Example of Intercompany Organization Configuration
This topic provides examples of intercompany organizations with various options.
The intercompany module lets you 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.
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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.
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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 Customer And Supplier assignments.
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 |