Controlling Intercompany Projects

Objective

After completing this lesson, you will be able to use Project Control for Intercompany Projects.

Intercompany Project Control

Intercompany Project Control is a functionality in SAP S/4HANA Cloud Public Edition that enables companies to manage projects where an affiliate company delivers services to the ordering company during project execution. The affiliate company posts expenses and records time on the project, which are then transformed into debit memo requests for automated intercompany billing and settlement.

A cross-company project structure serves as an accounting structure across multiple company codes, enabling project planning and cost tracking.

The settlement and allocation mechanisms make it possible for direct activity allocation, overhead applications, and settlement processes to be executed at period end for proper cost distribution.

Applicable Process Steps

To sum up the steps you saw in that video, here are the general process steps listed:

  • Project Financial Controller: Creates and releases a project

  • Internal Sales Representative: Creates intercompany sales order

  • Internal Sales Representative: Creates debit memo request for intercompany billing

  • Billing clerk: Creates intercompany invoice

  • Accounts payable accountant: Posts intercompany expenses

  • Cost Accountant Overhead: Allocates intercompany activity

Benefits

The benefits of the controlling intercompany projects are:

  • Proper setup of an ordering company (e.g. Germany) and delivering company (e.g. United States) relationships with company code assignments.

  • Configuration of intercompany transfer pricing and billing methods for time recordings and expenses with billing rules and pricing.

  • Setup of WBS elements with appropriate financial dimensions and account assignments for proper cost allocation with settlement rules.

Note

This process flow is covered in Scope Item: 4AU - Project Control Intercompany.

How to control an Intercompany Project

Introduction: Controlling Intercompany Projects

A company has an affiliate company (1710) that delivers a service to the ordering company (1010) during a project.

The affiliate company (1710) posts expenses and records time on the project. These expenses are transformed into debit memo requests which leads then to an intercompany invoice. The intercompany invoice is also posted automatically to the accounts payables of the ordering company.

  • The ordering company (1010) is located in Germany
  • The delivering company (1710) is located in the US

Task 1: Create a Project

In this first task, Project Financial Controller Shubham creates an Overhead Project, in this case as an intercompany project.

This project type is used to support the planning and monitoring of project-related costs.

Task 2-3: Add Subordinate WBS Elements

The Project Financial Controller Shubham maintains the project hierarchy by adding WBS elements to the project. He adds one WBS element for project planning and one for execution. He updates the project with further metadata.

Task 4: Release the Project Hierarchy

The Project Financial Controller Shubham wants to release the project.

He also enters the actual date for the project elements.

Task 5: Allocate Direct Activities

In this task Shubham does a direct activity allocation to the intercompany project for plant 1710.

Plant 1710 is the delivering company.

Task 6: Create a Supplier Invoice for Intercompany Expenses

When Shubham posted the direct activity allocation, Claire, the Accounts Payable Accountant, successfully posts a intercompany expense to a WBS element by entering all necessary invoice and general ledger data.

She verifies the data, simulates the posting, and finally posts the invoice after no errors appear.

Task 7: Create an Intercompany Sales Order

In this task, Kate, the Internal Sales Representative creates an intercompany sales order. The ordering company is located in Germany, the delivering company is located in the US.

She pays special attention to the sales order header and the delivery information.

Task 8: Create an Intercompany Billing Request

Katherine,  the Internal Sales Representative for Professional services, creates an intercompany Billing Request.

The result is a debit memo request for intercompany billing for the time recordings and expenses for the intercompany services.

Lionel, the Billing Clerk, creates the billing document. 

Task 9: Display a Sales Order

The Internal Sales Representative Kate finally checks again the sales order.

She pays special attention to the document flow.

Summary

After completing this lesson, you are able to:

  • name the benefits of using an Intercompany Project Control
  • set up an Intercompany Project
  • create a Sales Order for an Intercompany Project
  • perform the after Sales process

Learning

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