Intercompany Trade Agreements (tcitr1100m000)

Field Information

Intercompany Trade Agreement

intercompany trade agreement

Scenario

intercompany trade scenario

Allowed values

External Material Delivery Sales

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.

Supported price origins

• Cost-Plus
• Commercial Price
• Sales Order Price (Gross)
• Sales Order Price (Net)
• Sales Order Customs Value
• Profit Split (Gross)
• Profit Split (Net)

External (Material) Delivery Purchase

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.

Supported price origins

• Cost-Plus
• Commercial Price
• Purchase Order Price (Gross)
• Purchase Order Price (Net)

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

Project (PCS) Delivery

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

Supported price origin: Cost-Plus

WIP Transfer

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).

External Material Direct Delivery

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.

Supported price origins

• Cost-Plus
• Commercial Price
• Sales Order Price (Gross)
• Sales Order Price (Net)
• Sales Order Customs Value
• Purchase Order Price (Gross)
• Purchase Order Price (Net)
• Profit Split (Gross)
• Profit Split (Net)

Internal Material Delivery

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.

Supported price origins

• Cost-Plus
• Commercial Price

Note: 

Also used as Time and Material subscenario of the Subcontracting Depot Repair and Internal Service Deliveryscenarios, in which case the supported price origins are:

• Cost-Plus
• Commercial Price
• Zero Price

Freight

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.

Supported price origins

• Cost-Plus
• Commercial Price

Subcontracting Depot Repair

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.

Supported price origins:

• Time and Material
• Commercial Price

Internal Service Delivery

In this scenario, a financial entity within the Service package carries out activities on behalf of another financial entity within the Project package. The entity in Service invoices the Project entity for costs incurred such as the rental of equipment, labor, materials, or travel time.

Example

A service order activity for renting out equipment to a project of another financial entity. The equipment office of the service order activity invoices the project management office for equipment rented out to the project management office that uses the equipment to carry out a project for a customer.

Supported price origins:

• Time and Material
• Commercial Price

Expenses

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.

Supported price origins

• Cost-Plus
• Commercial Price
• Zero Price

Labor

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 and Internal Service Deliveryscenarios.

Supported price origins

• Cost-Plus
• Commercial Price

Other

Time and Material subscenario of the Subcontracting Depot Repair and Internal Service Deliveryscenarios.

Supported price origins

• Cost-Plus
• Zero Price

Subcontracting

This subscenario is used to determine the intercompany trade amount for these objects:

• Service order lines of cost type Subcontracting.
• Maintenance sales order lines of cost type Subcontracting
• Claim lines of cost type Subcontracting

Supported price origins

• Cost-Plus
• Commercial Price
• Zero Price

Tooling

This subscenario is used to determine the intercompany trade amount for these objects:

• Service order lines of cost type Tooling.
• Maintenance work order lines of cost type Tooling
• Claim lines of cost type Tooling

Supported price origins

• Cost-Plus
• Commercial Price
• Zero Price

Travel Time

This subscenario is used to determine the intercompany trade amount for these objects:

• Service order lines of cost type Traveling with travel specification time Travel Time.
• Claim lines of cost type Traveling with travel specification time Travel Time.

Supported price origins

• Cost-Plus
• Commercial Price
• Zero Price

Travel Other

This subscenario is used to determine the intercompany trade amount for these objects:

• Service order lines of cost type Traveling with travel specification time other than Travel Time.
• Claim lines of cost type Traveling with travel specification time other than Travel Time.

Supported price origins

• Cost-Plus
• Commercial Price
• Zero Price

Help Desk

This subscenario is used to determine the intercompany trade amount for these objects:

• Service order lines of cost type Help Desk.
• Maintenance sales order lines of cost type Help Desk
• Claim lines of cost type Help Desk
• Service calls

Supported price origins

• Cost-Plus
• Commercial Price
• Zero Price

Rental

This subcenario is used to determine the intercompany trade amount that the department that incurred the costs of renting out equipment charges internally to the department on whose behalf the costs are made. Usually the time that the equipment is rented out is specified for this scenario.

Supported price origins

• Cost-Plus
• Commercial Price
• Zero Price

Note: 

The Labor and Expenses scenarios are unavailable if the:

• From Entity is Warehouse or Project.
• To Entity is Warehouse, Shipping Office, or Project.

The External (Material) Delivery Purchase scenario is unavailable if the:

• From Entity is any of these:

  • Warehouse
  • Project
  • Shipping Office
  • Project Management Office
• To Entity is Shipping Office or Project.

Intercompany Trade Transactions

If this check box is selected, the intercompany trade transactions are generated with the intercompany trade order.

Note: By default, this check box is selected. However, you can modify the value.

Internal Invoice

If this check box is selected, internal invoicing is applicable to intercompany trade transactions.

Note: This check box is enabled only if the Intercompany Trade Transactions check box is selected.

Adopt Selling Cost Structure

If this check box is selected, the cost structure of the selling entity is adopted by the buying entity.

This is used for various types of cost and profit margin analyses.

Note: 

• This check box is:

  • Selected and unavailable for scenario WIP Transfer
  • Cleared and unavailable for scenarios Freight and Subcontracting Depot Repair.
• For the other scenarios, the setting of this check box is defaulted from the Adopt Selling Cost Structure in the Intercompany Trade Parameters (tcitr0100m000) session.
• The setting of this check box is defaulted to the Adopt Selling Cost Structure check box of the intercompany trade order sessions.
• This check box is enabled only if the Intercompany Trade Transactions check box is selected.

COS Cost Component

The cost component to which the intercompany trade COGS ( cost of goods sold) is charged.

Note: 

• This field is enabled only if the Adopt Selling Cost Structure checkbox is cleared.
• You can only specify a cost component for which the cost type is material.
• This field is disabled if the Scenario field is set to Freight, Subcontracting Depot Repair, Labor, Expenses or WIP Transfer.
• This field is enabled only if the Intercompany Trade Transactions check box is selected.

Description

The description or name of the code.

Margin Cost Component

The cost component on which to book the intercompany trade margin of the selling entity.

Note: 

• This field is disabled if:

  • The Adopt Selling Cost Structure check box is cleared.
  • The Adopt Selling Cost Structure check box is selected, and the Scenario is WIP Transfer.

• This field is enabled and mandatory only if:

  • The Adopt Selling Cost Structure check box is selected or,
  • The COS Cost Component field is specified

• If the Adopt Selling Cost Structure check box is selected, this field is mandatory for these intercompany trade scenarios:

  • External Material Delivery Sales
  • External (Material) Delivery Purchase
  • External Material Direct Delivery
  • Internal Material Delivery
  • Project (PCS) Delivery
• The value of this field is defaulted to the Margin Cost Component field of the intercompany trade order sessions.
• This field is enabled only if the Intercompany Trade Transactions check box is selected.

Description

The description or name of the code.

Currency Origin

The origin of the currency of the internal invoice or intercompany settlement transaction.

Allowed values

Company (Selling)

The home currency of the company of the from-part of the intercompany trade relation is used for the internal invoice.

Company (Buying)

The home currency of the company of the to-part of the intercompany trade relation is used for the internal invoice.

Internal Business Partner (Selling)

The currency of the internal business partner of the entity that belongs to the from- side of the intercompany trade relation is used for the internal invoice.

Internal Business Partner (Buying)

The currency of the internal business partner of the entity that belongs to the to-side of the intercompany trade relation is used for the internal invoice.

Order (Selling)

The currency of the purchase order to the supplier is used for the internal invoice. This is applicable if the trade scenario is External Material Direct Delivery.

Order (Buying)

The currency of the sales order or service order is used for the internal invoice. This is applicable if the trade scenario is External Material Delivery Sales or External Material Direct Delivery.

Specific

The currency specified by the user.

Note: This field is set to Not Applicable if the Intercompany Trade Transactions check box is cleared.

Currency

The currency of the intercompany trade transaction. The currency is displayed if the currency origin is Specific.

Price Origin

The pricing that must be used for the internal invoice or intercompany settlement transaction.

Allowed values

Cost-Plus

The internal trade price equals the actual costs, optionally a markup can be added.

Freight costs are based on the estimated freight cost, which, depending on the applicable invoicing method, can be updated with the carrier invoice. For more information, refer to Invoicing methods.

Time and Material

The internal price for the repair depends on the actuals, that is, on the material used, the hours spent, and the actual other costs.

Commercial Price

The internal trade prices and the prices charged to a non-affiliated business partner are the same, and can be retrieved from the applicable price books.

For repairs, a fixed internal price is specified. This price is independent of the type of repair and the actual costs.

See also Intercompany trade scenario Labor and Intercompany trade scenario Expenses.

Sales Order Price (Gross)

The internal trade price equals the gross sales price charged to the external business partner, minus the percentage specified in the Markdown Percentage field.

Sales Order Price (Net)

The internal trade price equals the net sales price charged to the external business partner, minus the percentage specified in the Markdown Percentage field.

Purchase Order Price (Gross)

The internal trade price equals the gross purchase order price, plus the percentage specified in the Markup Percentage field.

Purchase Order Price (Net)

The internal trade price equals the net purchase order price, plus the percentage specified in the Markup Percentage field.

Sales Order Customs Value

The customs value, minus the percentage specified in the Markdown Percentage field.

Profit Split (Gross)

The gross profit of the external sales transaction is divided among the entities involved in the transaction according to the percentage specified for the intercompany trade order in the Profit Split Percentage field. See Profit split.

Profit Split (Net)

The net profit of the external sales transaction is divided among the entities involved in the transaction according to the percentage specified for the intercompany trade order in the Profit Split Percentage field. See Profit split.

Zero Price

The value 0 (zero) is used for an internal invoice, because the costs are considered to be part of another invoice line, for example, the surcharge for labor or material.

This pricing option is only available if the intercompany trade scenario is Subcontracting Depot Repair or Expenses.

Markdown Percentage

The percentage by which the internal invoice is reduced. For example, if the sales price for the customer is EUR 100 and the markdown percentage is 5%, the internal invoice amount is EUR 95.

Only applicable to:

• Sales Order Price (Gross)
• Sales Order Price (Net)
• Sales Order Customs Value

Markup Percentage

The percentage by which the internal invoice is increased.

Only applicable to:

• Cost-Plus
• Purchase Order Price (Gross)
• Purchase Order Price (Net)

Markup Amount

The amount by which the internal invoice is increased.

This is only applicable to the Freight scenario and the Cost-Plus price origin.

Currency

The currency of the markup amount.

Seller Approve of Trade Order during Generation

If this check box is selected, the selling part of the intercompany trade orders based on the current intercompany trade agreement is approved automatically when the intercompany trade order is created. This value is defaulted from the Approve (Selling) check box in the Intercompany Trade Parameters (tcitr0100m000) session.

If this check box is cleared, the selling part of the intercompany trade order is approved using the Seller Approve Intercompany Trade Orders (tcitr3200m000) session.

Buyer Approve of Trade Order during Generation

If this check box is selected, the buying part of the intercompany trade orders based on the current intercompany trade agreement is approved automatically when the intercompany trade order is created. This value is defaulted from the Approve (Buying) check box in the Intercompany Trade Parameters (tcitr0100m000) session.

If this check box is cleared, the buying part of the intercompany trade order is approved using the Buyer Approve Intercompany Trade Orders (tcitr3200m100) session.

Release Transaction Lines to Invoicing during Generation

If this check box is selected, and an internal invoice is required, transaction lines based on the current intercompany trade agreement are automatically released to Invoicing when the transaction lines are created. This value is defaulted from the Release to Invoicing check box in the Intercompany Trade Parameters (tcitr0100m000) session.

If this check box is cleared, transaction lines are released using the Release to Invoicing (tcitr3210m000) session.

Note: This check box is enabled only if the Intercompany Trade Transactions check box is selected.

Post Transaction Lines (without Invoicing) during Generation

If this check box is selected, and no internal invoice is required, transaction lines based on the current intercompany trade agreement are posted to Financials automatically after the transaction lines are created. This value is defaulted from the Post Transactions (without Invoice) check box in the Intercompany Trade Parameters (tcitr0100m000) session.

An internal invoice is not required for an intercompany trade agreement if the Internal Invoice check box is cleared.

If this check box is cleared, transaction lines without invoicing are posted to Financials using the Post Transactions (tcitr3210m100) session.

Note: This check box is enabled only if the Intercompany Trade Transactions check box is selected.

Submit Trade Order for Approval During Generation

If this check box is selected, intercompany trade orders based on the current intercompany trade agreement are submitted to Workflow for approval.

If this check box is cleared, the intercompany trade orders must be manually submitted.

This setting is defaulted from the Submit for Approval check box in the Intercompany Trade Parameters (tcitr0100m000) session.

This check box is available if approval is applicable for the current intercompany trade agreement and if Workflow is implemented for intercompany trade orders. For more information, refer to Workflow Management System.

Intercompany Margin Billable in Project

If this check box is selected, the intercompany margin is added to the project costs of the project to which the current intercompany trade agreement applies.

The intercompany margin is the difference between the intercompany transfer price and the actual costs, such as the valuation price in the issuing warehouse. This implies that in case of a cost plus contract, this margin is billable to the customer.

This parameter is used for intercompany trade within a project using project cost pegs. For example, in a project pegged warehouse transfer within a logistic company with an internal invoice.

This value is defaulted from the Intercompany Margin Billable in Project check box in the Intercompany Trade Parameters (tcitr0100m000) session.

Note: This check box is enabled only if the Intercompany Trade Transactions check box is selected.

Labor Rate Level 1

Use the search path fields to set the priority for retrieving the labor rate that is used to determine the Commercial Price in intercompany trade scenario Labor.

Labor rates can be retrieved from an employee, an employee's department, or an employee's trade group. The value specified in level 1 is where the application looks first to retrieve the labor rate. If not found, the application looks in level 2 and if not found there, in level 3. Not Applicable means that the level is not searched.

The priorities specified in these fields are defaulted from the 1, 2, and 3 fields in the Intercompany Trade Parameters (tcitr0100m000) session.

Note: The field is set to Not Applicable if the Intercompany Trade Transactions check box is cleared.

Profit Split Percentage

The profit percentage of the external sales order, contract deliverable, or service order that the selling entity of the intercompany trade relationship is to receive. The remaining percentage goes to the buying entity.

Retrieve Original Order Settings for Return Order

If this check box is selected, intercompany trade orders created for return orders are based on the original ITR order instead of the intercompany trade agreement.

Retrieve Original Order Settings for Backorder

If this check box is selected, intercompany trade orders created for backorders are based on the original ITR order instead of the intercompany trade agreement.