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varsha_chetanmanu
Associate
Associate
9,590

Introduction

Today, many companies have gone global and have numerous interactions with their subsidiaries worldwide. Consequently, resource-related intercompany billing has become a crucial process for cross-company billing of intercompany services and expenses. In this blog, we discuss the primary motivations and prominent features of the new intercompany billing solution

Why new Resource-Related Intercompany Billing in S/4HANA Cloud, Public Edition?

The earlier solution for intercompany billing has been in place for quite some time in S4HANA Cloud, Public Edition. However, it came with certain limitations, such as the restriction that we could have only one intercompany sales order for a combination of ordering and delivering company codes. This resulted in double billing of cost posting. Furthermore, numerous enhancement requests indicated a need to revisit the old solution. The goal of the new solution is to:

    • Overcome the limitations to ease the customers' experience with the intercompany billing process.

    • Enrich the solution with new capabilities.

    • Address critical customer pain points, for example, providing end-to-end traceability of the intercompany billing process.


Delivery

Firstly, the resource-related intercompany billing process flow remains unchanged. This also signifies that the scope items required for the solution's activation remain constant. Reiterating the scope items for reference

Intercompany Billing for Cross-Company Cost Accounting Postings (4AN)

Intercompany Processes - Project-Based Services (16T)

Project Control – Intercompany (4AU)

Intercompany Billing for Service Documents (53Y)

These scope items are non-standard scope items and need to be activated explicitly. As of release S/4HANA Public Cloud 2408, the new intercompany billing solution is not localized for Brazil. For future updates, please refer to latest release notes.



Activation of New Solution

You might wonder, if the scope items remain the same then how can the new solution be activated. Currently the new solution is released as a non activate feature. The end user can activate the new solution by selecting the feature ID FTGL_500717 (new Resource-Related Intercompany Billing) via the 'Activate features' SSCUI. The 'Activate Features' SSCUI can be accessed via 'Manage Your Solution' application with Application Area: Application Platform and Infrastructure, Sub Area: General Settings and Item name: Basic Settings

Upon activation, the migration to new process is immediate. The existing 'Generate Intercompany Billing Request' application itself considers all that is currently unbilled and generates the new type of document called Billing Document Request, instead of the Debit Memo Request, thereby redirecting the existing process flow. Consequently, the Billing Document will be generated from the Billing Document Request, followed by IDOC, Accounts Payable, and Accounts Receivable creation, as before. A brief overview of the process flow is reflected in the image below.

 

Fig 1. Overview of process flow


Furthermore, after activation, if any of the already generated Debit Memo Requests are rejected and cost postings are reopened, then these records are considered for next billing cycle and billed via new solution.

Overview

The Intercompany process starts with cost allocations. Please refer to blog Intercompany Cost Allocations in S/4HANA Cloud. Cost allocations must be billed for taxes, revenues, receivables and payables. This is handled via intercompany billing process

The Intercompany billing process starts with the specification of intercompany sales order defining the ordering and delivery company codes. Starting 2408, multiple Intercompany sales orders can be specified as input. This is followed by selection of Intercompany billing relevant postings for the specified combination of company codes.

Selection of Relevant Intercompany Cost Postings

Today, the process considers the intercompany cost postings to several controlling objects like WBS elements ( any kind of projects) , Service orders, Repair orders, Cost centers ( only settlement and direct postings) . This forms the initial filtering level of intercompany cost postings.

This is further facilitated by enabling the same fields as filters in 'Generate Intercompany Billing Request' application. This allows the user to define relevant filters during invoice generation. Please note, that although sales order is not a controlling object capturing costs in public cloud, it is made available as filter parameter to filter based on associated project and its intercompany costs to be considered for billing.

 

Fig 2. Generate Intercompany Billing Request


Additionally, the application provides simplified date selection options to specify the date range for intercompany cost posting selection to be considered for billing. The parameters and date selection specified on the application become the second level filter.

Inherently, only the intercompany cost postings with a G/L account that are part of the YBPS_BILLI cost element group are selected for billing. This becomes the third and final level filter.

Flexible Material determination

Although the aggregation of the intercompany postings is based on fixed parameters stated below,

    • Activity type

    • Personnel number

    • Service organization

    • Transaction currency

    • Unit of measure

    • Work item ID

    • Month

    • Profit Center of sender

    • Profit Center of receiver



with new solution, it is possible to define one's own material determination and its criteria. This configuration is provisioned via' Manage Your Solution' application through the business role 'Business Expert - Configuration'. The user can setup the material determination based on a combination of Activity type, G/L Account and Source material.

A key aspect to note is that the intercompany billing process in S/4HANA Public cloud is greatly simplified with introduction of margin with cost allocations and cost plus billing. This simplification continues with new solution. Hence the material determination does not provide an option other than 'Transfer cost only' during configuration setup.

 

Fig 3. SSCUI Manage Billing Profile


Note: There is no pre-delivered configuration and hence it would be recommended pre-requisite step before the start of intercompany billing process.

Generation of Invoice 

The aggregated items are then transformed into Billing Document Request and its items, instead of the Debit Memo Request as outcome of the application 'Generate Intercompany Billing Request'. This can then be used for Billing Document creation.

Billing document triggers the IDOC creation following by Accounts Receivable and Payable creation. The status of IDOC can be viewed under the output items, as depicted in the image below

 

Fig 4 IDOC Status


The billing document reflects the document trace under the process flow section connecting the Accounts receivable to billing document to intercompany sales order. A similar process flow is also reflected in the intercompany sales order.

 

Fig 5 Document trace via Process Flow section


The billing document provisions an invoice preview. Similar to customer project billing invoice, this preview shows not just the aggregated billing details but the item level details corresponding to the  postings that participated in the generation of this invoice. Furthermore via process extensibility, a custom field enabled in timesheet application can be seen in invoice preview under itemized list of postings. For more details, refer to Extensibility: Timesheet to Invoice | SAP Help Portal

What stays the same as before?

The new intercompany billing process definitely enriches the old solution with numerous new capabilities as listed above. However, it maintains the some key aspects of the old solution. Here is a summary of what has not changed from previous solution

    • Scope items
    • Business Roles involved
    • Intercompany sales order setup (except the removal of restriction )
    • ICO cost rate setup
    • Cost allocations (with optionally margin)
    • IDOC creation
    • Support billing of settlements to cost center
    • Only cost plus billing


Withdrawal of "One Intercompany sales order" restriction

In former solution, you were required to maintain only one intercompany sales order between a combination of ordering and delivering company code. Otherwise, it would lead to double billing of already billed postings. For more details, refer to sap note 1341136 - RRICB .

With new solution this restriction has been lifted. Now, the end user can choose to create multiple intercompany sales orders to trigger the billing for same combination of ordering and delivering company codes. Since the process stores a trace to predecessor documents at each stage till the cost postings, it is possible to ensure there is no double billing. The same is partly reflected as document trace shown above.

Enablement of extensibility from sales order header till billing document 

Starting S/4HANA Public Cloud 2402 release, a custom field that is introduced in sales order header can be extended till the Intercompany Billing document. The custom field, along with standard fields, also controls the aggregation logic of the Billing document items. 

Trackability via core data views  

The I_ProjectBillingElement view, in conjunction with the I_ProjBillgElmObjectLink, defines which combination of sender and receiver company codes the billing data is being prepared for. Intercompany postings relevant to billing for this combination are priced and stored in the table associated with the I_ProjectBillingElementItem view. The corresponding journal entry for each entry in the I_ProjectBillingElementItem view can be accessed through the I_PrjBlgElmEntrJrnlEntrLink.

 When intercompany billing is initiated, an entry is created in the table corresponding to the I_ProjectBillingRequest view, with reference to the intercompany sales order. The items for the billing request are derived from the I_ProjectBillingElementItem view, based on the selection duration and applied filters, and are stored in the table associated with the I_ProjectBillingRequestItem view. Once the Billing Document Request (BDR) is created, its reference is also stored in the I_ProjectBillingRequest view. In summary, the Billing Request set of views stores a snapshot of the data used for a particular billing cycle and bi-directional traceability from Journal entry to Billing Document is possible.

The CDS views from new solution are available starting with 2402 release. For more details, refer to help documentation and the interplay of the CDS views is depicted in the diagram below 

varsha_chetanmanu_0-1721207737836.png

Note: As the same set of views are valid for Project Billing and New Intercompany Billing, the billing data can be differentiated based on Billing profile category, which is ICBL in case of Intercompany Billing

Deprecation of predecessor solution 

With the enablement of new solution enlisted with features mentioned above, we plan to deprecate the earlier resource-related Intercompany billing solution. Post deprecation, the new customers can only use the new solution. Please follow the roadmap for timelines.


Further references

 

12 Comments
Mayank_C
Explorer
0 Kudos
Thanks Varsha.

Very beautifully explained and a good addition to the blog Intercompany Cost Allocations in S/4HANA Cloud. Before activation of new feature of 2308, I was looking for some more information and glad that I found it 🙂

I think it is a good enhancement to remove the "Only One IC sales order" restriction but just wondering what could be a business case when there might be a need for more than 1 Sales order for a combination of Delivering and Sending Service organizations ?
varsha_chetanmanu
Associate
Associate
Thanks a lot Mayank for the good feedback.

We have encountered some cases where the Intercompany sales order requires different organizational attributes like profit center. These are not available for change in sales order. Hence arises the need for another new intercompany sales order for a combination of Delivering and Ordering Company codes.
alex_orn
Explorer
0 Kudos

Dear Varsha, thank you very much for the great blog post!

I am using the new functionality in an ongoing project and I have encountered on peculiarity:

I am using the universal allocation to distribute cost on an intercompany level and with these postings, the corresponding cost centers are already debited or credited. When I create the ICO billing document and post it, then my cost centers, which were credited through the ICO allocation, are now posted with revenue. As revenue postings on cost centers are "only" statistical, we can separate it in the cost center reporting. In the reporting on journal entry level, it cannot be separated between statistical and non-statistical cost center postings.

Is or will there any possibility to influence the cost objects which are used in the ICO billing document so that we could suppress the revenue posting on cost center level? Currently, all reports on G/L line item level show the cost centers credited twice.

Kind regards,

Alex

varsha_chetanmanu
Associate
Associate
0 Kudos
Dear Alex,

 

Thank you very much.

 

At the moment we do have filtering options while generating Intercompany billing document request based on CO objects like WBS element, service order. Filtering out based on cost center is not yet provided.

However as per our understanding A cost center can only be debited or credited with the derivation logic in CO. By default, the market segment gets posted on sending side and on receiving side it is posted to a non-operating G/L account without any CO object.

Hence we would like to understand the setup on your end to be able to understand why the necessity to suppress revenue posting. Could you please share the details?

 

Best Regards,

Varsha
alex_orn
Explorer
0 Kudos
Dear Varsha,

the revenue postings should happen, but the problem is, that they are done on cost centers - this is what we try to suppress.

The setup is the following:

We are using ICO cost allocation to send costs from one company to various other companies. Hereby, the cost centers of the sending company get already credited. The postings from the ICO cost center allocation get picked up by the new Resource-Related Intercompany Billing. In the posting of the billing document, the same cost centers, which were already credited through the ICO cost allocation, are credited again with the revenue of the billing document (in this case as statistical posting).

This is why it would be great to be able to post the billing document not on cost center level and post it on a non-operating expense or income G/L account. As far as we have seen, this seems not possible at the moment.

 

On the receiving side, we don't have this problem, since we post the ICO supplier invoice (created through EDI) on a non-operating expense or income G/L account. Therefore, we do not post it on cost center level, as the cost centers were already debited through the ICO cost allocation.

 

Best regards,

Alex
varsha_chetanmanu
Associate
Associate
0 Kudos
Hello Alex,

Could you please share the tool that you are using to generate Intercompany invoice?

Best Regards

Varsha
alex_orn
Explorer
0 Kudos
Hello Varsha,

the intercompany invoices are generated how you describe it in your blog post. In the project billing profile, we have maintained the secondary cost G/L accounts, which are used in the ICO allocation as allocation accounts.

Kind regards,

Alex
varsha_chetanmanu
Associate
Associate
0 Kudos
Hello Alex,

Could you please email us or better yet raise an incident with example from your system for us to have a look at the detailed setup.

Thanks & regards,

Varsha
Andro
Explorer
0 Kudos

Hi @varsha_chetanmanu ,

Really good blog, thanks!!

You mentioned the possibility to add a 'margin' for intercompany billing. 

"A key aspect to note is that the intercompany billing process in S/4HANA Public cloud is greatly simplified with introduction of margin with cost allocations and cost plus billing. This simplification continues with new solution. Hence the material determination does not provide an option other than 'Transfer cost only' during configuration setup."

I would like to know if a margin can be added to intercompany billing for intercompany cost allocations posted through the Intercompany Allocation process using the Universal Allocations functionality.

Kind regards,

Andro

varsha_chetanmanu
Associate
Associate
0 Kudos

Hello Andro,

Thank you very much.

Currently Margin postings are not supported by Universal allocation. It is only supported by activity allocation.

Regards

Varsha

Andro
Explorer
0 Kudos

Thanks for confirming @varsha_chetanmanu,

I do have another question for you - intercompany billing configuration have been maintained in accordance the set-up guide provided by SAP for the ICO Billing of CO related costs however when I run the ICO billing request it is not selecting any ICO cost allocations from the Intercompany Allocation process using the Universal Allocation functionality. These costs sits in a secondary cost element.

Any reason why that would be the case?

Regards,

Andro

varsha_chetanmanu
Associate
Associate
0 Kudos

Hello Andro,

The Intercompany billing engine selects the intercompany postings based on below criteria

1. Sender and receiver company code of the postings matches the same in Intercompany sales order

2. The postings date of the Intercompany postings must be within the date interval selected

3. The G/L account of the Intercompany postings must be added in YBPS_BILLI cost element group

4. Each of the G/L account added in YBPS_BILLI cost element group must be added in billing profile via SSCUI.

Please check if these criteria are met by Intercompany postings created by you. In case it still does not work, kindly share your example. 

Thanks

Varsha