Cross-Charge Options for Project Business Units
PPM provides two methods to process cross-charge transactions in legal entities.
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Borrowed and Lent Accounting: Creates accounting entries that move an amount equal to the transfer price between the provider and receiver organizations within a legal entity. There is no formal internal invoice created with this method. Costs or revenue are shared based on transfer price rules.
Use the Borrowed and Lent processing method to apply cross-charge transactions within a business unit or between business units.
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Intercompany Billing: Enables the provider organization to present a formal invoice based on the transfer price to the receiver organization and receive payment for services rendered and materials supplied. You can use this processing method between legal entities.
You must set up the contract business unit to use the Intercompany Billing processing method.
This section describes the project business unit options for setting up cross-charge transactions for sharing costs and revenue within and between business units in the same legal entity.
Transfer Price Currency Conversion
Select the date type, either transaction date or project accounting date, and rate type that the application uses by default to determine the conversion rate to convert the transfer price amount from the transaction currency to the ledger currency.
Cross-Charge Transactions Within a Legal Entity
The method of creating cross-charge transactions can be different for transactions within a business unit than the method used across business units. You can choose either the Borrowed and Lent Processing method of creating cross-charge transactions, or specify that no cross-charge transactions will be created.
The processing method that you specify for cross-charge transactions between business units is the default method used between the provider business unit and any other receiver business unit. You can override the default processing method for specific receiver business units.