Intercompany Financial Posting (1GP) - What is it used for?

[Wayne10]

Hi everyone,

I'm trying to understand the correct use case for the scope item 1GP – Intercompany Journal Entry Posting in SAP S/4HANA Public Cloud.

From what I’ve read, it allows posting general journal entries between company codes, but I’m not clear on the following:

Can 1GP be used for transactions involving goods or services?

Or is it only appropriate when there’s no VAT involved?

What are some realistic business scenarios where companies use 1GP?

I’m aware that intercompany invoices are typically required for VAT compliance, so I’d really appreciate it if someone could help clarify when and why you would use 1GP, and when it should be avoided.

[Jeremy_Deo · Accepted solution]

Dear user,

And thank you for asking your question on the SAP Community blog.

Here are the following answer I can provide regarding your questioning :

Can 1GP be used for goods or services?
No, 1GP is not typically used for goods or services that require VAT or formal invoicing.

Is it only appropriate when there’s no VAT involved?
Yes, 1GP is best for non-VAT transactions between company codes.

Realistic business scenarios for using 1GP:

• Internal cost allocations (e.g., shared overheads)
• Transferring funds or assets between company codes
• Settling internal balances.

I hope my explanation is clear enough and answer your main questions.

Do not hesitate to come back to me if you need more details.

Best regards,

Jeremy