Centralized Procurement Billing
Procurement billing services can be centralized without requiring financial orchestration flows which simplifies both the process and the accounting.
Key components of centralized billing are:
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Bill-to business unit (BU) as invoice processing party
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Sold-to legal entity (LE) as the liable party
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No inter-company invoices required
Bill-to Business Unit
This is the business unit which vouchers supplier invoices for a received purchase order. A single bill-to BU can serve as a centralized invoice processing party for multiple requisitioning business units. The bill-to BU on the purchase order is derived from the bill-to BU specified on the supplier site assignment for the requisitioning BU on the purchase order.
Sold-to Legal Entity
This is the legal entity that's financially responsible for the purchases on a purchase order and is specified on that purchase order. So even though the invoicing is handled by another party the liability for the purchase remains with this legal entity.
Inter-company Invoices
Using this method of centralized billing means that no inter-company invoices are required. Accounting for the purchases are managed through standard general ledger journal entries.