC Account CO CC PROD ACCT IC

AR Account

1000

000

0000

13012

0000

AP Account

1000

000

0000

21012

0000

Rule No. 4: Primary Balancing Segment Rule as shown in the following table.

  • From Ledger and To Ledger: InFusion USA

  • From Primary Segment Value: 4000

  • To Primary Segment Value: 3000

  • Source: Other

  • Category: Other

  • Transaction Type: None

IC Account CO CC PROD ACCT IC

AR Account

1000

000

0000

13013

0000

AP Account

1000

000

0000

21013

0000

Rule No. 5: Primary Balancing Segment Rule as shown in the following table.

  • From Ledger and To Ledger: InFusion USA

  • From Primary Segment Value: 4000

  • To Primary Segment Value: 5000

  • Source: Other

  • Category: Other

  • Transaction Type: None

IC Account CO CC PROD ACCT IC

AR Account

1000

000

0000

13014

0000

AP Account

1000

000

0000

21014

0000

Journal No. 1: One-to-One Legal Entity Journal as shown in the following table.

  • Source: Manual

  • Category: Adjustment

Line Account Debit Credit Description Uses Rule No.

1

5000- 100- 1200- 52330- 0000

150

 

 

 

2

4000- 110- 1200- 41111- 0000

 

150

 

 

3

5000- 100- 0000- 21010- 4000

 

150

Intercompany Balancing Line

1

4

4000- 110- 0000- 13014- 5000

150

 

Intercompany Balancing Line

5

Journal No. 2: One-to-Many Legal Entity with Multiple Primary Balancing Segment Values for a legal Entity as shown in the following table.

Note: Balancing summarizes across a legal entity and first performs intercompany balancing using the lowest primary balancing segment value within the legal entity. In the following example, 1000 and 9000 are assigned to the same legal entity so first 1000 is used to perform intercompany balancing. Then balancing is performed for 1000 and 9000, that is, the primary balancing segments within a legal entity.
  • Source: Manual

  • Category: Adjustment

Line Account Debit Credit Description Uses Rule No.

1

3000-100-1200- 52330- 0000

150

 

 

 

2

4000-110-1200- 41111- 0000

 

140

 

 

3

1000-120-1000- 52345-0000

30

 

 

 

4

9000-130-2000- 52330-0000

 

40

 

 

5

3000- 100- 0000- 21011- 4000

 

140

Intercompany Balancing Line

2

6

4000- 110- 0000- 13013- 3000

140

 

Intercompany Balancing Line

4

7

3000-100-0000- 21010-1000

 

10

Intercompany Balancing Line

1

8

1000-120-0000- 13010-3000

10

 

Intercompany Balancing Line

1

9

1000-120-0000- 21010-9000

 

40

Ledger Intercompany Balancing Line

1

10

9000-130-0000- 13010-1000

40

Ledger Intercompany Balancing Line

1

Many-to-Many Balancing: Example

In this section, we look at many-to-many primary balancing segment value journals and many-to-many legal entity journals.

  • For many-to-many primary balancing segment journals, a clearing company is used if it is available. If no clearing company is available, balancing is done using a default rule that matches the largest debit with largest credit and so on.

  • For many-to-many legal entity journals, a clearing company is required to balance a journal.

Setup

InFusion USA Chart of Accounts as shown in the following table.

Segment Qualifier Primary Balancing Segment Balancing Segment 2 Segment Segment Intercompany Segment

Segment Name

Company

(CO)

Cost Center

(CC)

Product

(PROD)

Account

(ACCT)

Intercompany

(IC)

Ledger, Legal Entity, and Primary Balancing Segment Value Assignments as shown in the following table.

Ledger Legal Entity Primary Balancing Segment Value

InFusion USA

InFusion Farms

3111, 3121, 3199, 3899

InFusion USA

InFusion Textiles

3311

InFusion USA

InFusion Production

3211

InFusion USA

InFusion Sales

3251

Many-to-Many Primary Balancing Segment Values Within One Legal Entity Balanced Using a Clearing Company: Example

Rule No. 1: Chart of Accounts as shown in the following table.

  • Chart of Accounts: InFusion USA

  • Source: Auto copy

  • Category: Accrual

  • Transaction Type: None

IC Account CO CC PROD ACCT IC

AR Account

3111

000

0000

11020

0000

AP Account

3251

000

0000

21021

0000

Rule No. 2: Primary Balancing Segment Rule as shown in the following table.

  • Chart of Accounts: InFusion USA

  • From Primary Segment Value: 3111

  • To Primary Segment Value: All other

  • Source: Auto copy

  • Category: Accrual

  • Transaction Type: None

IC Account CO CC PROD ACCT IC

AR Account

3111

000

0000

11018

0000

AP Account

3111

000

0000

21030

0000

Additional Intercompany Balancing and Clearing Options as shown in the following table.

  • Source: Auto copy

  • Category: Accrual

Journal Lines

Line Account Debit Credit Description Uses Rule No.

1

3111-000-000- 52330-0000

10

 

 

 

2

3121-000-000- 52330-0000

20

 

 

 

3

3199-000-000- 52330-0000

 

14

 

 

4

3899-000-000- 52330-0000

 

16

 

 

5

3199-000-000- 11020-3371

14

 

Ledger Intercompany balancing line

1 and clearing company value 3371

6

3371-000-000- 21021-3199

 

14

Ledger Intercompany balancing line

1 and clearing company value 3371

7

3111-000-000- 21030-3371

 

10

Ledger Intercompany balancing line

2 and clearing company value 3371

8

3371-000-000- 11020-3111

10

 

Ledger Intercompany balancing line

1 and clearing company value 3371

9

3121-000-000- 21021-3371

 

20

Ledger Intercompany balancing line

1 and clearing company value 3371

10

3371-000-000- 11020-3121

20

 

Ledger Intercompany balancing line

1 and clearing company value 3371

11

3899-000-000- 11020-3371

16

 

Ledger Intercompany balancing line

1 and clearing company value 3371

12

3371-000-000- 21021-3899

16

Ledger Intercompany balancing line

1 and clearing company value 3371

 

 

90

90

 

 

Many-to-Many Legal Entity with a Clearing Company: Example

Rule No. 1: Chart of Accounts Rule as shown in the following table.

  • Chart of Accounts: InFusion USA

  • Source: Other

  • Category: Other

  • Transaction Type: None

IC Account CO CC PROD ACCT IC

AR Account

3111

000

0000

11020

0000

AP Account

3251

000

0000

21021

0000

Additional Intercompany Balancing and Clearing Options as shown in the following table.

  • Source: Auto copy

  • Category: Accrual

Condition Source Value

Use clearing company for all many-to-many journal

Default clearing balancing segment value

3899

Journal Lines

Line Account Debit Credit Description Uses Rule No.

1

3111-000-000- 52330-0000

10

 

 

 

2

3311-000-000- 52330-0000

20

 

 

 

3

3211-000-000- 52330-0000

 

14

 

 

4

3251-000-000- 52330-0000

 

16

 

 

5

3111-000-000- 21021-3899

 

10

Ledger Intercompany balancing line

1 and clearing company 3899

6

3211-000-000- 11020-3899

14

 

Ledger Intercompany balancing line

1 and clearing company 3899

7

3251-000-000- 11020-3899

16

 

Ledger Intercompany balancing line

1 and clearing company 3899

8

3311-000-000- 21021-3899

 

20

Ledger Intercompany balancing line

1 and clearing company 3899

9

3899-000-000- 11020-3111

10

 

Ledger Intercompany balancing line

1 and clearing company 3899

10

3899-000-000- 21021-3211

 

14

Ledger Intercompany balancing line

1 and clearing company 3899

11

3899-000-000- 21021-3251

 

16

Ledger Intercompany balancing line

1 and clearing company 3899

12

3899-000-000- 11020-3311

20

Ledger Intercompany balancing line

1 and clearing company 3899

 

 

90

90

 

 

Many-to-Many Primary Balancing Segment within a Legal Entity and No Clearing Company Specified: Example

The default rule is used which applies largest debit to largest credit and so on.

Note: The default rule is only used for Many-to-Many Primary Balancing Segment and is not used for Many-to-Many legal entity.

Rule No. 1: Chart of Accounts Rule as shown in the following table.

  • Chart of Accounts: InFusion USA

  • Source: Other

  • Category: Other

  • Transaction Type: None

IC Account CO CC PROD ACCT IC

AR Account

3111

000

0000

13011

0000

AP Account

3111

110

0000

21081

0000

Balancing will take the line with the largest debit which is line number 2 and balance it against the largest credit which is line 4. Then it takes the balance of line 2 and balance this against line 3 and so on.

Journal Lines as shown in the following table.

Line Account Debit Credit Description Notes

1

3111-000-000- 52330-0000

10

 

 

 

2

3121-000-0000- 52330-0000

20

 

 

 

3

3199-000-0000- 52330-0000

 

14

 

 

4

3899-000-0000- 52330-0000

 

16

 

 

5

3899-000-0000- 13011-3121

16

 

Ledger Intercompany balancing line

First, Line 4, the largest credit is balanced against line 2, the largest debit

6

3121-000-0000- 21081-3899

 

16

Ledger Intercompany balancing line

First, Line 4, the largest credit is balanced against line 2, the largest debit

7

3199-000-0000- 13011-3121

4

 

Ledger Intercompany balancing line

Remainder of line 2 is balanced against line 3, which is the next largest credit amount

8

3121-000-0000- 21081-3199

 

4

Ledger Intercompany balancing line

Remainder of line 2 is balanced against line 3, which is the next largest credit amount

9

3199-000-0000- 13011-3111

10

 

Ledger Intercompany balancing line

Finally, line 1 is balanced against the remainder of line 3.

10

3111-000-0000- 21081-3199

 

10

Ledger Intercompany balancing line

Finally, line 1 is balanced against the remainder of line 3.

 

 

60

60

 

 

This topic provides examples of additional intercompany balancing and clearing options, the setup required, and the journal before and after balancing.

Additional Intercompany Balancing Segment Options

In this scenario the enterprise has the second balancing segment and the third balancing segment enabled for its chart of accounts. The journal is balanced by primary balancing segment but is out of balance by the second balancing segment and the third balancing segment.

Setup

  • InFusion USA Chart of Accounts

The following table describes the structure of the InFusion USA chart of accounts.

Segment Qualifier Primary Balancing Segment Second Balancing Segment Third Balancing Segment Product Account Intercompany Segment

Segment Name

Company

(CO)

Cost Center

(CC)

Division

(DIV)

Product

(PROD)

Account

(ACCT)

Intercompany

(IC)

  • Ledger, Legal Entity, Primary Balancing Segment Value Assignments

The following table describes the defined ledger, legal entity, and primary balancing segment values.

Ledger Legal Entity Primary Balancing Segment Value

InFusion USA

InFusion Farms

3100, 3200, 3300, 3400, 3500

InFusion USA

InFusion Textiles

4000

InFusion USA

InFusion Products (East)

5000

InFusion USA

InFusion Products (West)

6000

InFusion USA

 

1000, 9000

  • Additional Intercompany Balancing and Clearing Options as shown in the following table.

Rule Number Ledger Source Category Transaction Type AR Account AP Account

1

InFusion USA

Other

Other

None

1000 - 000 -200 - 0000 - 13010 - 0000

1000 - 000 - 100- 0000 - 21010 - 0000

  • Journal Balancing

    • Journal Before Balancing as shown in the following table.

Line Line Type Legal Entity CO CC DIV PROD ACCT IC Debit Credit

1

Expense

InFusion Farms

3100

100

110

1200

52330

0000

150

 

2

Liability

InFusion Farms

3100

500

330

1300

40118

0000

 

150

  • Journal Balancing

    • Journal after Balancing as shown in the following table.

Line Legal Entity CO CC DIV PROD ACCT IC Debit Credit Uses Rule

1

InFusion Farms

3100

100

110

1200

52330

0000

150

 

 

2

InFusion Farms

3100

500

330

1300

40118

0000

 

150

 

3

InFusion Farms

3100

100

110

0000

21010

0000

 

150

1

4

InFusion Farms

3100

500

330

0000

13010

0000

150

 

1

Manage Intercompany Allocations

Intercompany Allocations: How They Are Processed

The two processes you can use for intercompany allocation generation are Generate Intercompany Allocations and Generate General Ledger Allocations. You can use both processes for single-ledger allocations or cross-ledger allocations. The Generate Intercompany Allocations process updates Oracle Fusion Intercompany tables. The Generate General Ledger Allocations process updates Oracle Fusion General Ledger tables.

Settings That Affect Intercompany Allocations

The following table describes the parameters for the Generate Intercompany Allocations and Generate General Ledger Allocations processes.

Parameter Generate Intercompany Allocation Process Generate General Ledger Allocations Process

Rule or Rule Set

Select the rule or rule set to create allocation calculations.

Select the rule or rule set to create allocation calculations.

Intercompany Transaction Type

Select the type of transactions that are grouped together and are identified by the type of intercompany transaction.

Not Applicable

Post Allocations

Not Applicable

Select to book amounts spread from one account to another.

Process Cross-Ledger Allocations

Not Applicable

Process allocations that run across more than one ledger.

Use Intercompany Accounts

Not Applicable

Post allocation transactions to the intercompany accounts determined by the FUN application programming interface (API).

This option appears only for cross-ledger allocations.

Use Suspense Account

Not Applicable

Post allocation transactions to the suspense account, if one exists. Cross-ledger allocations are processed using Journal Import.

This option appears only for cross-ledger allocations.

How Intercompany Allocations are Processed Using the Generate Intercompany Allocations Process

The Generate Intercompany Allocations process:

  1. Calls the FUN API to create intercompany transactions and process the allocation lines.

  2. Extracts the allocation lines from the General Ledger interface table and populates the Intercompany interface tables.

  3. Removes the allocation lines from the General Ledger interface table upon successfully populating the Intercompany interface tables.

  4. Generates a batch by provider legal entity and groups lines by receiver legal entity so that there is one transaction per legal entity.

  5. Uses the entered currency amounts for populating the Intercompany interface tables.

How Intercompany Allocations are Processed Using the Generate General Ledger Allocations Process

The Generate General Ledger Allocations process:

  1. Uses Journal Import to process the intercompany allocations if you select to post allocations for single ledger journals.

  2. Calls the FUN API to generate the intercompany accounts if the rule or rule set contains cross-ledger lines. You select to process cross-ledger allocations using the intercompany accounts.

    Note: If you select to process cross-ledger allocations using the suspense account, Journal Import processes the allocation lines.
  3. Provides the intercompany receivables or intercompany payables account lines for cross-ledger allocations going to General Ledger.

  4. Populates the General Ledger interface table with the appropriate line for each ledger of the cross-ledger allocation.

The receivables (AR) and payables (AP) accounts for manual intercompany transactions are generated automatically by Oracle Fusion Intercompany. Enter distributions for the transaction and intercompany generates the receivables and payables accounts, based on the intercompany balancing rules setup.

Intercompany uses the transaction type, provider legal entity, receiver legal entity, primary balancing segment value of the first provider distribution and the primary balancing segment value of the first receiver distribution to ascertain which rule to apply. Intercompany then uses the rule, and the balancing segment values of the first provider distribution to build the intercompany receivable account combination for the provider side of the transaction. Similarly, intercompany builds the intercompany payables account for the receiver side of the transaction, based on the first receiver distribution account.

Intercompany will evaluate the rules in the following order.

  1. Primary balancing segment rules

  2. Legal entity level rules

  3. Ledger level rules

  4. Chart of accounts rules

If there is no matching rule at the lower levels, then intercompany will use the chart of accounts rule. It is therefore recommended that you set up a chart of accounts rule for every chart of accounts structure you have. This will ensure that intercompany will always find a rule to use to generate the intercompany receivables and intercompany payables accounts for transactions.

Intercompany will then evaluate the transaction type in determining which rule to use to generate the receivables or payables account. A rule with a specific transaction type takes precedence over a rule defined for the All Other transaction type.

Generating Intercompany Receivables and Intercompany Payables Accounts for Manual Transactions Example

In this scenario you choose to track your intercompany sales for the farming and textile companies separately from other intercompany activities. Separate intercompany accounts are used for these two companies. A chart of accounts rule is created for all other intercompany activity.

Setup

InFusion USA Chart of Accounts as shown in the following table.

Segment Qualifier Primary Balancing Segment Balancing Segment 2 Segment Segment Intercompany Segment

Segment Name

Company

(CO)

Cost Center

(CC)

Product

(PROD)

Account

(ACCT)

Intercompany

(IC)

Ledger, Legal Entity, and Primary Balancing Segment Value Assignments as shown in the following table.

Ledger Legal Entity Primary Balancing Segment Value

InFusion USA

InFusion Farms

3100, 3200, 3300, 3400, 3500

InFusion USA

InFusion Textiles

4000

InFusion USA

InFusion Production

5000

InFusion USA

 

1000, 9000

Chart of Accounts Rule

Rule No. 1 as shown in the following table.

  • Chart of Accounts: InFusion USA

  • Source: None

  • Category: None

  • Transaction Type: All Other

IC Account CO CC PROD ACCT IC

AR Account

1000

000

0000

13020

0000

AP Account

1000

000

000

21020

000

Legal Entity Rules.

Rule No. 2 as shown in the following table.

  • From Ledger and To Ledger: InFusion USA

  • From Legal Entity: InFusion Farms

  • To Legal Entity: InFusion Textiles

  • Source: None

  • Category: None

  • Transaction Type: Intercompany (IC) Sales

IC Account CO CC PROD ACCT IC

AR Account

1000

000

0000

13011

0000

AP Account

1000

000

0000

21011

0000

Rule No. 3 as shown in the following table.

  • From Ledger and To Ledger: InFusion USA

  • From Legal Entity: InFusion Farms

  • To Legal Entity: InFusion Production

  • Source: None

  • Category: None

  • Transaction Type: Intercompany (IC) Sales

IC Account CO CC PROD ACCT IC

AR Account

1000

000

0000

13012

0000

AP Account

1000

000

0000

21012

0000

Rule No. 4 as shown in the following table.

  • From Ledger and To Ledger: InFusion USA

  • From Legal Entity: InFusion Textiles

  • To Legal Entity: InFusion Farms

  • Source: None

  • Category: None

  • Transaction Type: Intercompany (IC) Sales

IC Account CO CC PROD ACCT IC

AR Account

1000

000

0000

13013

0000

AP Account

1000

000

0000

21013

0000

Rule No. 5 as shown in the following table.

  • From Ledger and To Ledger: InFusion USA

  • From Legal Entity: InFusion Textiles

  • To Legal Entity: InFusion Production

  • Source: None

  • Category: None

  • Transaction Type: Intercompany (IC) Sales

IC Account CO CC PROD ACCT IC

AR Account

1000

000

0000

13014

0000

AP Account

1000

000

0000

21014

0000

Intercompany Accounts Generated for Intercompany Debit Transactions

Provider Distribution and Intercompany Receivable Account

This table displays the Provider side of the transaction.

Transaction Transaction Type Provider LE Receiver LE Provider Distribution Provider AR Account Generated Uses Rule No.

1

IC Sales

InFusion Farms

InFusion Textiles

3100- 100- 1200- 52330- 0000

3100- 100- 0000- 13011- 4000

2

2

IC Adjustments

InFusion Farms

InFusion Textiles

3100- 100- 1200- 52330- 0000

3100- 100- 0000- 13020- 4000

1

3

IC Sales

InFusion Production

InFusion Farms

5000- 120- 1300- 52345- 0000

5000- 120- 0000- 13020- 3200

1

Receiver Distribution and Intercompany Payable Account

This table displays the Receiver side of the transaction.

Transaction Transaction Type Receiver LE Provider LE Receiver Distribution Receiver AR Account Generated Uses

1

IC Sales

InFusion Textiles

InFusion Farms

4000- 110- 1200- 41111- 0000

4000- 110- 0000- 21013- 3100

4

2

IC Adjustments

InFusion Textiles

InFusion Farms

4000- 110- 1200- 41111- 0000

4000- 110- 0000- 21020- 3100

1

3

IC Sales

InFusion Farms

InFusion Production

3200- 130- 1200- 41112- 0000

3200- 130- 0000- 21012- 5000

3

Intercompany Accounts Generated for Intercompany Credit Transactions as shown in the following table.

Provider Distribution and Intercompany Receivable Account

Transaction Transaction Type Provider LE Receiver LE Provider Distribution Provider AR Account Generated Uses Rule No.

4

IC Sales

InFusion Farms

InFusion Textiles

3100- 100- 0000- 52330- 0000

3100- 100- 0000- 13011- 4000

2

5

IC Adjustments

InFusion Farms

InFusion Textiles

3100- 100- 1200- 52330- 0000

3100- 100- 0000- 13020- 4000

1

6

IC Sales

InFusion Production

InFusion Farms

5000- 120- 1300- 52345- 0000

5000- 120- 0000- 13020- 3200

1

Receiver Distribution and Intercompany Payable Account

This table displays the Receiver side of the transaction.

Transaction Transaction Type Receiver LE Provider LE Receiver Distribution Receiver AP Account Generated Uses Rule No.

4

IC Sales

InFusion Textiles

InFusion Farms

4000- 100- 1200- 41111- 0000

4000- 100- 0000- 21013- 3100

4

5

IC Adjustments

InFusion Textiles

InFusion Farms

4000- 100- 1200- 41111- 0000

4000- 100- 0000- 21020- 3100

1

6

IC Sales

InFusion Farms

InFusion Production

3200- 130- 1200- 41112- 0000

3200- 130- 0000- 21012- 5000

3

Cross-Ledger Allocations: How They Are Processed

Journals can be for a single ledger or multiple ledgers within a ledger set. When you create cross-ledger allocations, they must have only one debit or one credit line. The other side of the journal can have as many lines as you need. The process adds an intercompany receivables or intercompany payables line to each ledger's journal so it can be posted. The intercompany receivables and payables accounts are generated based on the intercompany balancing rules.

Settings That Affect Allocations

General Ledger Allocations

For the Generate General Ledger Allocations process, set the parameters listed in the following table to create allocation journals:

Parameter Description

Rule or Rule set

Select the rule or rule set to create allocation lines.

Post Allocations

Select to automatically post allocation journals after they have been imported.

Intercompany Allocations

For the Generate Intercompany Allocations process, set the parameters listed in the following table to create intercompany allocations:

Parameter Description

Rule or Rule set

Select the rule or rule set to create allocation calculations.

Intercompany Transaction Type

Select the transaction type to be used to create the intercompany transactions.

How Allocations are Processed Using the Generate General Ledger Allocations Process

The Generate General Ledger Allocations process creates journals from the allocation lines generated by the rule or rule set.

Journals can be for a single ledger or multiple ledgers. If the allocation lines span multiple ledgers each journal is balanced using the intercompany balancing rules. When you create cross-ledger allocation rules each rule must only result in either one debit line or one credit line with as many lines on the other side as you need. The process then adds intercompany receivables or intercompany payables lines to cross-ledger journals so they can be imported into the relevant ledger.

How Allocations are Processed Using the Generate Intercompany Allocations Process

The Generate Intercompany Allocations process creates an intercompany batch, transactions, provider distributions and receiver distributions from the allocation lines generated by the rule or rule set. The process creates intercompany transactions in the entered currency of the allocation lines.

The Intercompany uses the primary balancing segment values, the balancing segment to legal entity assignments and the intercompany organizations set up to create transactions from your allocation.

You can create intercompany transactions from either single ledger or cross-ledger allocation lines. To successfully process cross-ledger allocations you must have either one debit line or one credit line per allocation but as many lines as required for the other side. The single debit or single credit line forms the provider side of the transaction and the lines on the other side form the receiver side of the transaction.

Cross-Ledger Allocations: Examples

You can process cross-ledger allocations by choosing to create them as general ledger journals or intercompany transactions. Choose to generate journals from an allocation rule or rule set by submitting the Generate General Ledger Allocations process. This process provides options to balance any cross-ledger journal with a receivables or payables line.

You can also choose to create intercompany transactions from an allocation rule or rule set by submitting the Generate Intercompany Allocations process. This creates intercompany transactions that optionally can be routed to Receivables for invoice generation.

The following scenario illustrates generating balancing journal entries as well as intercompany transactions for cross-ledger allocations.

Intercompany Allocation Entries

At month end the accountant allocates a portion of any centrally incurred expenses across all organization units that contribute to, or benefit from, that expenditure, based upon a calculation that represents a reasonable allocation of how that expense should be split. By doing this allocation, the Income Statement or Profit and Loss statement for each of those organization units shows a fair representation of its share of operational costs.

In many cases, allocations only take place between departments within one subsidiary, but there may be other costs that are shared between subsidiaries on a regular basis.

For example, marketing expense is incurred within a central corporate ledger, and is allocated to the United States (US), Canadian (CA), and United Kingdom (UK) organizations based on sales volume. These organizations are separate legal entities with their own separate ledgers. The US organization bears 50% of the cost and the CA and UK organizations each bear 25% of the cost.

The Marketing Costs allocation rule is set up to generate the allocation lines listed in the following table.

Ledger Account Debit Credit Description

InFusion USA

3111-110-0000-41110-0000

 

USD 500

Allocation Line

InFusion UK

3411-000-0000-52330-0000

USD 250

 

Allocation Line

InFusion Canada

3511-120-0000-52330-0000

USD 250

 

Allocation Line

The intercompany balancing rules are set up to use the following accounts.

  • Receivables Account: 3000-000-0000-13011-0000

  • Payables Account: 3000-000-0000-21081-0000

Generate General Ledger Allocations Using Intercompany Accounts

Submit the Generate General Ledger Allocations process and choose your Rule or Rule Set. Select Process Cross-Ledger Allocations and Use Intercompany Accounts options to use intercompany balancing rules to generate the receivables and payables accounts required to balance cross-ledger allocation journal lines.

The following journals are created for the Marketing Costs allocation rule.

The following table described the InFusion USA journal after cross-ledger balancing:

Ledger Account Debit Credit Description

InFusion USA

3111-110-0000-41110-0000

 

USD 500

Allocation Line

InFusion USA

3111-110-0000-13011-3411

USD 250

 

Cross-Ledger Intercompany Allocation with Ledger InFusion UK

InFusion USA

3111-110-0000-13011-3511

USD 250

 

Cross-Ledger Intercompany Allocation with Ledger InFusion Canada

The following table described the InFusion UK journal after cross-ledger balancing:

Ledger Account Debit Credit Description

InFusion UK

3411-000-0000-52330-0000

USD 250

 

Allocation Line

InFusion UK

3411-000-0000-21081-3111

 

USD 250

Cross-Ledger Intercompany Allocation with Ledger InFusion USA

The following table described the InFusion Canada journal after cross-ledger balancing:

Ledger Account Debit Credit Description

InFusion Canada

3511-120-0000-52330-0000

USD 250

 

Allocation Line

InFusion Canada

3511-120-0000-21081-3111

 

USD 250

Cross-Ledger Intercompany Allocation with Ledger InFusion USA

Generate Intercompany Allocations

Submit the Generate Intercompany Allocations process to create intercompany transactions. If you need invoices for your allocations choose an intercompany transaction type that requires invoicing so the intercompany transactions get routed to Receivables for invoice generation.

Ledger, Legal Entity, and Primary Balancing Segment assignments are set up as shown in the following table:

Ledger Legal Entity Primary Balancing Segment

InFusion USA

USA Corp

3111

InFusion UK

UK Corp

3411

InFusion Canada

Canada Corp

3511

Intercompany organizations are set up as listed in the following table.

Intercompany Organization Legal Entity

USA Sales

USA Corp

UK Sales

UK Corp

Canada Sales

Canada Corp

The following table lists the provider intercompany transactions that are created for the Marketing Costs allocation rule.

Batch 101:

Provider Transaction Number Distribution Number Distribution account Debit Credit

USA Sales

1

1

3111-110-0000-41110-0000

 

USD 250

 

 

2

3111-110-0000-13011-3411

USD 250

 

 

2

1

3111-110-0000-41110-0000

 

USD 250

 

 

2

3111-110-0000-13011-3511

USD 250

 

The following table lists the receiver intercompany transactions that are created for the Marketing Costs allocation rule.

Receiver Transaction Number Distribution Number Distribution account Debit Credit

UK Sales

1

1

3411-000-0000-52330-0000

USD 250

 

 

 

2

3411-000-0000-21081-3111

 

USD 250

Canada Sales

2

1

3511-120-0000-52330-0000

USD 250

 

 

 

2

3511-120-0000-21081-3111

 

USD 250

FAQs for Manage Intercompany Allocations

Use the Social link on the Intercompany Transactions work area to invite others to a conversation to address the adjustments.

For example, the monthly intercompany allocation of administration costs changed substantially to more accurately reflect resource usage. You need the cost center owners to validate their intercompany allocation.

From the Intercompany Transactions work area:

  1. Search for the intercompany transaction.

  2. Click Social to open Oracle Social Network. Click the Share button, or click Join if collaboration has already been initiated.

  3. Create a new related conversation.

  4. Invite all of the cost center owners to join the conversation.

  5. Upload the allocation spreadsheet for the cost center owners' review.

The cost center owners can post questions and because the other cost center owners are members, they can see your responses to the questions. Each cost center owner validates their intercompany allocation in the conversation itself, which creates a lasting record.

Intercompany Organization Configuration Examples

Intercompany Organization Configuration: Example

This topic provides examples of intercompany organizations with various options.

The intercompany module allows you to create intercompany transactions that have an invoice associated with them. If you require invoices for your intercompany transactions, you must complete the following additional intercompany setup.

  • Associate your provider intercompany organization to a receivables business unit and your receiver intercompany organization to a payables business unit.. The invoice for your intercompany transaction will be raised in the receivables business unit and it will be recorded in the payables business unit.

  • Associate a supplier to your provider legal entity and a customer account to your receiver legal entity.

    Note: The Intercompany module leverages the Invoicing and Customer features in Receivables to generate invoices for intercompany transactions. The Supplier feature in Procurement and the Payables Invoicing feature are leveraged to record the invoice in Payables.

Intercompany Organization Configuration: Example

In this example, Vision Corporation has two legal entities, Vision Operations legal entity and Vision Services legal entity which provide goods and services to each other. The company has a requirement to record intercompany activity between these legal entities. In some circumstances, Vision Operations legal entity provides goods to Vision Services legal entity and in other circumstances Vision Services legal entity provides services to Vision Operations legal entity. Therefore it is necessary for each of these legal entities to be able to invoice the other legal entity as well as record a payables invoice received from the other legal entity.

The following figure illustrates the Intercompany Organization Setup. Vision Operations is an Intercompany organization that has a legal entity called Vision Operations Legal Entity. Vision Operations Legal Entity has a Receivables Business Unit, Operations AR and a Payables Business Unit, Operations AR. Vision Services is the other Intercompany organization that has a legal entity called Vision Operations Legal Entity. Vision Operations Legal Entity has a Receivables Business Unit, Services AR and a Payables Business Unit, Services AP.

The figure describes how Intercompany organization
is configured.

The following figure illustrates the Customer And Supplier assignments.

The figure shows that Vision Operations Legal Entity is assigned to Customer Account 123 and Supplier 123. Vision Services Legal Entity is assigned to Customer Account 456 and Supplier 456.

This image illustrates how Legal Entity is described.

The following table describes Vision Operations Intercompany Organization as a Provider.

Type Intercompany Organization Legal Entity Receivables Business Unit Payables Business Unit Comments

Provider

Vision Operations

Vision Operations Legal Entity

Operations AR

Operations AP

AR invoice will be created in Operations AR business unit which is the receivables business unit of the Provider. Customer will be the one assigned to Vision Services Legal Entity.

Receiver

Vision Services

Vision Services Legal Entity

Services AR

Services AP

AP Invoice will be created in Services AP business unit which is the Payables business unit of the Receiver. Supplier will be the one assigned to Vision Operations Legal Entity.

The following table describes the required Customer Supplier Assignments setup.

Type Legal Entity Customer Account Customer Account Supplier Supplier Site

Provider

Vision Operations Legal Entity

 

 

Supplier 123

Supplier 123 must have a site with Primary Pay site purpose enabled in Services AP business unit

Receiver

Vision Services Legal Entity

Customer Account 456

Customer Account 456 must have a Bill To site in Operations AR business unit.

 

 

The table describes the Invoices created.

Type Legal Entity Invoices

Provider

Vision Operations Legal Entity

AR Invoice 101 raised for Customer Account 456 in Operations AR business unit.

Receiver

Vision Services Legal Entity

AP Invoice 101 recorded for Supplier 123 in Services AP business unit.

Scenario

The following table describes the Vision Operations Intercompany Organization as a Receiver.

Type Intercompany Organization Legal Entity Receivables Business Unit Payables Business Unit Comments

Receiver

Vision Operations

Vision Operations Legal Entity

Operations AR

Operations AP

AP Invoice will be created in Operations AP business unit which is the payables business unit of the Receiver. Supplier will be the one assigned to Vision Services Legal Entity

Provider

Vision Services

Vision Services Legal Entity

Services AR

Services AP

AR invoice will be created in Services AR business unit which is the receivables business unit of the Provider.

Customer will be the one assigned to Vision Operations Legal Entity.

The following table describes the required Customer Supplier Assignments setup.

Type Legal Entity Customer Account Customer Site Supplier Supplier Site

Receiver

Vision Operations Legal Entity

Customer Account 123

Customer Account 123 must have a Bill To site in Services AR business unit.

 

 

Provider

Vision Services Legal Entity

 

 

Supplier 456

Supplier 456 must have a site with Primary Pay site purpose enabled in Operations AP business unit

The table describes the Invoices created.

Type Legal Entity Invoices

Receiver

Vision Operations Legal Entity

AP Invoice 102 recorded for Supplier 456 in Operations AP business unit

Provider

Vision Services Legal Entity

AR Invoice 102 raised for Customer Account 123 in Services AR business unit

Intracompany Organization Configuration: Example

The following example explains Intracompany Invoices.

In this example, Vision Corporation has one legal entity, Vision Operations Legal Entity which is associated with multiple intercompany organizations within the corporate structure. In the following configuration, the Vision Operations intercompany organization provides goods to Vision Administration intercompany organization and in other circumstances Vision Administration provides services to Vision Operations. The business has a requirement for each of these intercompany organizations to be able to invoice the other as well as record a payables invoice received from the other intercompany organization.

Intercompany Organizations Setup

The following figure illustrates the Intercompany Organizations Setup.

The following figure shows how intercompany organizations, Vision Operations and Vision Administration generate invoices and record Payables invoice from the intercompany organization. Vision Operations is an Intercompany organization that has a legal entity called Vision Operations Legal Entity. Vision Operations Legal Entity has Payables Business Unit and Receivables Business Unit. Vision Administration is the other Intercompany organization that has a legal entity called Vision Operations Legal Entity. Vision Operations Legal Entity has a Payables Business Unit and Receivables Business Unit.

This image illustrates Intercompany Organization.

The following figure illustrates the Customer And Supplier assignments.

The following image shows that Vision Operations Legal Entity is assigned to Customer Account 456 and Supplier 123.

This figure shows Vision Operations legal entity.

The following table describes the Intracompany Organization as a Provider:

Type Intercompany Organization Legal Entity Receivables Business Unit Payables Business Unit Comments

Provider

Vision Operations

Vision Operations Legal Entity

Operations AR

Operations AP

AR invoice is created in Operations AR business unit which is the receivables business unit of the Provider. Customer is the one assigned to Vision Operations Legal Entity.

Receiver

Vision Administration

Vision Operations Legal Entity

Operations AR

Administration AP

AP Invoice is created in Administration AP business unit which is the payables business unit of the Receiver. Supplier is the one also assigned to Vision Operations Legal Entity

The following table describes the required Customer Supplier Assignments Setup.

Type Legal Entity Customer Account Customer Site Supplier Supplier Site

Provider

Vision Operations Legal Entity

 

 

Supplier 123

Supplier 123 must have a site with Primary Pay site purpose enabled in Administration AP business unit

Receiver

Vision Operations Legal Entity

Customer Account 456

Customer Account 456 must have a Bill To site in Operations AR business unit.

 

 

The following table describes the Invoices created.

Type Intercompany Organization Legal Entity Invoice

Provider

Vision Operations

Vision Operations Legal Entity

AR Invoice 101 raised for Customer Account 456 in Operations AR business unit

Receiver

Vision Administration

Vision Operations Legal Entity

AP Invoice 101 recorded for Supplier 123 in Administration AP business unit