 Introduction of SAP Inter company sales process

The definition of inter-company sales in SAP is when the company code that is determined by the
delivering plant at goods issue time differs from the company code determined by the sales organization at
billing time. In essence, inventory was sold that belonged to a different legal entity. In order to “balance
the books”, after posing goods issue from the delivering plant, two billing documents need to be generated.
The first billing document, which is issued to the customer, is used to record the revenue and accounts
receivable in the company code that is related to the sales organization of the sales order. The second
billing document is used to record the “intercompany” sales. That is, the company code related to the plant
that provided the inventory bills the company code related to the sales organization that received “credit”
for the sale.

 Benefits of Inter company sales process

 Pre-requisites for intercompany
 Inter Company Invoice Posting
 Intercompany Configurations
o Define Order Types For Inter company Billing:
 Menu Path: IMG- > Sales & Distribution->Billing->Inter Company Billing->Define
Intercompany Billing Order Types.
o Assign Organizational Units by Delivering Plant:
 Menu Path: IMG- > Sales & Distribution->Billing->Inter Company Billing->Assigning
Organizational Units by Plant
o Assign Plant to Sales Organization and Distribution Channel:
 Menu Path: IMG->Company Structure->Assignment->Sales and Distribution->Assign Plant
to Sales Organization and Distribution Channel.
o Define Internal Customer Number By Sales Organization:
 Menu Path: IMG- > Sales & Distribution->Billing->Inter Company Accounting->Define
Internal Customer Number by Sales Organization.
 Master Data –Preparation
o Create Internal Customer Number By Sales Organization:
 Menu Path: Easy Access- > Logistics- > Sales and Distribution- > Master Data- > Customer-
> Create.(XD01)
o Master Data – Extend the material in the Delivery Plant
 Menu Path: Easy Access- > Logistics- > Sales & Distribution- > Master Data- > Products- >
Material- > Other Materials- > Change.
 Condition Type Configurations
o
 Menu Path: IMG -> Sales and Distribution ->Basic functions -> Pricing-> Pricing Control ->
Define Condition type.(T-code: V/06)
 Master Data – Condition Records
o
 Menu Path: Easy Access ->Logistics -> Sales and Distribution -> Master Data -> Conditions -
> Select using Condition Type ->Create
 Transaction Steps – Order Creation
o
 Menu Path: Easy Access -> Logistics -> Sales & Distribution -> Sales -> Order -> Create
 Transaction Processing – Outbound Delivery
 Transaction Processing – Billing Document
o
  Menu Path: Easy Access- > Logistics- > Sales & Distribution- > Billing- > Document Billing-
> Create (VF01)
o F2 Invoice
o IV Inter company Invoice
 Posting of the Inter Company Invoice
Intercompany sales processing shall be initiated with the sales organisation
creating an order for the delivery plant belonging to another company code.

The system checks sales organization and distribution plant company codes
and conducts intercompany billing processing via Inter-Company Billing
document automatically.

The plant in the company code of delivery delivers the goods to the customer
for whom the sales organization has placed the order.

In this case , two billing documents are created:

 The customer billing document that is sent from the sales organization
to the customer who receives the goods.
 •An Inter-Company billing document that is forwarded from the delivery
plant to the sales organization
An inter-company business transaction is where sales transactions (sales
orders and billing document ) for the sale of materials are carried out in a
company code different from that used for the storage, production and
delivery of those materials. This business transaction often occurs in corporate
groups where, for example, the subsidiaries are entrusted with sales-related
operations, while the actual production takes place exclusively in the parent
company.

Intercompany business therefore typically requires the actual sale of products

to “external customers” to be accompanied by an internal allocation between
the subsidiary (sales company code) and the parent company (suppliers
company code).

Billing documents for such transactions must be generated both in the

company code of production and in the company code that sells the product
to the end customer.
Inter company Process flow

Benefits of Inter company sales process

 This prevents the company from pre-supplying the goods in its own
warehouse and can choose from whom to deliver the goods to the
customer.
 Allows all company codes to share inventory information, track inter-
company shipments, and view automatic FI postings and settlements.
 Automatic Inter-Company account reconciliation and settlement In-
transit inventory visibility and reporting
 Workload reduction in processing invoices
 Eliminate invoicing errors
 Eliminates reconciliations

Pre-requisites for intercompany

 The ordering sales organization and the delivery plant must be
governed by different company codes.
 The required combination of the Sales Organization and the Delivery
Plant must be maintained.
 Sales Area – Sales Organization, Distribution Channel and Division shall
be assigned to all plants in which the sales processing of Intercompany
is carried out.
  Intercompany Billing Document type must be assigned to the type of
sales document required.
 In order to represent the ordering Sales Organization, an internal
customer number must be established in the Sales Organization
representing the delivery plant.
 Materials must be available in all plants participating in the
Intercompany Sales process.
 Condition types representing the processing of sales by Intercompany
shall be maintained in the pricing procedure.
 Condition records for the required combination of sales organization
and plant must be maintained

Inter Company Invoice Posting

The delivery company and the ordering company are part of the same
company. The intercompany billing document for the delivery company is
therefore posted as the receipt of the invoice for the ordering company.

The ordering company can post an invoice receipt either:

 Manually after delivery of the goods, the invoice document can be

printed with the help of the output type RD00, which is then sent to the
end customer.
 Automatically with an intercompany billing document: through IDOC /
EDI. The system uses the output type RD04 included in the output
determination procedure V40000, which is assigned to the internal
billing type.
The delivery company must be set up as a supplier or vendor in order to be
able to create the financial document of the ordering company.
Inter Company Sales Flow

Intercompany Configurations
Define Order Types For Inter company Billing:
Intercompany billing document type IV is assigned to all types of order
documents for which intercompany sales processing may be carried out

Configuration Steps :

STEP 1: Intercompany Document type

Assign Intercompany document type to Sales document types in order to use the Intercompany sales
process

Path: SPRO – IMG- Sales and Distribution –Billing-Intercompany Billing – Define Order types for
Intercompany billing

STEP 2: Plant Assignment

i) Assign Supplying plant to Suppling sales area (i.e.,) PABC plant will be assigned to ABCD AB AB sales
area. This would be done in enterprise structure assignment and the same can be seen in the below path.

Path: SPRO – IMG- Sales and Distribution –Billing-Intercompany Billing –Define Organizational Units
by Plant
ii)Assign the Supplying plant to receiving Sales Org and Distribution Channel.(i.e.,) PABC plant will be
assigned to 1234 12 12 sales area

Path: SPRO- IMG- Enterprise Structure-Assignment- Sales and Distribution-Assign Sales Organisation-
distribution channel-plant

STEP 3: Internal Customer Creation

i) Since Sales Org 1234 is requesting the Sales org ABCD to deliver the material, Sales Org 1234 will
become a customer to Sales Org ABCD. Hence create Customer XYZ in sales org ABCD

XD01 – XYZ for ABCD AB AB Sales area

ii)Assign the created customer XYZ to sales org 1234

Path: SPRO – IMG- Sales and Distribution –Billing-Intercompany Billing –Define Internal customer
number by the Sales organization

Menu Path: IMG- > Sales & Distribution->Billing->Inter Company Billing-

>Define Intercompany Billing Order Types.
Define Order Types For Inter company Billing:

Assign Organizational Units by Delivering Plant:

The sales organization, Distribution Channel and Division are allocated to
plants for which inter-company processing of sales is possible. Delivery Plant
uses these specifications to process intercompany billing.

Menu Path: IMG- > Sales & Distribution->Billing->Inter Company Billing-

>Assigning Organizational Units by Plant
Define Order Types For Inter company Billing:
Assign Plant to Sales Organization and Distribution Channel:

Sales Organization and Distribution Channel must be assigned to the Delivery

Plant to enable the processing of sales.

Menu Path: IMG->Company Structure->Assignment->Sales and

Distribution->Assign Plant to Sales Organization and Distribution
Channel.
Assign Plant to Sales Organization and Distribution Channel
Define Internal Customer Number By Sales Organization:
The Internal Customer Number must be assigned to the Ordering Sales
Organization.

Menu Path: IMG- > Sales & Distribution->Billing->Inter Company

Accounting->Define Internal Customer Number by Sales Organization.
Define Internal Customer Number By Sales Organization:

Master Data –Preparation

Create Internal Customer Number By Sales Organization:
The Customer Master Record shall be established in the Sales Organization
representing the Delivery Plant. The sales organisation belonging to the Code
of the Ordering Company shall be the internal customer.

Menu Path: Easy Access- > Logistics- > Sales and Distribution- > Master
Data- > Customer- > Create.(XD01)
Define Internal Customer Number By Sales Organization:

Master Data – Extend the material in the Delivery Plant

Enter the Delivery Plant in the material master records that will be relevant to
the sales transaction will be carried out by the Ordering Sales Organization.
Extend the material master records in the Delivery Plant: Enter the Delivery
Plant in the material records that will be relevant to the sales processes carried
out by the Ordering Sales Organization.

Menu Path: Easy Access- > Logistics- > Sales & Distribution- > Master
Data- > Products- > Material- > Other Materials- > Change.
Extend the material in the Delivering

Condition Type Configurations

Creating Intercompany Condition Types: The delivery plant uses one of the
following condition types to bill the sales organization.

 PI01 Intercompany: fixed amount per unit of material

 PI02 Intercompany: percentage of the amount of the net invoice.
 These conditions specify that the price charged by the delivery plant to
the sales organization shall be shown as a statistical value in the order
of sale and as an effective charge in the internal invoice.
Menu Path: IMG -> Sales and Distribution ->Basic functions -> Pricing->
Pricing Control -> Define Condition type.(T-code: V/06)
Condition Type

Master Data – Condition Records

Creating Inter Company Condition Records:

 PI01 Inter company: fixed amount per material unit

 PI02 Inter company: percentage of the net invoice amount.
Menu Path: Easy Access ->Logistics -> Sales and Distribution -> Master
Data -> Conditions -> Select using Condition Type ->Create
All Setup has been done , Now lets create intercompany transaction

Transaction Steps – Order Creation

Menu Path: Easy Access -> Logistics -> Sales & Distribution -> Sales ->
Order -> Create
Create Order: The ordering Sales Organization shall prepare the order for sale.
The system shall check the company codes and the authorized combinations
of the ordering sales organization and the delivery plant for the
implementation of the Inter-Company Billing process.
Sales order initials creation

Inter company Sales Order Creation

The system automatically performs pricing in accordance with the pricing

procedure assigned to the sales organization. The intercompany charge (PI01 /
PI02) appears as a statistical value on the sales order screen conditions-the
charge has no effect on the final value of the customer’s order. The
intercompany charge is not printed on the customer’s documents.

Sales Order Item Pricing condition

Transaction Processing – Outbound

Delivery
Delivery shall be effected by the Ordering Company from the Shipping Point
assigned to the Delivery Plant.

Outbound Delivery

Transaction Processing – Billing Document

Menu Path: Easy Access- > Logistics- > Sales & Distribution- > Billing- >
Document Billing- > Create (VF01)
The Ordering Company creates the invoice for the end customer.The Payer
and the Company Code are derived from the Order created by theOrdering
Company Code

F2 Invoice
Inter company Billing Document

The Company associated with the Delivery Plant bills the Ordering Company
through the Inter-Company Billing Document. The Payer Code and the
Company Code are derived from the Order of the Order of the Company.

IV Inter company Invoice

IV Inter company Invoice

Posting of the Inter Company Invoice

Manual invoice posting is done after Post good issue has been done and
systems prints invoice document using the output type RD00, which is then
sent to the end customer. The intercompany accounting transaction is
automatically posted via IDOC / EDI The system uses the output type RD04
included in the output determination procedure V40000, which is assigned to
the internal billing type.
Automatic posting of the intercompany billing

For the system to determine another delivering plant for the material in the
customer order item, when entering a sales document:

 Ensure that the same delivering/supplying plant is maintained in the

Customer material info record if any.
 The internal customer master for the delivering sales organization must
also contain the same plant.
The delivery company must be set up as a vendor in order to be able to
publish the financial document of the ordering company.