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Intercompany resource related billing for projects

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Hi SAP experts,

Can you guide me on intercompany resource related billing steps.

We have a US based leading company responsible for execution of customer projects. We also have a company in Colombia.

In our case if US doesn't have available resources , it can assign resources from Colombia to work on US project.

As a result, resource from Colombia books time against US projects.

The sender cost center in CATS is Colombia Cost Center and receiver is US project, the activity type being onsite consulting.

When this is transferred to accounting, system generates intercompany accounting entries as a result of I/C configuration and real time integration between CO & FI.

Next Colombia unit decides to bill the US company code for hours at  pre determined intercompany price.

Please advise on below questions.

1. What should be account assignment on Intercompany sales order. Is COVP table still relevant for DIP processing?

     If not, which is right table system refers?

2. Detailed process and configuration steps for intercompany line items as a source on DIP profile.

3. Lastly, is the process of time booking and moving to FI correct for such scenarios.

Thanks

Accepted Solutions (1)

Accepted Solutions (1)

Paulo_Vitoriano
Active Contributor
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Hi Neeraj,

You can review the scenario as it is described by SAP:

Billing Between Company Codes - Revenues and Earnings - SAP Library

Regards,

Paulo

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Hi Paulo,

I did read this.

I have confusion over following.

1. What should be the account assignment object for internal sales order to affiliate company code.

2. What DIP configurations should I maintain for this profile ?

I tried giving Intercompany line items (1005)  but not able to find right characteristics to trigger this billing. The existing material determination is based on Activity type  which gets confirmed at time of billing.

Please advise

Paulo_Vitoriano
Active Contributor
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Hi Neeraj,

For DIP profile I recommend mapping between cost elements and materials. It is better to have 1:1 between Activity type and secondary cost element, and next using most simple and most standard determination based on accounts only.

If I would do the same scenario in PS, I would create Colombian WBS in the US project.  That Colombian WBS should be mirrored on US part of the project with US WBS that will be the account assignment for RRB on Colombian side.  So, if you have a symbolic markup of maybe 2% that often is a legal requirement that will land on Colombian WBS as profit.  And same cost + markup reflect on US WBS.

Regards,

Paulo

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Thanks Paulo,

1. Yes my DIP profile has one to one mapping between Activity type and material.

2.  If we were to go on your suggestion, you are suggesting creating a WBS (company code Colombia) under the project.

This is just for Colombia, we may have resources from multiple company codes working on same project.Will we have to create WBS for each legal entity whose resources are working on that project?

3. In your suggested scenario, resources will book time/ activity against their own company code WBS and then someone will manually transfer this time/ costs to US WBS for billing it to customer? This will be an additional step.  If I am following process correct, this will credit the time from Colombian WBS, resulting in 0 hours at Colombian WBS..

4. For intercompany billing you will bill US company, based on time captured in Colombian WBS at cost + %?  as we cannot have account assignment of US WBS on Colombian Sales order .

We have real time integration between FI &CO active, as a result company code validation of CO object is active.

Plz advise


Paulo_Vitoriano
Active Contributor
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Hi Neeraj,

Please note that any inter-company postings that are different from the invoicing flow might be illegal. I am not familiar with any situation when postings between legal entities are allowed through CO module cost allocation.  That is very much from the past or when multiple Company codes belong to the same legal entity.  You cannot get cost or revenue out of nowhere into the company P&L without a single legal document.

So, I would be very very surprised if your scenario was accepted by accountants in both USA and Colombia...

In my sample scenario every legal entity that provides own resources for the US project will need own WBS-element.  The advantage of such project is that you have a full cost/revenue picture at any time, not just at month-end.  It is a global project where different WBS-elements belong to different Company codes.

"Someone will manually transfer...", - no.  You cannot manually transfer anything between legal entities.  It will be an RRB from one WBS to another US WBS at any agreed interval, month-end or weekly or whatever agreed. 

Next there will be a second RRB from US part of the project to the external customer.

Regards,

Paulo

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Yes Paulo,

I understand the document legality aspect of intercompany billing and will have corresponding cost and revenue recognized in alignment with documents.

In nutshell you are recommending following.

1. Create a Global project with WBS elements for each company code.

2. Have time and costs  booked by Colombian employees in WBS associated with their company code (Colombia).

3. Have a RRB triggered at actual costs +% based from Colombian company code WBS to US company code WBS.

4. Recognize this billing as cost against PO raised from US company code to Colombian company code.

5. Once all costs are recognized, trigger RRB to customer.

Is above correct? If so, this doesn't require use of Intercompany line items (1005) in DIP profile as source. This is regular PO-SO scenario between intercompany billings.

The time by employees (of US and CO) should be booked similarly in US project. No need to track it separately on a Colombian WBS. We have real time CO-FI integration.

When CO employee books time against US WBS in controlling, system automatically posts the intercompany charges & Time.


Paulo_Vitoriano
Active Contributor
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Hi Neeraj,

Your understanding 1 to 5 is correct.

CO-FI integration cannot substitute the invoicing flow, so why you would do it twice and taking the risk of postings through technical recon accounts?  Try to ask this in FICO forum and nobody will tell you this is an option for inter-company.  Do not confuse accounting with something technical...

Again, symbolic markup is a legal requirement in many countries, often the cost basis is not allowed even for same group of companies.  I am talking mostly for Europe.

Regards,

Paulo

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Paulo,

I do understand the CO-FI integration is a separate topic , but we do have a use here. It will not substitute the billing process but should act as source to billing.

I was just trying to use cross company cost allocation to serve as basis for RRB. In DIP profile we have an option of source as " Actual line items" and " Intercompany line items".

I was trying to trigger RRB on " Intercompany line items".  What you are suggesting above will be triggered on "Actual line items". We don't have any trigger point for Intercompany line items. It's regular SO-PO scenario.

Also, in your scenario, you will have to bill the customer for Colombian employee at costs +% basis, as you have no collection of Colombian employee activity in US WBS. My requirement is to bill end customer on basis of Hours booked.

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