Oracle Fusion
Intercompany Invoicing Flow
Bernardine Rogers
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Contents
1. Introduction ............................................................................................................................ 3
2. Summary of setup ................................................................................................................... 4
A. Ledger Options ................................................................................................................. 4
B. Legal Entities .................................................................................................................... 5
C. Legal Function .................................................................................................................. 5
D. Business Units .................................................................................................................. 7
E. Tax .................................................................................................................................... 8
F. Supplier and Supplier Sites ............................................................................................... 8
G. Customer and Customer Sites .......................................................................................... 9
H. Intercompany Systems Options ..................................................................................... 11
I. Intercompany Transaction Types ................................................................................... 12
J. Intercompany Period Status........................................................................................... 13
K. Intercompany Organizations .......................................................................................... 14
L. Customer Supplier Assignments .................................................................................... 15
M. Receivables Assignments ............................................................................................... 16
N. Intercompany Balancing Rules ....................................................................................... 17
O. Intercompany Approval Rules ........................................................................................ 18
P. Transaction Account Rules ............................................................................................. 20
Q. Access to Intercompany Organizations .......................................................................... 20
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1. Introduction
In today’s global economy many companies are doing business around the world, locating
subsidiaries/entities where they can get the best tax, manufacturing and distribution benefits. Trading
between these entities for the provision of goods or services therefore needs to be accounted as
intercompany activity. In many legal jurisdictions around the world there is the requirement that
invoices be generated with the appropriate tax, for these intercompany transactions. This paper looks at
the set up required to achieve invoicing for intercompany transactions.
InFusion – USA Ledger InFusion – UK Ledger
InFusion – USA InFusion – UK
Legal Entity Legal Entity
BU - USA BU - UK
Chicago Ops Seattle Ops Bristol Ops London Ops
Chicago Ops sells to London Ops – Invoice required
Oracle Fusion Intercompany can record intercompany transactions that interface to Receivables and
Payables to generate and record invoices. The provider side of the transaction is recorded in Receivables
where an invoice is generated and the receiver side along with the receivables invoice information is
recorded in Payables. The components for the invoicing flow are shown below.
Create Approve Transfer to Run AR Transfer to Run AP
Transaction > >Transaction > Receivables > Autoinvoic > Payables > import
e
Record the accounting for the invoicing flow by completing the following steps.
Run
Run
ARAR Transfer AR Complete Run AP Transfer AP
Create
Create > invoice & > AP invoice > Create > invoice &
Accounting
Accounting Post in GL Accounting Post in GL
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2. Summary of setup
The setup for the invoicing flow is shown below. It is likely that several of the pre-requisite setups in
other applications will already be done as part of a financials implementation.
General Legal Entity Business Unit Tax Procurement Receivables
Ledger Configurator
Legal Receivables Receivables
Ledger Suppliers Customers
Entity BU Tax Setup
Payables Payables Supplier Customer
BU Tax Setup Sites Sites
Intercompany
Customer
System Transaction Period Intercompany Receivables
Supplier
Options Types Statuses Organizations Assignments
Assignments
Intercompany
Balancing
Rules
BPM
Intercompany Approval Rules
SLA
Intercompany Transaction Account Definition
A. Ledger Options
Navigator > Setup and Maintenance > Financials Implementation Project > Define Common Applications
Configuration for Financials > Define Ledgers
Check the ‘Enable Intercompany Accounting’ option on the Specify Ledger Options UI.
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B. Legal Entities
Navigator > Setup and Maintenance > Financials Implementation Project > Define Common Applications
Configuration for Financials > Define Enterprise Structures for Financials > Define Legal Entities for
Financials
Define legal entities for the Enterprise. These will be used in the intercompany setup when
intercompany organizations are assigned to legal entities.
C. Legal Function
Navigator > Setup and Maintenance > Financials Implementation Project > Define Common Applications
Configuration for Financials > Define Enterprise Structures for Financials > Define Legal Jurisdictions and
Authorities for Financials
Choose the legal function ‘Generate intercompany invoice’ to make the option available for the
jurisdiction you are planning to use for your legal entity.
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Then assign the Generate intercompany invoice option to a legal entity via the Legal Entity Registration
page.
Navigator > Setup and Maintenance > Financials Implementation Project > Define Common Applications
Configuration for Financials > Define Enterprise Structures for Financials > Define Legal Entities for
Financials > Manage Legal Entity Registrations
Create a row for the legal function ‘Generate intercompany invoice’ to enforce invoicing on a legal
entity.
Alternatively, you can choose not to set this option at the legal entity level but instead choose invoicing
for only certain transaction types used to create intercompany transactions. This is defined within
Intercompany.
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D. Business Units
Navigator > Setup and Maintenance > Financials Implementation Project > Define Common Applications
Configuration for Financials > Define Business Units
Define business units to be used in the Intercompany setup. Note that separate business units can be
created, one with the Billing and Revenue Management business function for the receivables business
unit and a second one with the Payables Invoicing business function for the payables business unit.
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E. Tax
Navigator > Setup and Maintenance > Financials Implementation Project > Define Common Financials
Configuration > Define Transaction Taxes
Complete the set up for tax if you plan to use the invoicing feature and require taxes on the receivables
and payables invoices.
F. Supplier and Supplier Sites
Navigator > Setup and Maintenance > Procurement Implementation Project > Procurement > Suppliers >
Manage Suppliers
Create suppliers that will be assigned to legal entities as part of the intercompany setup. When creating
intercompany transactions, the provider organization’s supplier must exist in the receiver’s business unit
and the receiver organization’s customer must exist in the provider’s business unit. Create supplier sites
in the relevant business unit and ensure the Primary Pay option for the site is checked as shown below.
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G. Customer and Customer Sites
Navigator > Receivables > Billing > Manage Customers
Create customers that will be associated with legal entities in a later step, as part of the intercompany
setup.
Ensure the customer is set up as an ‘Internal’ customer and it has a primary bill-to site.
The customer site must exist in the business unit associated with the provider organization. To do this,
create a site with ‘Account Address Set’ that matches the set assigned to the provider business unit’s
reference data object, ‘Customer Account Site’.
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H. Intercompany Systems Options
Navigator > Setup and Maintenance > Financials Implementation Project > Define and Maintain
Intercompany Processing Rules > Manage Intercompany System Options
Define intercompany systems options to control intercompany transaction processing. Specify defaults
and associated set up for the intercompany transaction flow.
a. Intercompany Batch Numbering
Choose system generated batch numbering or require users to manually enter a batch
number
b. Intercompany Currency
Select a currency to force all intercompany transactions to be in a single currency
c. Minimum Transaction Amount
Specify the minimum amount that all intercompany transactions have to be
d. Minimum Transaction Currency
If you have entered a minimum transaction amount, select the currency of that
minimum transaction amount
e. Conversion Rate Type
Select a currency conversion rate to apply to foreign currency transactions when they
are transferred to General Ledger, Receivables and Payables
f. Allow Receiver to Reject Transactions
Choose if you want to allow users to be able to reject inbound (receiver) transactions
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g. Intercompany Calendar
Select a general ledger calendar to use as the intercompany calendar to control
intercompany transaction entry
h. Period Type
If you selected a calendar, this field will be automatically populated
i. Default Transaction Type
Choose a transaction type that will default into every new batch created.
I. Intercompany Transaction Types
Navigator > Setup and Maintenance > Financials Implementation Project > Define and Maintain
Intercompany Processing Rules > Manage Intercompany Transaction Types
Define intercompany transaction types to control if invoices should be generated for intercompany
batches and if manual approval will be required. Enable the invoicing option to route intercompany
transactions to Receivables where invoices will be generated. The receivables invoice information will
then be transferred and recorded in the Payables application.
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J. Intercompany Period Status
Navigator > Setup and Maintenance > Financials Implementation Project > Define and Maintain
Intercompany Processing Rules > Manage Intercompany Period Status
If you selected a calendar on the Systems Options setup, open and close periods by transaction type on
the Manage Intercompany Period Status page.
If you have created new transaction types after the calendar is selected on the systems options page,
choose the Copy GL Periods option under the Actions menu to generate records for the new transaction
types.
Similarly, if you have created new general ledger periods for the calendar, choose the Copy GL Periods
function to generate intercompany records for the new periods.
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K. Intercompany Organizations
Navigator > Setup and Maintenance > Financials Implementation Project > Define and Maintain
Intercompany Processing Rules > Manage Intercompany Organizations
Create intercompany organizations and assign them to legal entities. You can have a 1-1 relationship
between an intercompany organization and a legal entity or a Many-1 relationship with many
intercompany organizations associated with a single legal entity.
Select a receivables business unit and a payables business unit for each intercompany organization if
these organizations will require invoices to be generated.
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L. Customer Supplier Assignments
Navigator > Setup and Maintenance > Financials Implementation Project > Define and Maintain
Intercompany Processing Rules > Invoicing > Manage Customer Supplier Assignments
Assign a customer and a supplier to each legal entity that can be used in Receivables and Payables to
generate and record invoices.
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M. Receivables Assignments
Navigator > Setup and Maintenance > Financials Implementation Project > Define and Maintain
Intercompany Processing Rules > Invoicing > Manage Receivables Assignments
Assign receivables transaction types and receivables memo lines to transaction types for given business
units. Note that Intercompany already has a default receivables transaction type ‘Intercompany’ and a
default receivables memo line ‘Global Intercompany’ that are used if there are no other matches.
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N. Intercompany Balancing Rules
Navigator > Setup and Maintenance > Financials Implementation Project > Define and Maintain
Intercompany Processing Rules > Intercompany Balancing Rules
Create intercompany balancing rules that will be used to generate the intercompany receivables or
intercompany payables account for your transactions. Create a single rule per chart of accounts or
create more granular rules at the ledger, legal entity and primary balancing segment value levels.
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O. Intercompany Approval Rules
Oracle BPM Worklist > Administration > Approval Groups
Add users to the Intercompany Approval Group so they can manually approve transactions. This step is
necessary if you choose to use transaction types that require manual approval.
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P. Transaction Account Rules
Navigator > Setup and Maintenance > Financials Implementation Project > Define and Maintain
Intercompany Processing Rules > Define Transaction Account Rules
Create transaction rules to default provider and receiver distribution accounts when creating
intercompany transactions.
Q. Access to Intercompany Organizations
Oracle Identity Manager
Each user who will be creating intercompany batches will need access to intercompany organizations
they intend using as providers. The Security Administrator should assign roles with the appropriate data
security policies to the user.
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