Intercompany billing

Project contracts can be created with a funding source to bill another accounting entity.

Use Intercompany Billing functionality on project contracts to complete these functions:

  • Create invoice documents
  • Journal entries for receivables and payables
  • Payments or cash settlements between the accounting entities

See the Intercompany Billing User Guide and the Financials Setup and Administration Guide for information about setup and processing.

Setup in other solutions

This table shows the setup that is required when you use Intercompany Billing with project contracts:

Setup Description
Global Ledger Companies
Receivables Company
Payables Company
Intercompany Billing Create at least one group, units of measure, and a recharge item.

The recharge item must include a chart account. A recharge item is assigned to the project funding source and is used to create intercompany invoice lines from project contracts.

Setup for projects

This table contains information about fields that are used to create projects when intercompany billing is used:

Record Description
Project Funding Create Finance Dimension 2 for project funding types that are Intercompany Billing.

Select a Payables Company and Payables Expense Finance Structure.
Project Contract In the Revenue Recognition field, select Combined if any funding source for the project contract is intercompany billing.
Project Funding Source Select values for these intercompany billing fields: Receivables Company, Recharge Item, and Payables Expense Finance Structure.

Processing

This table shows how the process is affected when you use Intercompany Billing with project contracts:

Action Description
Generate invoices Use the standard actions to generate project contract invoices. A green alert on the invoice detail is used to denote an intercompany invoice. The company column contains the accounts payable company.

On external funding type invoices, the company column shows the accounts receivable company and the customer column contains the accounts receivable customer. The Intercompany Transactions tab shows the intercompany transaction lines and the standard Invoice Lines tab is displayed.

Journalize invoices Use the Journalize Invoices action to create released intercompany billing transaction records for each project contract invoice line. The related journal entries and receivable invoice are created when the intercompany billing document is released.

When you reverse journalized invoices, the project invoice is in a created state. The reversing entries are sent to intercompany billing to complete the reversal.

For information about project invoicing, see Invoicing and revenue recognition.

After the project contract invoices are journalized in Project Ledger for intercompany billing funding sources, the process is completed in Intercompany Billing.