1) The document discusses tips for coping with intercompany invoicing in Oracle EBS, including reconciliation, scheduling concurrent programs daily, adding descriptions, monitoring for errors, and controlling the valuation cutoff date. 2) It recommends creating a Discoverer worksheet to reconcile intercompany payables and receivables invoices. 3) Scheduling the four required concurrent programs daily helps detect errors quicker than running them monthly.

1. Oracle E-Business Suite: Coping with EBS Intercompany Invoicing Eric Guether eguether@gmail.com

2. Objectives Explore intercompany (I/C) invoicing topics and issues not addressed in the Inventory User’s Guide Learn tips for coping with I/C invoicing in areas of: Reconciliation Scheduling G/L Dating Error Detection Valuation 2

3. Presentation Scope In Scope Shipments to fulfill customer sales orders Loosely referred to as “internal drop shipments” Simple pricing of I/C invoices from price lists EBS 11i functionality; applicable to Release 12 Out of Scope Step-by-step configuration Internal Sales Order / Internal Req-specific scenarios Global Purchase Agreement-specific scenarios “External” Drop Shipments (EBS SO spawns a PO) Advanced Pricing to value intercompany invoices 3

4. Intercompany Invoicing Overview Standard functionality in EBS 11i and R12 Produces intercompany invoices for “internal” drop shipments when SOs are sourced across operating units (OUs): SO entered in a selling (OU) Shipment for SO is sourced from an org linked to a different OU, the shipping OU I/C Receivables (A/R) invoice in the shipping OU Bill an internal customer, the selling OU I/C Payables (A/P) invoice in the selling OU Pay an internal supplier, the shipping OU 4

5. Classic Intercompany Invoicing Flow Note: Child not created until Parent record has been Transacted and Costed 5

6. Typical Accounting for Classic I/C Invoicing 6

7. Intercompany Relation 7

8. Reconciliation How do you ensure the completeness of all intercompany Payables invoices? Each I/C Receivable should have matching I/C Payable No reconciliation report provided in Oracle EBS 8

9. Reconciliation: Discoverer Worksheet 9

10. Tip # 1: Discoverer Worksheet Create a custom Discoverer worksheet for every existing intercompany relation Use a custom SQL script to query I/C A/R invoices and any matching I/C A/P invoices Sample script provided in white paper on My Oracle Support site or upon e-mail request 10

11. Intercompany A/P Invoice Numbering Prior to release 11.5.9, the I/C A/P invoice # equaled the I/C A/R invoice # Starting in 11.5.9, the A/P invoice # has a suffix (dash + shipping OU’s org ID) to ensure uniqueness Example: I/C A/P invoice # 47391-32 created to match I/C A/R invoice # 47391 The SQL script provided in the white paper can accommodate matching to A/P invoice #s with or without the suffix 11

12. I/C Invoicing Concurrent Programs Four separate concurrent programs must run to produce I/C A/R and A/P invoices: “Create Intercompany AR Invoices” in the INV module “Autoinvoice Master Program” for Intercompany source in the Receivables module “Create Intercompany AP Invoices” in the INV module “Expense Report Import” for Intercompany source in the Payables module The 2nd, 3rd & 4th programs are dependent on predecessor 12

13. Tip # 2: Daily Scheduling Don’t wait until month-end to generate a whole month’s worth of intercompany invoices! Schedule the four concurrent programs to run daily Reason: Errors can be detected & resolved more quickly through frequent scheduling 13

14. Example of Daily Scheduling List 14

15. Tip # 3: Meaningful Description Use meaningful Header Description values when submitting the “Create Intercompany AR Invoices” or “Create Intercompany AP Invoices” programs Reason: Parameter value becomes the invoice description 15

16. Header Description Parameter 16

17. Description on Imported Invoice 17

18. Error Detection Request status does not necessarily indicate whether errors occurred with some records For 3 of the 4 concurrent programs (except “Create Intercompany AR Invoices”), the request status will be Normal even if the output or log file indicates some records were rejected Do not just monitor at month-end! Reason: Daily scheduling won’t minimize issues at month-end if monitoring is only done at month-end People should be responsible for periodic monitoring errors with these scheduled requests 18

19. Typical Detection Methods “Create Intercompany AR Invoices” Warning request status indicates transaction errors User must review the log file to identify error messages “Autoinvoice Master Program” Request status will be Normal even if records error out Review the output file of spawned Autoinvoice Import Program request for rejected record count Error records can be monitored by querying the RA_INTERFACE_ERRORS_ALL table I/C autoinvoice errors are not so common 19

20. Log File from Warning Request 20

21. Typical Detection Methods [continued] “Create Intercompany AP Invoices” Request status will be Normal even if records error out User must review the log file to identify error messages Contains separate counts for records selected, processed, and rejected “Expense Report Import” Request status will be Normal even if records error out User must review the output file to detect errors in the Exceptions Report section 21

22. Tip # 4: Alert for Warning Requests Create an Oracle Alert to detect “Create Intercompany AR Invoices” requests that ended with a Warning status Sample alert script provided in white paper available upon e-mail request Common reason for Warning: Missing transfer price For example, log file will indicate “APP-INV-05706: Warning: Cannot retrieve transfer price for the item LASER123. Warning: Cannot create invoice line” 22

23. Example of Oracle Alert E-Mail 23

24. Scheduling Issue: Unique Batch Issue in EBS prior to release 11.5.8 Payables invoice batch names must be unique within an operating unit if batch control is enabled Bug 2366334: If an “Expense Report Import” request is scheduled to run repeatedly, each submission will have the same batch name parameter value (won’t be unique) A/P batch from 1st request run will be created Subsequent runs will fail, because they will attempt to create the same batch name Resolved in release 11.5.8 and patch 3114322; request concatenates the batch_id to batch name 24

25. G/L Dating Issue: Payables Options Setting GL Date Basis to System Date is appropriate for trade payables but not for intercompany payables Would cause some I/C A/P invoices to have G/L dates different from their corresponding I/C A/R invoices Could push an I/C A/P invoice’s G/L date into another G/L period If GL Date Basis for I/C A/P invoices were set to Invoice Date, then their G/L Date would always match the G/L Date of their I/C A/R Invoice I/C A/P Invoice’s G/L Date = I/C A/P Invoice’s Invoice Date = I/C A/R Invoice’s Invoice Date = I/C A/R Invoice’s G/L Date 25

26. G/L Date Basis Option in Selling OU 26

27. No Solution Offered in EBS Neither EBS 11i or R12 offer a way to vary the GL Date Basis of A/P invoices based on source type [Intercompany vs. non-Intercompany] Issue raised in numerous Oracle Support bugs Bug 2359320 – INCIAP INTERCOMPANY INVOICING PICKING UP WRONG DATE Bug 3104204 – AP INTERCOMPANY INVOICES HAVE A DIFFERENT GL DATE FROM AR INVOICES 27

28. Unofficial Tip: Custom Triggers Keep the GL Date Basis set to System Date in the selling OU if desired for trade payables Add custom triggers to two Payables tables to override the A/P invoice’s G/L date [only for intercompany invoices!], inserting its invoice date value: AP_INVOICES_ALL AP_INVOICE_DISTRIBUTIONS_ALL Custom triggers guarantee that the G/L dates of I/C A/P and A/R invoices match Add triggers at your own risk! 28

29. Example of Custom Trigger for One Table 29

30. Payments Oracle EBS 11i offers no automation: For corporate netting of I/C A/R and A/P invoices To apply cash collections to I/C receivables when a payment is recorded against I/C A/P invoices One intercompany cash collection could be for hundreds or thousands of I/C A/R invoices depending on shipping volumes 30

31. Valuation Two methods for valuing intercompany invoices: Static price list in Order Mgmt. module Advanced Pricing engine rules for more complexity Static price list for an internal customer is defined within the customer’s bill-to location 31

32. Price List Chosen for Customer Site 32

33. Transfer Price List 33

34. Basis for Selecting a Transfer Price The “Create Intercompany AR Invoices” request selects a transfer price based on which price is effective as of the system date Request run system date = I/C A/R inv. creation date The G/L date of the I/C invoice has no bearing on the transfer price selection 34

35. Example of Transfer Price Selection I/C A/R invoice for item LASER123 G/L date: 01-APR-2007 Invoice date: 01-APR-2007 If this I/C A/R invoice were created on: 01-APR-2007, it would be valued at the $1,320 price 05-APR-2007, it would be valued at the $1,100 price Issue: Some companies want the invoice to be priced at the new price ($1,100) based on the G/L date regardless of the invoice creation date 35

36. Potential Valuation Issue Dilemma: How do you ensure that intercompany invoices with G/L date in: March 2007 are valued at the old transfer prices? April 2007 are be valued at the new prices? 36

37. Tip # 5: Control the Valuation Cutoff Use the Cost Cutoff Date (CCD) functionality in EBS Inventory to indirectly control the I/C invoice valuation cutoff Introduced in EBS release 11.5.7 Controlled by one simple Inventory parameter date Defers the costing of any MTL transactions in the org with G/L date on or after the cost cutoff date value 37

38. Inventory Org Parameter: Cost Cutoff Date 38

39. CCD Impact on I/C Invoice Valuation Set CCD to 01-APR-2007 to defer the costing of April-dated shipments until perhaps April 6th I/C invoices for April-dated shipments will not be created & valued so long as their ‘Sales Order Issue’ shipment transactions remain uncosted The cost cutoff date indirectly defers I/C A/R invoice creation through the Parent-Child dependency Deferring the I/C invoice creation also postpones the transfer price selection 39

40. Cost Cutoff Date Impact on a SO Issue 40

41. Additional Resources I/C Invoicing for Internal Reqs / Internal Orders: Han Kolbe presentation [2006 NorCal OAUG Seminar on Intercompany Transactions] COGS Account Generator for I/C Payables: John Peters presentation [2006 NorCal OAUG Seminar on Intercompany Transactions] “Overview of Intercompany Invoicing” Oracle white paper by Sharma Manda[Oracle Support doc # 336129.1] “Internal Drop-Shipping: Multi-Org Inter-company Invoicing in 11.5.10” by David S. McCurry [OAUG COL’06 white paper presentation] “Multiple Organizations in Oracle Applications” Oracle white paper, Appendix B – “Using The Account Generator to Generate the Intercompany COGS Account” [Oracle Support doc # 226456.1] “11i Cost Cutoff Date to Retroactively Cost Transactions” by Eric Guether [NorCal OAUG 2007 Training Day presentation and Oracle Support doc # 432515.1 ] 41