Intercompany Trade Scenario

The ownership of the goods changes from an internal financial entity to an external business partner (or affiliated company) based on an order of another internal financial entity, which invoices the external customer.

Example

Sales office S1 and warehouse W1 are part of organization A, but are located in different countries. To fulfill a sales order to an external customer, S1 instructs W1 to deliver the goods to the customer. The warehouse W1 sends an internal invoice to sales office S1 to cover the costs for the goods and the delivery.

The ownership of the goods changes from an external supplier (which can be an affiliated company) to an internal financial entity based on an order of another internal financial entity, which is invoiced by the external supplier.

Example

A multinational organization has a central purchase office that buys materials for its production plants located in various countries. The purchase office buys the materials from external suppliers. The production plants are modeled as separate financial entities. The purchase office charges the production plants internally for the costs it made.

To charge the production plants, the central purchase office sends intercompany trade orders to the production plants. The charges can be based on various pricing rules, such as the purchase price paid to the external supplier.

This scenario is applicable if Order Management and Service are implemented.

Invoicing between a project calculation office and a warehouse or other departments.

Supported price origin: Cost Plus

In case of WIP transfers, work in progress is transferred from one work center to another work center. Each work center is defined as an entity. Each entity belongs to a different internal financial entity. The shipping work center invoices the receiving work center, because ownership changes directly from one internal financial entity to another internal financial entity. Supported price origin: Cost Plus (without markup).

The ownership of the goods changes from one external legal entity to an external business partner based on two orders, for example a sales order and a purchase order, from different internal legal entities.

Example

To fulfill a sales order for an external customer, sales office A instructs purchase office A1 to purchase goods from an external supplier. The supplier delivers the goods directly to the external customer. Sales office A invoices the external customer. The external supplier invoices purchase office A1. To be compensated for the costs incurred, purchase office A1 sends an internal invoice to sales office A.

Goods and the related ownership are transferred from one internal financial entity to another internal financial entity. For example, a warehouse transfer in which goods are transferred from one warehouse to another. Both warehouses are defined as entities. In this scenario, the shipping entity incurs costs on behalf of the receiving entity, or invoices the receiving entity.

Freight costs are invoiced by a shipping office to a warehouse, sales office, or other department.

If a freight order is created for an order, such as a sales order, transfer order, or purchase order, the shipping office pays the freight costs. If specified, to be compensated for the freight costs the shipping office sends an internal invoice to the sales office, warehouse or purchase office on whose behalf the freight costs are incurred. The shipping office and the other departments are defined as entities.

In this scenario, a shipping office is the selling entity and a warehouse, sales office or other department is the buying entity on the intercompany trade order.

See Intercompany trade scenario Freight - process and setup and Internal and external freight invoicing.

Operations or activities are carried out by one financial entity on behalf of another financial entity and costs are incurred, for example, material or labor, for these operations or activities.

Example

A work order to repair an item, linked to a maintenance sales order of another financial entity.

The intercompany trade scenario Expenses is used to determine the intercompany trade amount that the department of the employee who made the expenses charges internally to the department on whose behalf the expenses are made.

The intercompany trade scenario Labor is used to determine the intercompany trade amount that the department of the employee who books the hours charges internally to the department on whose behalf the hours are booked.

This scenario is also used as a Time and Material subscenario of the Subcontracting Depot Repair scenario.

Time and Material subscenario of the Subcontracting Depot Repair scenario.