Intercompany billing

A company arranges direct delivery of the goods to the customer from the stocks of another
company belonging to the same corporate group to put in simple terms, Company code A orders
goods through its sales organization A from Plant B belonging to Company code B. It is imperative
that both Plants A & B should have the material. In other words, the material is created for both the
Plants A & B + their respective storage locations.

Sales Organizations and Plants are uniquely assigned to Company codes. It is not possible to assign
either a plant or a sales organization to more than one company code. Sales organizations and plants
assigned to each other need not belong to the same company code.

In other terms, a plant belonging to Company code A & assigned to Sales Organization A can also be
assigned to Sales Organization B of Company Code B. This enables cross company sales.

PARTIES INVOLVED

1) End Customer 2) Ordering Company code 3) Supplying Company Code.

End customer:

Customer who orders goods from the ordering company code.

Ordering Company Code:

Which orders goods from Plant belonging to Supplying Company code through its sales organization
and bills the end customer.

Supplying Company Code:

Supplies goods from its plant to the end customer specified by the ordering company code and bill
the ordering company code.

CONFIGURATION SETTINGS

Assign Delivery Plant of the supplying company code to Sales Org + Distribution channel of the
Ordering company code in the Enterprise Structure.

DEFINE ORDER TYPES FOR INTERCOMPNY BILLING:

Menu path: IMG/ SD/Billing/Intercompany Billing/Define Order Types for Intercompany billing

VOV8:

Assign Organizational units by Plant:

Menu Path: IMG/ SD/Billing/Intercompany Billing/Assign Organizational units by Plant.

Define Internal Customer Number by Sales Organization:

Menu Path: IMG/ SD / Billing/ Intercompany Billing/ Define Internal Customer Number By Sales
Organization:

 OVVA—Assign customer number (Buying company) to the sales organization that it represents

Sales and Distribution Billing Intercompany Billing Define Internal Customer Number by Sales Organization

Creating / Showing Ordering Sales Organization as Internal Customer for Supplying Company code:

Transaction Code: XD01

The ordering sales organization is represented as Internal customer of Supplying company code.

We need to create customer master in Account Group – Sold to Party and maintain minimum
required financial & Sales Area data.

This internal customer number must be assigned to the ordering sales organization. Hence, the
system automatically picks up this Internal customer number whenever there is Intercompany
billing.

PRICING:

We need to maintain two pricing procedures RVAA01 & ICAA01. Pricing procedure RVAA01
represents condition type PR00 & any other discounts or surcharges that are meant for end
customer.

We assign Pricing procedure RVAA01 to combination of Sales area (Of Ordering company code) +
Customer Pricing Procedure + Document Pricing Procedure of Sales document type.
This pricing Procedure (RVAA01) is determined both at Sales Order level & Billing processing for the
end customer.

We maintain PR00 condition type to represent the ordering company code’s price to the end
customer.

Condition records for PR00 are maintained using organizational elements of Ordering company code,
end customer & the Material.

Eg: Sales Org. of Ordering company code + End customer + Material.

We also need to maintain PI01 condition type to represent costs to Ordering company code (in other
words revenue to supplying company code). It is statistical condition type & meant for information
purpose only.

Condition records for PI01 are created with the following key combination:

Ordering sales Org + Supplying Plant + Material

Pricing Procedure ICAA01is determined at Intercompany billing processing level.

Pricing Procedure ICAA01 – Pricing Procedure for Intercompany billing is assigned to the
combination of:

1) Sales Area (of supplying company code) + Document pricing Procedure of Billing document type IV
+ Customer Pricing Procedure of the Internal customer.

Pricing Procedure ICAA01 has condition type IV01 that represents revenues for Supplying company
code in the intercompany billing.

PR00 condition type also appears in Intercompany billing document. It is for information purposes
only and does not have bearing on the value of the document.

PI01 represented under-pricing procedure RVAA01 is reference condition type for IV01 and the same
is defined in the condition type IV01. Due to this these two condition types represent same value.

The condition type IV01 in intercompany billing document represents revenue to the Supplying
Company. But its corresponding condition type PI01 in the billing document to the end customer is
shown as a statistical item meant for information purposes.

Condition Type VPRS in the intercompany-billing document indicates cost to the supplying company
code.

The use of two different condition types in Intercompany billing is necessary to ensure that data is
transmitted correctly to the financial statement (Component CO-PA).

ILLUSTRATION:

STEP 1: Create Sales Order

Manually Enter the Delivery Plant of the Supplying Company Code:

OBSERVE CONDITIONS SCREEN FOR ITEM:

PR00 represents Price to the end customer (in other words, revenue for the ordering company).
PI01 represents cost to ordering company (in other words, revenue for the supplying company). It is
represented as statistical item only.

DELIVERY:

Delivery is carried out from the supplying point & hence we can observe that it is done from shipping
point assigned to the supplying point.

Subsequently, Picking & PGI are carried out.

BILLING TO END CUSTOMER:

T-Code: VF01

Create Intercompany Billing:

T-code: VF01

Step : 1

 OVVA—Assign customer number (Buying company) to the sales organization that it represents

Sales and Distribution Billing Intercompany Billing Define Internal Customer Number by Sales Organization

 OVV9—Assign Delivering plant to sales area that owns the intercompany sale:

Sales and Distribution  Billing Intercompany Billing  Assign Organizational Units by Plant

 OVX6—Assign Sourcing plants to buying sales organizations / distribution channels.

Enterprise Structure  Assignment Sales and Distribution  Assign Sales Organization – Distribution

Channel – Plant

 OVV8—Define the order types that are relevant for intercompany billing.

Sales and Distribution  Billing Intercompany Billing  Define Order Types for Intercompany Billing

Intercompany Pricing Configuration:

 VOK0—Create new pricing conditions

Sales and Distribution  Basic Functions  Pricing Define condition types

 V/08—Define intercompany pricing procedure: Intercompany pricing may be derived following

different intercompoany methodology like Resale Minus or Cost Plus. Depending upon company’s
requirement, it may be configured.

Sales and Distribution  Basic Functions  Pricing Pricing control Define and assign pricing procedures
  OVKK—Set up pricing procedure determination for new intercompany pricing procedure for all
intercompany billing document types

Sales and Distribution  Basic Functions  Pricing Pricing control Define and assign pricing procedures

Intercompany Billing & Postings Configuration:

 WEL1—Set up automatic postings to vendor accounts.

Sales and Distribution  Billing Intercompany Billing  Automatic Posting to vendor account.

Log Address = XXX XXXXXXXXXX

Company Code = XXX

Vendor = XXXXXXXX

 OBCA—Set up company code assignments for inbound EDI invoice.

Financial Accounting Accounts Receivable and Accounts Payable Business Transactions  Incoming

Invoices/Credit Memos EDI  Assign Company Code for EDI Incoming Invoice.

Partner Type = KU

Partner Number = XXXXX

Company Code = XXX

 OBCE—Enter posting parameters for EDI invoice receipt for intercompany vendors.

Financial Accounting Accounts Receivable and Accounts Payable Business Transactions  Incoming

Invoices/Credit Memos EDI  Enter Program Parameters for EDI Incoming Invoice.

Partner Type = LI

Partner Number = XXXXXX

Company Code = XXX

Indicators for Transfer:

Posting details:

G/L db.pstg ky = 40                         Invoice doc.type = RE   

G/L cr.pstng ky = 50                        Cred.memo doc.type = RA   

Vend.deb.pstng ky = 21                   Debit clearing acct = (blank)  

Vend.cred.pstng ky = 31                  Credit clearing acct = (blank)   

Tax-ex.tax code = XX

Standard Unit of Measure:

Standard unit = blank

 OBCB—Set up GL account determination for EDI invoice processing for intercompany vendors.

Financial Accounting Accounts Receivable and Accounts Payable Business Transactions  Incoming

Invoices/Credit Memos EDI  Assign Company Code for EDI Incoming Invoice:

Partner Type = LI

Partner Number = XXXXXX

Company Code = XXX

Goods/Services No. = *

Goods/Services Number Details:

Goods/serv ID text  = (blank)

G/L account no. = XXXXXXX

Company Code = XXX

 OBCD—Set up tax determination for EDI invoice processing for intercompany vendors.

Financial Accounting Accounts Receivable and Accounts Payable Business Transactions  Incoming

Invoices/Credit Memos EDI  Assign Tax Codes For EDI Procedures.

Apart from above configuration, one may require to maintain priding condition records, access sequence,
AR output type to enable auto AP posting along with AR invoice posting.