Describing the Intercompany Process for Foreign Exchange Management (2F2)

This process enables you to enter foreign exchange transactions if the counter-party is an affiliated company. When you create a foreign exchange transaction (spot exchange, forward exchange, foreign exchange swap and non-deliverable forward transaction) in the company code of the issuing company, mirror transactions will be automatically generated in the company code of the receiving company.

Creating foreign exchange transactions with affiliate companies easily is the main business benefit of this scope item.

To achieve this, the key process flows covered by this item include the creation of a FX spot/forward - intercompany transaction, a FX swap - intercompany transaction and non-deliverable forward - intercompany transaction. After this step is performed, the system automatically creates the corresponding mirror deal. This transaction can be checked afterwards as well.

The Cash Manager from central group verifies the cash position status and determines that a specific foreign currency is required for a subsidiary company based on analysis of foreign currency cash position. The Cash Manager enables the intercompany foreign currency exchange transactions.

The process allows a company to exchange foreign currency with an affiliate company.

This scope item allows the company who wants to exchange foreign currency with the affiliate companies. The contracts and deals are mirrored automatically. These intercompany transactions can be posted into the leading accounting principle. The intercompany process described here is applicable to the following product type and transaction type combinations:

• 60I: Foreign Exchange (FX) Spot/Forward contracts

  • 101: Spot Transaction
  • 102: Forward

• 60I: 101/102 FX Swap

• 60J: Non-Deliverable Foreign Exchange (NDF) contracts

  110: Non-Deliverable Forward

The intercompany FX deal creation is similar to external FX deal. You can create them with the Fiori app Create FX Spot/Forward and the above mentioned product types.

Once the issuing deal is created, you need to check whether a mirror deal is generated successfully, then complete the following processes for both the issuing FX deal and mirror deal respectively. The status of issuing deal or mirror deal is independent. For FI posting related steps, you can execute postings for parallel valuation areas separately from operative valuation area.

This scope item allows the company to exchange the foreign currency with the affiliate companies and post the transactions with Parallel Ledger. It helps the customer to execute the posting for the parallel valuation area separately from the operative valuation area. In practice, the customer can also do postings for all valuation areas at the same time.

The main business covered in this item is to valuate the intercompany foreign exchange transactions with a different accounting principle. Therefore the Intercompany Process for Foreign Exchange - Parallel Ledger uses the scope items 2F2 - Intercompany Process for Foreign Currency and the 1X9 - Foreign Currency Risk Management - Parallel Ledger in both the receiving and issuing company.

Select the Manage Your Solution app in order to get to the Configuration screen.

The task Configure Your Solution enables you to maintain certain processes.

In this activity, you assign the company code to a partner. This partner represents the affiliated company as counterparty in an intercompany FX transaction.

For the issuing transaction and mirror transaction creation, both business partners for the issuing and receiving company code need to be maintained.

In this activity, you determine whether a mirror transaction is created with the company code, product type, transaction type, and activity category parameters.

The Partner field determines the transaction counterparty and the company code of the mirror transaction.

A mirror transaction can only be generated if an issuing contract is created with the matched parameters.

This video shows how you setup the mirror transactions for the intercompany FX trading process.