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Intercompany Transactions Presentation Intercompany Transactions in Oracle R12 and Differences between Oracle R12 and 11i
Intercompany Transactions Presentation Intercompany Transactions in Oracle R12 and Differences between Oracle R12 and 11i

Intercompany Transactions

Presentation

Intercompany Transactions in Oracle R12 and Differences between Oracle R12 and 11i

Monday, April 7, 2014 1:00 2:00 p.m. Level 3, San Polo - 3504

Prepared by:

Paul Kirch & Jay Chandran Paul Kirch, Inc. and Simplex Data Technologies

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Summary: Paul is a senior program manager with over 22 years experience managing programs, with

Summary:

Paul is a senior program manager with over 22 years experience managing programs, with over 10 years delivering large complex global business transformation projects. Paul has worked on and/or delivered 17+ Oracle

full life cycle implementations, and has

extensive international experience working in Europe, South America, Israel, and the principal Asian countries.

In addition to his package implementation experience, Paul has

also led package selection programs,

business process reengineering/ transformation programs, business case development , and supply chain operational effectiveness initiatives. Paul has led programs utilizing Oracle Financials, Supply Chain, HR/Payroll and

Projects modules in all releases from Oracle 9.4.2 through Oracle R.12.1.3 and Fusion Release 5.

Paul lives in San Francisco, California and is currently working in the San Francisco area on a global

implementation project.

Paul Kirch

area on a global implementation project. Paul Kirch Relevant Work Experiences: Formerly Director, Oracle EBS and

Relevant Work Experiences:

Formerly Director, Oracle EBS and Fusion Practice at large India-based Integrator

Developed proposals and led practice for India-based system integrator. Responsibilities

included creating artifacts for project delivery methodology, creating implementation methodology for Fusion project and hiring staff into the Fusion Practice. Successful in selling Fusion projects to 1 regional restaurant chain and to a government national lab.

Client: Major High End Clothing Retailer | Role: Program/ Project Manager

Led a 12 month Oracle R12 Assessment and Implementation project in which project team assessed the impact of migrating over 400 custom objects to Oracle R12 (12.1.6). Project scope included Oracle R12 functional and technical upgrade and reimplementation of Oracle Projects modules (Project billing, costing, management modules) Project solution included Oracle STT eB Tax solution, Oracle Procurement, iSupplier, HR/ Payroll and OIC. Project value: $4.2 million.

Client: Major Games Software Development Company| Role: Financials & Tax Lead

Led a Order to Cash (OTC) project team tasked with implementing Oracle SOA Suite of products as part of an Oracle R12 (12.1.6) upgrade project. Team reversed engineered a number of major modifications created during the Oracle 11.5.10 implementation, using Oracle SLA, Ledger/Ledger Sets, and eB Tax to replace customizations with standard “out of the box” functionality. Project team size: 25 consultants. Project scope: Worldwide, including Asia Pacific and Europe.

Client: Major Construction Company (Brazil & U.S)| Role: AP Lead and U.S Tax SME

Led a project team engaged in the United States implementation of Oracle R12 (12.1.4).

Project

scope included: Oracle Financials, including Oracle eB Tax (Sales & Use Tax), Supply Chain, HR and

PeopleSoft Payroll.

Project team developed a template to allow company to implement a global

sourcing/ procurement company for Brazilian-based construction project teams.

3

Jay Chandran Jay Chandran has over 15 years of diverse experience in the fields of

Jay Chandran

Jay Chandran Jay Chandran has over 15 years of diverse experience in the fields of Finance,

Jay Chandran has over 15 years of diverse experience in the fields of

Finance, Accounting, Business Process Re-engineering and ERP consulting. He has held senior positions in the Oracle eBusiness Suite Consulting, a regional accounting firm in California and Corporate Controllership in the industry. Jay is the Managing Partner of SimpleX

Data Technologies, a managed service provider company in California

that helps companies increase their competitive position by reducing expenses related to implementation and on-going maintenence of Oracle ERP and database systems. Jay is a Certified Public Accountant (inactive status) from California and holds a Masters degree in

Accounting from ‘Ole Miss.

Agenda

Definition of Terms

Conceptual Understanding of Intercompany transactions in Oracle R12:

Internal Drop Shipment

External Drop Shipment

Single Node Intercompany (Internal Replenishment Order)

Global Purchase Agreement (GPA) and GPA Returns

Multiple Node Intercompany

Challenges in R12

Profit in Inventory (PII) and PPV Accounting

Unsupported Multiple Hop Intercompany Transactions

Global Purchase Order (GPA) Returns in 11i versus R12

AGIS (Advanced Global Intercompany System) and Solution Approach

SLA- and GL-based Accounting Solution for PII and PPV

Conclusion

System) and Solution Approach • SLA- and GL-based Accounting Solution for PII and PPV • Conclusion

Definition of Terms

Definition of Terms

Multi- Org Concepts

Multi- Org Concepts ■ Ledgers, Data Access Sets, and Ledger Sets ■ Reporting Currencies and Secondary

Ledgers, Data Access Sets, and Ledger Sets

Reporting Currencies and Secondary Ledger(s)

Company Codes/ Balancing Segment Values (BSVs)

Legal Entities

Business Group

Operating Units

Inventory Org

Terms

Data Access Sets can be used to segment Ledgers so that multiple

companies use a common GL with appropriate transactional security

Oracle uses company codes or Balancing Segment Values (BSV’s) to define the level at which debits=credits in Oracle General Ledger. At the subledger level, Oracle uses the concept of Operating Units to define separate business units

In Oracle R12, Oracle introduces the concept of a Legal Entity in Oracle General Ledger. The Legal Entity or Establishment captures the VAT Registration Number and creates a legal address

The Legal Entity can be used to “lock down” BSV’s. This functionality is

be used to “lock down” BSV’s. This functionality is extremely important in Oracle eB Tax in

extremely important in Oracle eB Tax in determining the appropriate rates to use on a specific transaction (place of supply)

Inter-company transactions are defined as transactions between

related-company legal entities; Intra-company transactions are

transactions between BSVs that belong to the same legal entity

Inter-company Overview

Operating Unit Intercompany Functionality: Oracle’s Operating Unit

is designed to hold an operational entity and its transactions

separate from others OUs. In order for Oracle’s Shipping Networks/ Intercompany Transaction Flows to work correctly, two operating units must be defined which transact with one another. Oracle uses the two operating units structure to enable intercompany

transactions for OM, INV, PA , AR, and AP transactions.

transactions for OM, INV, PA , AR, and AP transactions. ■ Balancing Segment Intercompany Functionality: The

Balancing Segment Intercompany Functionality: The GL Balancing

Segment is designed to maintain an entity’s financial information.

With its automatic balancing of I/C journals Oracle’s GL module

provides I/C functionality that is independent of the OU concept, described above.

AGIS Intercompany Functionality: In Oracle R12, Oracle’s AGIS

extends the GIS functionality created in 11i and allows users to

create intercompany transactions, including the underlying I/C AR/AP invoices. The relationship and entries between Initiator and

Recipient in AGIS define which entities can transact and create intercompany AR/AP transactions, and whether these transactions

require approval.

History of Intercompany Processing in Oracle

History of Intercompany Processing in Oracle Supported Transactions flows: (from Oracle White Paper) ▪ Internal

Supported Transactions flows: (from Oracle White Paper)

Internal Drop-Ship (older functionality 10.7)

External Drop-Ship (released in 11.5.3)

Standard Single Node Inter-company (11.5.9)

Global Purchase Agreements (GPA) (11.5.10)

Multiple Node Inter-company (not supported in Oracle R12)

Global Intercompany/ Advanced Intercompany System (GIS/AGIS)

Conceptual Understanding of Intercompany Transaction Business Flows This is a subtitle or bulleted list

Conceptual Understanding of Intercompany Transaction Business

Flows

This is a subtitle or bulleted list

Internal Drop Ship

Customer

Customer

Bill-to

Ship-to

Internal Drop Ship Customer Bill-to Ship-to Sale and Shipment Invoice Entity A Selling Entity INV-Org A
Internal Drop Ship Customer Bill-to Ship-to Sale and Shipment Invoice Entity A Selling Entity INV-Org A

Sale and

Shipment

Invoice

Entity A Selling Entity

INV-Org A

OM: Book Sales Order - Reserve with Ship-From Warehouse of Inv Org B

AR: Trade Invoice To Customer

AP: Create IC AP Invoice from Entity B

Entity B

Shipping

INV-OrgEntityB

OM: Pick Release, Ship-Confirm, Inv Interface, Costing

AR: Create IC Invoice To Entity A

IC Invoice

INV-OrgEntityB OM: Pick Release, Ship-Confirm, Inv Interface, Costing AR: Create IC Invoice To Entity A IC
INV-OrgEntityB OM: Pick Release, Ship-Confirm, Inv Interface, Costing AR: Create IC Invoice To Entity A IC

External Drop Ship

External Drop Ship Customer Bill-to Ship-to Shipment Vendor of Entity B Sale and Invoice Purchase Order,
Customer

Customer

Bill-to

Ship-to

External Drop Ship Customer Bill-to Ship-to Shipment Vendor of Entity B Sale and Invoice Purchase Order,

Shipment

Vendor

of Entity B

Bill-to Ship-to Shipment Vendor of Entity B Sale and Invoice Purchase Order, AP Invoice Entity A

Sale and Invoice

Purchase Order, AP Invoice

Entity A

Selling Entity

INV-Org A

Entity B

Shipping Entity

INV-Org B

PO: Import Requisition, Create PO

PO: Supplier Ship - “Receipt of PO”

INV: Create Logical Transactions in A and B (Sales Order Issue and IC Receipts) and Costing

AR: Create IC Invoice To Entity A

IC Invoice

and Costing AR: Create IC Invoice To Entity A IC Invoice OM: Book/Reserve to Vendor Site

OM: Book/Reserve to Vendor Site of Entity B

AR: Trade Invoice To Customer

AP: Create IC AP Invoice from Entity B

Single Node Intercompany (Internal Supply and Replenishment)

Single Node Intercompany (Internal Supply and Replenishment) Entity B Entity A Shipment and IC Shipping “Selling
Entity B Entity A Shipment and IC Shipping “Selling Invoicing INV-Org B INV-Org Entity” A
Entity B
Entity A
Shipment and IC
Shipping
“Selling
Invoicing
INV-Org B
INV-Org Entity” A
PO: Internal Requisition
PO: Create Internal Order
OM: Import Internal Sales Order
OM: Reserve, Pick Release, Ship-
Confirm, Inv Interface, Costing
AP: Create IC AP Invoice from
Entity B
AR: Create IC Invoice To Entity A
Vendor Bill-to Ship-to Receive Purchase Order, Ship to Entity A “GPA Entity” INV-Org A PO:
Vendor Bill-to Ship-to Receive Purchase Order, Ship to Entity A “GPA Entity” INV-Org A PO:
Vendor
Bill-to
Ship-to
Receive Purchase Order, Ship to
Entity A
“GPA Entity”
INV-Org A
PO: Purchase Order (Auto)
AP: Create IC AP Invoice from
Entity B

Global Purchase Agreement

(Centralized Procurement)

Shipment
Shipment

Entity B

“Procuring”

INV-Org B

PO: Create Requisition

AR: Create IC Invoice To Entity A

B PO: Create Requisition AR: Create IC Invoice To Entity A Requisition for Item On GPA

Requisition for Item On GPA

Entity C “Accounting”

INV-Org C

for Item On GPA Entity C “Accounting” INV-Org C Intercompany AR INV: Create Intercompany AR INV:
for Item On GPA Entity C “Accounting” INV-Org C Intercompany AR INV: Create Intercompany AR INV:

Intercompany AR

INV: Create Intercompany AR

INV: Create Intercompany AP INV: Create

Intercompany AP

AP: Create IC Invoice To Entity A AR: Create IC Invoice to Entity B

Multiple Hop Intercompany

Multiple Hop Intercompany Entity B “Procuring” INV-Org B PO: Create Internal Requisition PO: Create Internal

Entity B “Procuring”

INV-Org B

PO: Create Internal Requisition

PO: Create Internal Order

AR: Create IC Invoice To Entity C

Entity A “Selling Entity”

INV-Org A

OM: Import Internal Order Pick, Pack and Ship

AP: Create IC AP Invoice from Entity C

Shipment

and Ship AP: Create IC AP Invoice from Entity C Shipment IR/ISO Entity C “Accounting” INV-Org
and Ship AP: Create IC AP Invoice from Entity C Shipment IR/ISO Entity C “Accounting” INV-Org

IR/ISO

AP: Create IC AP Invoice from Entity C Shipment IR/ISO Entity C “Accounting” INV-Org C Intercompany
AP: Create IC AP Invoice from Entity C Shipment IR/ISO Entity C “Accounting” INV-Org C Intercompany

Entity C “Accounting”

INV-Org C

Intercompany AR

Intercompany AP

INV: Create Intercompany AR

INV: Create Intercompany AP

INV: Create

AP: Create IC Invoice To Entity A AR: Create IC Invoice to Entity B

Enhancement request # 12539412. (Bug 12539412 :

MULTI-NODE INTERNAL DROP SHIP SALES ORDERS)

AGIS and Solution Approach AGIS or Advanced Intercompany Syste SLA or Subledger Accounting Standard Oracle

AGIS and Solution Approach

AGIS or Advanced Intercompany Syste SLA or Subledger Accounting Standard Oracle

Advanced Global Intercompany System

(AGIS)

Advanced Global Intercompany System (AGIS) The resolution to the first problem – “How do we develop

The resolution to the first problem – “How do we develop a mechanism to support multi-hop intercompany trransactions?” – lay in using AGIS as the

means of creating the required intercompany AR and AP transactions.

trransactions?” – lay in using AGIS as the means of creating the required intercompany AR and

Advanced Global Intercompany System

(AGIS)

Create I/C Multi-hop transactions and identify these transactions in the MTL_Transactions table

Create an I/C

transaction in AGIS

I/C Multi-hop transactions and identify these transactions in the MTL_Transactions table Create an I/C transaction in
I/C Multi-hop transactions and identify these transactions in the MTL_Transactions table Create an I/C transaction in
I/C Multi-hop transactions and identify these transactions in the MTL_Transactions table Create an I/C transaction in

ADI Spreadsheet Upload

ADI Spreadsheet Upload ADI to Load Multihop Intercompany Transactions Use ADI to create I/C transactions from

ADI to Load Multihop Intercompany Transactions

Upload ADI to Load Multihop Intercompany Transactions Use ADI to create I/C transactions from data elements

Use ADI to create I/C transactions from data elements on MTL_Transactions table and load to AGIS, creating I/C AR and AP invoices

Standard Oracle creates a Profit in Inventory (PII) for the Intercompany Single Node Transaction
Standard Oracle creates a Profit in Inventory (PII) for the Intercompany Single Node Transaction

Standard Oracle creates a Profit in Inventory (PII) for the Intercompany Single Node Transaction

Thank you for your time!!

Thank you for your time!!
Thank you for your time!!
Thank you for your time!!