Business Scenario

In a global company, expenses such as subscription charges and marketing campaign expenses accrued by subsidiaries are charged and settled through the parent company.

Subsequently, the parent company recharges these expenses to the beneficiaries using intercompany transactions.

For example, a subscription charge of $1,000, incurred by the subsidiary company, is billed by the supplier to the parent company. An invoice, for payment on behalf of the expense is created for the supplier in Oracle Payables with the parent company as the paying entity. The Payables invoice is converted into intercompany transactions resulting in intercompany receivables of $1,000 for the parent company and intercompany payables of $1,000 for the subsidiary company. The parent company pays the supplier the invoice amount of $1,000.