Understanding Intercompany Billing for Cross-Company Cost Accounting Postings

Objective

After completing this lesson, you will be able to perform intercompany billing in the delivering company.

Intercompany Billing

Process flow between the ordering company and the delivering company for project billing and invoicing, involving several key steps: Project: Work packages are created within the project. Billing items are generated for these work packages. Sales Order Service (SO01): Sales order items are created. Billing profile is assigned. Billing items are submitted as Project Billing Document Requests (BDR). Project Billing Document Request (BDR): BDR items are generated and submitted. BDR items are used to create billing documents. Invoice (CIO1): Billing document line items are created. These line items generate invoices. Billing Material Determination: Material determination takes place based on the billing items. Links the process flow between the ordering company and the delivering company. Sales Order IC (SO03): Sales order items are created for internal orders. BDR is generated. Resource-Related Intercompany Request (RICR): BDR items are generated for intercompany transactions. These items are used to create billing documents. Invoice (CIO2): Billing document line items are created for intercompany transactions. These line items generate invoices.

Intercompany billing happens between company codes within a corporate group. Once again, taking the example from previous sections, after a customer places an order for services from company code 1010 (Germany), this company code orders the services through a sales organization from a plant that belongs to company code 1710 (United States). In addition to the invoice for the customer, the system also creates an intercompany billing document for delivering company 1710 (United States) to charge ordering company 1010 (Germany).

The next sections will take you through the steps required to perform intercompany billing in the delivering company.

Material Determination

The aggregation of intercompany postings is based on a number of predefined parameters:

  • Activity type
  • Personnel number
  • Service organization
  • Transaction currency
  • Unit of measure
  • Work item ID
  • Month
  • Profit center of sender organization
  • Profit center of receiver organization

The material used for intercompany billing can be determined in configuration based on:

  • Activity Type
  • G/L account
  • Source material (if a material is originating the posting)

Intercompany Sales Order

For project-based services, intercompany sales orders must be created manually as a one-time activity for each delivering company involved in the intercompany process. The SAP Fiori app Create Sales Orders – Intercompany can be used to create intercompany sales orders, order type SO03 (Intercompany Order), for resource-related intercompany billing.

Multiple sales orders can be created for the combination of ordering and delivering company codes considering the flexible material determination.

In this example the intercompany sales order is created for sales organization 1710 (United States) as the delivering organization.

Intercompany Billing: Create Intercompany Order interface displaying Sales Area for Customer overlay.

When delivering services for company code 1010 (Germany), the intercompany sales order for delivering company 1710 (United States) should be created to customer 10401010. That is, the sold-to-party should be set to 10401010 and the sales organization to 1710.

Note

10401010 is the standard customer number for intercompany billing assigned to the sales organization of ordering company 1010. See the section Setting up Business Partners for more details.

SAP Create Intercompany Order: Overview interface displaying relevant information for intercompany orders.

To check whether the intercompany sales order for a given delivering company already exists, you can use the List Sales Orders – Intercompany app. Through this app, you can specify the following criteria:

  • Order type
  • Sold-to party
  • Document date
  • Material
  • Customer reference
SAP List of Sales Orders interface for Intercompany Billing.
SAP List of Sales Orders interface for intercompany billing.

Intercompany Billing Request

The resource-related intercompany billing request can be generated through the Generate Intercompany Billing Request app by scheduling a background job. The result of this job is a debit memo request, type DMR3 (Debit Memo RequestIC), for intercompany billing. This debit memo request includes time recordings and expenses related to intercompany services which will be invoiced to the ordering company later.

SAP New Job: Resource-Related Billing Between Company Codes for Intercompany Billing: Generate Intercompany Billing Request (General Information)
Interface for Intercompany Billing: Generate Intercompany Billing Request (Parameters)

Intercompany Billing Document

Finally, the intercompany invoice, billing type CI02 (Intercompany Invoice), can be issued through the Create Billing Documents app by selecting the debit memo request generated through the scheduled job. In case there are several items in the billing due list, you can filter by SD Document Type DMR3 to obtain the list of intercompany debit memo requests which are ready to be billed.

Interface for Intercompany Billing: Create Billing Document.

For more details on the functionalities available in the SAP Fiori app Create Billing Documents, please refer to Sales Order Processing (J14).

Create Intercompany Sales Orders

Watch the simulation Creating Intercompany Sales Orders to learn more about the system-related activities.

ExerciseStart Exercise

Generate Intercompany Billing Requests

Watch the simulation Generating Intercompany Billing Requests to learn more about the system-related activities.

ExerciseStart Exercise

Creating Intercompany Invoices (16T)

Watch the simulation Creating Intercompany Invoices (16T) to learn more about the system-related activities.

ExerciseStart Exercise

Set-up Business Processes for Intercompany Processes (16T, 4AN)

In SAP S/4HANA Cloud for Professional Services, intercompany occurs when a company A (ordering company) has an affiliate company B delivering services in the course of a customer or internal project.

Before proceeding with intercompany processes, master data and configuration must be adjusted as per customer requirement. The following are examples of prerequisite tasks:

  1. Setting up Business Partners
  2. Setting up Intercompany Billing
    • Configure Intercompany Billing Communication
    • Configure Intercompany Accounts Payable
  3. Setting up Internal Cost Rates

This exercise is based on a scenario where company 1710 (United States) delivers services for ordering company 1010 (Germany).

We first need to associate the ordering company (1010) to a sold-to-party business partner (we will use business partner 10401010).

Note

While the receiving company code is associated to a sold-to-party business partner so that the servicing company can sell its services to it, the servicing company code needs to be associated to a vendor business partner. In our example supplying company code (1710) is assigned to supplier business partner 10401710.

In the intercompany transaction, company 1710 sells services to company 1010 identified as sold-to-party 10401010. Our second task will be to make sure business partner 10401010 is maintained in the 1710 sales area.

The third task is to create the framework intercompany sales order in the delivering company 1710 that defines the services 1710 sells to company 1010 (sold-to-party 10401010). This sales order is the document supporting intercompany pricing and intercompany billing for these services.

In the exercise Test Business Processes for Intercompany Processes (16T, 4AN), we will complete the intercompany example by consuming some services from company 1710 in our company 1010 project and proceeding to the intercompany billing.

Note

An SAP S/4HANA Cloud training system is required to complete the following exercise.

Training Systems for Self-Paced Students: If you are working through the training content self-paced in the SAP Learning Hub, please purchase an SAP Learning System Access contingent to access the training system designed to accompany exercises in the training course content. Navigate to SAP Learning System Access Quick Start and search for the course code to locate the correct training system.

To execute this exercise with best system performance you can remove any other business roles assigned to your user except for S4C Generic Role provided. You can assign further roles as required in the subsequent exercise anyway and can perform this task in the same step if necessary.

Some exercises use the characters ### as placeholders for your three digit user number. Once you are on the SAP Fiori Launchpad of the training system, open the user profile icon in the upper right corner. There you will see your user: A followed by digits. Please use the last three digits of your user consistently instead of ### whenever you see ### in an exercise.

Prerequisites

Check User Authorizations

Make sure the following roles are assigned to your user:

Business Role IDBusiness Role
BR_BPC_EXPERTConfiguration Expert - Business Process Configuration
BR_BUPA_MASTER_SPECIALISTMaster Data Specialist - Business Partner Data
BR_INTERNAL_SALES_REP_PRSVInternal Sales Representative - Professional Services
BR_BILLING_CLERKBilling Clerk
BR_PROJECT_MANAGER_PROFProject Management – Professional Services
BR_EMPLOYEEEmployee
BR_AP_ACCOUNTANTAccounts Payable Accountant

How to:

Look for and open the SAP Fiori application Maintain Business Users and select your username in the search section. Click on the username item or select it and click on Edit. In the user details Assigned Business Roles section make sure the required roles are present. If they are not, click on Add, search by the business role description in the exercise and add them to your user. You need to add one role at a time. Save your business user after you finish adding roles.

In this exercise, you will check whether a customer number has been maintained for ordering company 1010 (Germany). Please note that for intercompany billing purposes, a customer number must be assigned to the relevant sales organizations. By doing so, you are identifying the sales organization as an internal customer that can be billed by other companies in the same corporate group.

Note

Some roles may enable new spaces in SAP Fiori. You may need to refresh your screen in order to see them.

Task 1: Check Customer Number for Intercompany Billing

Steps

  1. In the Implementation Activities application go to configuration step Maintain Sales Organizations and check customer 10401010 is assigned to sales organization 1010 for intercompany billing.

    Note

    Implementation Activities application will be available if SAP Central Business Configurations is enabled. Otherwise select the application Manage Your Solution and search for the configuration table using the search text field.

    1. Search for a run Implementation Activities application. In the text field in the selection section, type Maintain Sales Organizations and perform the search. Select and open the configuration item.

    2. Select Sales Organization 1010 and click on Details. Verify Customer Intercompany business partner for Billing 10401010 is assigned to it.

Task 2: Verify the Business Partner Representing Company 1010 (Germany)

Your business partner representing the company code 1010 (Germany) should be maintained for the US sales area. This exercise shows you how to check and if required extend the business partner master record representing company code 1010.

Steps

  1. Log into the SAP S/4HANA Cloud training system with your user credentials and open the Maintain Business Partner app.

    1. Search for and open application Maintain Business Partner.

    2. In the Business Partner Search enter Type 10401010 and click Start.

    3. Select the item for the business partner and double click on it. The Display Organization: 10401010 screen opens.

  2. Open your business partner 10401010 and check if customer data is available for the following sales area:

    FieldValue
    Sales Organization1710
    Distr.Channel10
    Division00

    If there is already a row for sales organization 1710 with the data shown in the table, you can proceed to the next exercise Test Business Processes for Intercompany Processes (16T, 4AN) Otherwise continue with the next step and create customer data.

    1. Select Customer in the Display in BR Role field.

    2. Click on Sales and Distribution.

    3. Select Sales Areas. Verify the business partner is created for sales organization 1710.

  3. If you did not find Sales Organization 1710 in the previous step, extend your business partner 10401010 with customer sales area data. Use the data from the following table:

    Sales Area

    FieldValue
    Sales Organization1710
    Distr.Channel10
    Division00

    Orders Tab

    FieldValue
    Customer group02
    CurrencyUSD
    Cust.Pric.Procedure02

    Shipping Tab

    FieldValue
    Shipping conditions02

    Billing Tab

    FieldValue
    IncotermsEXW
    Incoterms Location 1New York
    Terms of payment0001
    Acct Assmt Grp Cust.03
    Tax Classific. (You find the tax classification field for country US in the Output Tax table)1

    1. Run the application "Maintain Business Partner", select partner 10401010, click on Start, double click on it in the results list to open it.

    2. In the display BP Role field, select Customer from the drop down menu.

    3. From the top menu, select Sales and Distribution button.

    4. Click on Sales Areas. You will see in the popup, there are two sales areas to which this business partner is assigned to.

    5. Select 1710 that is the one the exercises asks for, and click on Transfer. You will see the corresponding field values are updated in the business partner.

    6. Verify the data in the various screens the exercise requires. You'll see some values are missing.

    7. Click on Switch between display and change and complete the missing values per the exercise.

Task 3: Check and Create Intercompany Sales Order

In this exercise, you will check whether a sales order has already been created in the delivering company 1710. Please note that intercompany sales orders must be created manually as a one-time activity for each delivering company involved in the intercompany process.

Steps

  1. Open the List Sales Orders - Intercompany app.

    1. Search for and execute the application List Sales Orders – Intercompany.

  2. Check if an intercompany sales order exists in delivering company 1710 by using the following filters:

    • Sold-To Party: 10401010 (company code 1010 as a business partner)
    • Sales Organization: 1710

    1. In the search screen, type 10401010 in the "Sold-to Party" field and 1710 in the "Sales Organization" field and click on Execute.

      Note

      If a sales order is created, go to the exercise "Test Business Processes for Intercompany Processes (16T, 4AN)", otherwise continue with the next steps to create a sales order for intercompany.

  3. Open the Create Sales Orders - Intercompany app.

    1. Search for and execute the application Create Sales Orders – Intercompany.

  4. Make the following entry in the Header section:

    • Sold-To Party: 10401010

    1. Type 10401010 in the Sold-to Party Field.

      Optionally you can add a Customer Reference text as a help to find your sales order later on.

  5. Make the following entries in the "All Items" section:

    • Material: P002
    • Amount: 1,000
    • Currency: USD

    1. Type the given values in the corresponding item fields. Click on enter and in the Sales Area for Customer pop-up screen select 1710.

    2. If a profit center is required, enter YB101 (Consulting Unit A).

    3. Save your sales order.

Test Business Processes for Intercompany Processes (16T, 4AN)

Exercises "Set-up Business Processes for Intercompany Processes (16T, 4AN)" and "Test Business Processes for Intercompany Processes (16T, 4AN)" setup the system to run the intercompany process where company 1710 (USA) supplies services to company code 1010 (Germany).

This exercise covers the project update for intercompany, intercompany service delivery, and intercompany billing processes.

Caution

Note this exercise builds on previous exercises. You may need to review these exercises before you complete this one.

Note

An SAP S/4HANA Cloud training system is required to complete the following exercise.

Training Systems for Self-Paced Students: If you are working through the training content self-paced in the SAP Learning Hub, please purchase an SAP Learning System Access contingent to access the training system designed to accompany exercises in the training course content. Navigate to SAP Learning System Access Quick Start and search for the course code to locate the correct training system.

To execute this exercise with best system performance you can remove any other business roles assigned to your user except for S4C Generic Role provided. You can assign further roles as required in the subsequent exercise anyway and can perform this task in the same step if necessary.

Some exercises use the characters ### as placeholders for your three digit user number. Once you are on the SAP Fiori Launchpad of the training system, open the user profile icon in the upper right corner. There you will see your user: A followed by digits. Please use the last three digits of your user consistently instead of ### whenever you see ### in an exercise.

Task 1: Staff an Intercompany Resource in your Project

Steps

  1. Open the application Plan Customer Projects and select the customer project you created in the exercise "Test Business Processes for Customer Project Management (J11)". Verify its organizational assignments under Accounting in the project information screen.

    1. Select the application Plan Customer Projects and use the search by project name or ID field to select your project. Alternatively, you can use the filter My Projects to short list the projects your user is assigned to in any role.

    2. If you followed the instructions in the exercise "Test Business Processes for Customer Project Management (J11)", the project should be assigned to service organization Company DE (Germany).

  2. Select Edit and go to the Billing screen. Verify the assigned work package to contract type Time and Expenses.

    1. Click on Edit and open the Billing section. Verify the work package Explore is assigned contract type Time and Expenses.

  3. Go to the Team screen and Add Resource to the T&E work package. Select an employee from Service Organization 1710 and assign it to the work package for 100 hours.

    1. Open the Team Screen and select Add Resource (you can check the steps in the exercise "Managing Resources Across Customer and Internal Projects (J11)").

    2. In the selection screen, select Delivery Organization 1710, and Company Code 1710, then click on Go to perform the search.

    3. Select one of the employees displayed employees and click on Add.

    4. Back in the Team table, complete the assigned resource item with Role Project Manager (T005), work package Explore and optionally work item Project Management. Type 100 in the effort field, and switch to "ON" the Confirmed indicator.

    5. Recalculate and save.

Task 2: Book Time for the Intercompany Resource

Steps

  1. Open the application Notify Missing Time and filter by your project.

    1. Open the application Notify Missing Time.

    2. Input your project ID in the search field and click on Go. Staffed resources with missing time should be displayed in the list.

  2. Select the intercompany resource staffed to the project in the previous task and select Edit Timesheet. You can review the steps in the exercise in Unit 4 for details on time booking.

    1. Select the intercompany resource you assigned to the project in the previous task and click on Edit Timesheet.

  3. Under the My Tasks section select your project and verify the assignment details correspond to the staffing data you created in Task 1.

    1. Make sure you select your project in the My Task panel.

  4. Input some time for the project and click on Save & Submit.

    1. Book some hours in the project.

    2. You can review the steps in the exercise "Test Business Processes for Time Recording (J12)" for details on time booking.

    3. Times should be automatically approved. If they are not, open the My Inbox application and approve the hours.

Task 3: Generate an Intercompany Billing Request

Steps

  1. Open the application Generate Intercompany Billing Request and create a batch process for your intercompany sales order and project.

    1. Open the Generate Intercompany Billing Request application to setup and run a job to create the intercompany billing requests for your project.

    2. Select Create.

    3. Accept the job template "Resource-Related Billing Between Company Codes".

    4. Click on Step 2.

    5. Accept the default selections.

    6. Click on Step 3.

    7. Input the intercompany sales order number you created in exercise "Set-up Business Processes for Intercompany Processes (16T, 4AN)".

      Note

      If a sales order is not created, go to the exercise "Test Business Processes for Intercompany Processes (16T, 4AN)", otherwise continue with the next steps to create a sales order for intercompany.

    8. Input the ID of the project you created in the exercise "Test Business Processes for Customer Project Management (J11)".

    9. Select Save Sales Document.

    10. Select Schedule.

  2. Verify the successful finalization of the job.

    1. Click on the job item and wait until the job finalizes successfully. A green icon should be displayed in column "Log" indicating the successful finalization of the job.

  3. Open the application Manage Debit Memo Requests and display the intercompany debit memo the job just created.

    1. Go to Manage Debit Memo Requests application and look for the debit memo created by the job. You can search by Sold-to party.

Conclusion

Personal Reflection

Think about a time when you or a client experienced operational challenges, such as delays or miscommunication.

How could the features of SAP's intercompany processes and billing have helped address those challenges?

Reflect on specific tools like intercompany billing, project management, or cost rate management.

Expert Response

As an experienced consultant specializing in intercompany processes, I recall a client facing frequent delays and miscommunications between their ordering and delivering companies.

By implementing SAP S/4HANA Cloud for Professional Services, we optimized their intercompany transactions through efficient intercompany billing and project management features. The intercompany billing process ensured accurate and timely invoicing between company codes, reducing financial discrepancies and delays.

The project management tools allowed for precise planning and staffing of resources across companies, ensuring that the right resources were assigned to the right projects promptly.

Additionally, the cost rate management feature provided clarity on intercompany margins and rates, improving transparency and communication between the companies.

Lesson Summary

In this lesson, we explored the essential elements of SAP's intercompany processes and billing to help you make informed recommendations for implementation. Here's a recap of the key points linked to our objective:

  1. Understanding Intercompany Processes and Features: We covered the core functionalities of intercompany processes, including project creation, resource staffing, expense posting, and intercompany billing. These features are crucial for optimizing business operations across company codes, a vital aspect of your role as a consultant.
  2. Integration with SAP S/4HANA Cloud: We highlighted how intercompany processes integrate seamlessly within SAP S/4HANA Cloud, ensuring efficient data flow and accurate financial transactions. This integration is fundamental in providing holistic solutions to your clients.
  3. Roles and Responsibilities: We discussed the roles of the ordering and delivering companies in using intercompany process tools. Understanding these roles helps you recommend the right tools and processes to improve operational efficiency.
  4. Real-World Applications: We examined various use cases, such as project-based services and cross-company cost accounting postings. These examples demonstrate the versatility and scalability of intercompany processes, enabling you to tailor recommendations to specific client needs.
  5. Practical Tools and Techniques: Through detailed descriptions and examples, you saw intercompany processes in action, from project initiation to billing and expense posting. This practical knowledge is essential for evaluating the capabilities of SAP's intercompany solutions and advising clients effectively.

Learning

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