Setting up transfer pricing recharges

Before you set up transfer pricing, you must set up Global Ledger, Payables, Receivables, and Intercompany Billing.

  1. Select Intercompany Billing > Transfer Pricing Allocations > Recharges.
  2. Click Create.
  3. Specify this information:
    Recharge Name
    Specify the name of the transfer pricing calculation.
    Description
    Specify the description of the transfer pricing calculation.
    Bill From Entity
    The entity that is associated with the receivables company is the default value. The bill from entity is used to determine the entity for the source balances and for the receivables distribution account.
    Receivables Company
    Specify the receivables company for billing document processing.
    Ledger
    Select the ledger from which the balances will be calculated.
    Calendar
    Select the Global Ledger calendar for processing transfer pricing. The calendar determines the periods and balances that are allocated.
    Period Type
    Select whether to process weekly, monthly, quarterly or annual balances. The period type must exist in the calendar.
    Year To Date
    Select this check box to process period balances up to the current period.
    Recharge Currency
    Select the currency to use for the recharge amount calculation. If this field is blank, then the currency from the receivables company is used.
    Recharge Currency Table
    Select the currency rates that are used for recharge amount calculation. The currency table must be selected if the recharge currency is different from the source amount currency.

    If this field is blank, then the global ledger company override currency is used if it is defined. Otherwise, the finance enterprise group currency exchange table is used.

  4. On the Billing Document tab, specify this information:
    Billing Recharge Item
    Select the billing recharge line item that is used to create the billing document.
    Receivables Revenue Account Override
    If the billing document for the recharge requires a specific receivables revenue account, then specify a billing document override. This overrides the defaults and accounts that are set up in the billing recharge item.
    Payables Expense Account Override
    If the billing document for the recharge requires a specific payables expense account, then specify a billing document override. This overrides the defaults and accounts that are set up in the billing recharge item.
    Billing Document Currency
    Select the currency to use for billing document. The receivables company currency is the default.
    Billing Document Currency Table
    Select the currency rates that are used for the billing document. The currency table must be selected if the Billing Document Currency is different from the recharge amount currency. If this field is blank, then default values are used in this order:
    • Recharge Currency table is used, if it is defined
    • Global Ledger Company override currency is used, if it is defined
    • Otherwise, Finance Enterprise Group currency exchange table is used.
  5. Click Save.
  6. On the Bill To Entities tab, click Create and define the bill to entity by identifying the payables company.

    For a Recharge, you specify one or more bill to entities. For example, when recharging the shared services costs to multiple entities, each entity must be added.

    When you set up multiple entities, a recharge amount is calculated for each of the entities and a corresponding recharge transaction is created.

    1. Specify this information:
      Bill To Entity
      The entity that is associated with the payables company is used. The bill to entity is used to determine the entity for the source balances and for the payables distribution account.
      Payables Company
      Specify the payables company for the billing document processing.
    2. On the Billing Document tab, specify this information:
      Receivables Revenue Account Override
      If a specific receivables revenue account is required for the entity, then specify a bill to entity override. This overrides the defaults and accounts in the billing recharge item and recharge setup.
      Payables Expense Account Override
      If a specific payables expense account is required for the entity, then specify a bill to entity override. This overrides the defaults and accounts in the billing recharge item and recharge setup
  7. Click Save.
  8. On the Structures tab, specify the valid dimension elements to use as source. By default, the values are set to the enterprise structures.
  9. On the Sources tab, click Create and define the source of the balances to process. Specify this information:
    Description
    Specify the description for the source amount.
    Source Percentage
    Specify the percentage of the source to process.
    Recharge Calculation Option
    Specify the method to use to calculate the recharge amount.
    • Retain: Select this option to use the derived source amount.
    • Split Using Header: Select this option to allocate the source amount so that entities are billed based on the weights that are defined at the recharge level. If this option is selected, then continue with the steps to set up weights at the recharge level.
    • Split Using Source: Select this option to allocate the source amount so that entities are billed based on the weights that are defined at the source level. If this option is selected, then continue with the steps to set up weights at the source level.
    • Split Using Compute: Select this option to allocate the source amounts using the custom compute. This allows entities to be billed based on variable factors like revenue. If this option is selected, then continue with the steps to setup accounting entity compute.

      For more information, see Custom totals and custom computes.

    Use Source Compute
    Select this check box to use custom compute to calculate the source amount. If this field is selected, then continue with the steps to set up the source compute.

    For more information, see Custom totals and custom computes.

  10. Click Save.
  11. If the Recharge Calculation Option is set to Split Using Header or Split Using Source, then specify this information:
    Apply All Weights
    Select this check box if all of the weights that are defined for the period are included when calculating the percent for each entity. If this check box is cleared, then transfer pricing allocations only include weights for all bill to entities when calculating the percent for each entity.
  12. Click Save.
  13. On the Structures tab, specify override structures, if the source address requires different structures for the source balance. Otherwise leave this field blank.
  14. Click Save.
  15. On the Source Address tab, specify the source entity and the dimension elements for the origin of the balances to process. For every dimension you can specify at the posting level or the summary level of the hierarchy.
    Treat blank Project or Finance Dimension 1 as empty
    If you are using a project or Finance Dimension 1 and the value is blank, then select this check box. Selecting this check box indicates that the value should be treated as empty. Clear this check box to indicate a structure level (top node) balance.
  16. Click Save.