Get started with intercompany trading
Organizations often trade with themselves where they buy or sell items among subsidiaries. The intercompany setup is created to automatically generate documents and create transactions between legal entities to manage trading with subsidiaries. This article will briefly introduce how to get started with intercompany trading.
Intercompany setup
The intercompany trade relationship is between a customer in one legal entity, in this case, “USMF,” and a vendor in another. In this case, “DEMF.”
To set up the relationship, start by going to the customer and pressing “Intercompany” to set up the connection.
The fast tab “Miscellaneous details” shows the intercompany information when the relationship is set up. Here it is possible to set up the automatic creation of intercompany orders by setting “Create intercompany order” to “Yes” and determine if the order should be defaulted as direct delivery by setting “Direct delivery to “Yes.” By doing this, the default settings are copied to the sales order instead of they should be set for each sales order manually.
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Afterward, the relationship should be set up for the vendor in the legal entity “DEMF.”
The fast tab “Miscellaneous details” shows the intercompany information when the relationship is set up.
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Before creating a sales order, ensure the item is shared between the two legal entities and the vendor on the item is set to the intercompany legal entity. In this case, the DEMF item must have US-001 as the vendor.
It is also possible to stop intercompany orders for specific items on the “Released product details” form if the “Intercompany stopped” is set to “Yes.” It can be set to “Yes” for Purchase orders or Sales orders under the “Purchase” or “Sell” fast tab.
The intercompany chain will be created after confirming and refreshing the original sales order or purchase order.
Intercompany orders can be Two-legged or Three-legged, depending on the scenario.
The Three-legged chain is as follows:
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The Two-legged chain is as follows:
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This is the basic intercompany setup for the relationship. However, the intercompany setup has many other configurations like intercompany planning, policies, value mapping, and agreements policies for sales and purchases that can be configured. The policies, value mapping, and agreements policies will shortly be introduced in the following sections.
Purchase order policies
The purchase order policies control the interactions (Business rules) between the two trading entities.
1.????The headers “Original sales order (Direct delivery)” and “Intercompany purchase order (Direct delivery)” determine how to update packing slips and invoices and document printing for the original sales order if the intercompany purchase and sales order is direct delivery. It is essential to state that this does not apply to orders which are not direct delivery.
2.????The headers “Charges Allocation” and “Intercompany purchase order prices” determine the ability to edit prices and discounts and how charges are allocated
3.????The headers “Original sales order <-> Intercompany purchase order” and “Intercompany purchase order -> Intercompany sales order” determine which data is synchronized between the trading entities
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Purchase value mapping
Value mapping is the translation of specific values between two trading entities. For example, an external code can be added to the, e.g., delivery mode in DEMF. This external code must also be created in USMF for translation to work.
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Purchase agreement policies
On the purchase agreement policies tab, it is possible to control whether the buying party can modify terms in a purchase agreement, such as price, discount, and validity period.
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Sales order policies
Sales order policies control intercompany sales orders in multiple aspects.
1.????The header “Intercompany sales order creation” determine the sales order creation and picking list printing
2.????The header “Payment” determine what payment journal to use and whether posting should happen automatically
3.????The header “Intercompany customer invoice posting” determine the sales order posting and price used for posting
4.????The header “Intercompany sales order prices” determines how to control pricing between the intercompany sales order and purchase order.
5.????The header “Intercompany sales order -> Intercompany purchase order” determines how data is synchronized between the intercompany sales order and purchase order.
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Sales value mapping
The sales value mapping is the same as purchase value mapping, just the other way around. Purchase order policies apply to the vendor, while sales order policies apply to the Customer.
Sales agreement policies
On the sales agreement policies tab, it is possible to control whether the selling party can modify terms in a sales agreement, such as price, discount, and validity period.
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To learn more about Intercompany trading and how to:
-??????Configure the value mapping between legal entities.
-??????Use the intercompany trading process.
-??????Configure intercompany planning functionality.
-??????Understand and follow the transactions created by intercompany trading.
-??????Configure policies for purchase and sales.
-??????Configure the intercompany trading relationship.
Reach out and get help.
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