Intercompany Cost Allocations and Intercompany Billing in SAP S/4HANA Cloud for Finance: Introduction

[Ulrich_Hauke]

This blog provides an introduction into the detailed blog ‘Intercompany Cost Allocations in S/4HANA Cloud’ authored by my SAP colleagues Stefan Walz and Sebastian Doll.

An intercompany process in SAP S/4HANA Cloud consists of two parts: the direct intercompany cost posting and the periodic intercompany billing. The first part covers the basis for an enhanced cost analysis and the second part covers the basis for the correct legal reporting. All the information is posted consistently in the single source of truth – the Universal Journal.Picture 1: Intercompany Example Process for Prof. Service

The following intercompany scenarios are available in SAP S/4HANA Cloud for cost allocations and periodic intercompany billing:

1. Intercompany activity time recording or activity allocation on receiver such as projects, service orders, cost centers. Especially in professional service businesses intercompany staffing on customer project is very common. The consultant confirms time and expenses to a WBS element in a different company code.


2. Intercompany travel expense with and w/o SAP Concur. In the Concur application, an employee assigns his expense report to a cost object (cost center or project) of a different company code.


3. Intercompany cost allocation. Costs are allocated between company codes with the Reassign Costs and Revenues app. Possible use cases are intercompany allocation of travel or shared service center costs.

With the intercompany postings completed, some legal requirements are not yet covered. Taxes, accounts receivables and payables as well as affiliated revenues and expenses for group reporting are missing. This is provided by the periodic intercompany billing. The following steps need to be completed:

1. Creation of an intercompany sales order with the ‘Create Sales Order Intercompany’ App


2. Creation of an intercompany billing document with the app ‘Generate Intercompany Billing Request’


3. The direct memo request and the intercompany invoice is created


4. From the AR posting the matching AP document created by IDOC

An important configuration step to be considered upfront is the definition of the intercompany clearing accounts with the self-service configuration task ‘Account Determination’. The ICO clearing accounts are P&L accounts of type non-operating Expense or Income.

Curious to read all details and posting examples? Don't miss the blog from Stefan and Sebastian.

For more information on SAP S/4HANA Cloud, check out the following links:

• SAP S/4HANA Cloud release info: http://www.sap.com/s4-cloudrelease


• SAP S/4HANA Cloud Release Blogs here


• Inside SAP S/4HANA Podcast here


• Best practices for SAP S/4HANA Cloud here


• SAP S/4HANA Cloud User Community: register here


• Feature Scope Description here


• What’s New here


• Help Portal Product Page here


• Implementation Portal here


• All finance expert compendium blogs here


• New book Financial Accounting with SAP S/4HANA: Business User Guide

Follow us via @Sisn and #S4HANA, or myself via @HaukeUlrich and LinkedIn

[edwin_weijers3]

What I don't understand is that there are separate apps for Manage cost allocations (only within a company code) and Intercompany cost allocation. The benefit of assigning more company codes to 1 CO area was in the past that you could allocate within a company code and intercompany combined in 1 cycle. If you treat this is separated ctcles, you complex the process. In stead of just allocating 100% of the costm now you need to calcualte first hiow much % of the cost you eant to allocate within the compamy code, put this in the Manage allocations app. The remainder % must be allocated in the intercompany cost allocation app. That gices totally different tracing factors compared to if these allocations would be combined in 1 overall allocation. It is more work for the end user and it doesn;t make sense to spread the allocations over diofferent apps.

[Jack_Reynolds]

Hi ulrich.hauke , is this functionality available in S/4HANA 2021 on-premise? And if not, when is it planned to be made available for on-premise customers?

Thanks,

Jack

[former_member95844]

Hi Reynolds,

for the most part, the functionality is also available in SAP S/4HANA On-premise.

Only for cost rate handling and apps there are some differences.

Best regards

Sebastian

[former_member95844]

Hello Weijers,

thanks for your comment.

You are right that intercompany and intracompany allocations can no longer be mixed-up in one allocation cycle and therefore the receiving tracing factor calcualation can not be done automatically.

However, Intercompany Cost Allocations must follow certain rules and therefore it´s good to have them clearly seperated.

In addition, it´s also important to understand that for Intercompany Allocation the "Prima Nota" principle is applied which means that  the value from the leading ledger are taken and posted to all parallel ledgers. For Intracompany allocations, the values are calculated and allocated ledger dependent.

Best regards

Sebastian