Controlling Intercompany Projects

Objectives

After completing this lesson, you will be able to:

  • Discuss how Project Control helps control intercompany projects

How to control an Intercompany Project

Introduction: Controlling Intercompany projects

A company has an affiliate company that delivers a service to the ordering company during a project. The affiliate company posts expenses and records time on the project. These expenses are transformed into debit memo requests.

An intercompany invoice with reference to the debit memo request is created by the delivering company. The intercompany invoice is also posted automatically to the accounts payables of the ordering company.

The ordering company is DE.

The delivering company is US.

Task 1: Create a project

In this first task, Shubham, our Project Financial Controller, creates an Overhead Project. This project type is used to support the planning and monitoring of project-related costs, in this case an intercompany project.

Task 2-3: Add subordinate WBS elements

Shubbham performs a project planning with subordinate WBS elements for project planning and project execution.

Task 4: Release the project hierarchy

Shubham releases the project and adds actual dates to the WBS elements.

Task 5: Perform a direct activity allocation

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

Task 6: Create a supplier invoice for intercompany expenses

When Shubham posted the direct activity allocation, Claire, our accounts payable accountant, posts an intercompany expense to the right WBS element.

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.

Pay special attention to the sales order header and the selecting 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

Finally Kate, our internal sales representative checks again the sales order. She pays special attention to the document flow.

Now you should have an impression of "How to maintain an Intercompany Project".

Intercompany Project Control

A company has an affiliate company that delivers a service to the ordering company during a project. The affiliate company posts expenses and records time on the project. These expenses are transformed into debit memo requests. An intercompany invoice with reference to the debit memo request is created by the delivering company. The intercompany invoice is also posted automatically to the accounts payables of the ordering company.

Watch the following video to understand how a possible process could look like. You learn which users and which roles are necessary to control intercompany projects.

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:

  • Automate the intercompany process in projects

  • Perform margin analysis

Note

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

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