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.

• 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 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.

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