As Intercompany transactions are very likely to cross systems they are a good candidate for integration in a 'Hub' of some sort.
In R12 the Financials Services Accounting Hub (FSAH) allows integration of third party systems to Oracle and is incredibly powerful and flexible.
Let's use a simple example:
Company A and B both use two different Ledgers. A Sales Invoice is issued by Company A (to Company B) for $5,000
The accounting needs to be created as below, they need to be booked with the same accounting date in the same period.
In Company A
Debit Intercompany AR $5,000
Credit Intercompany sales $5,000
In Company B
Debit Expense or inventory (per content), $5,000
Credit Intercompany AP, $5,000
So there's a number of options that come to mind (in no particular order).
1) Using Oracle Accounting Hub you can account for transactions form third party systems, it uses the Subledger accounting engine to process accounting events defined for the third party system. If your invoice systems are third party applications, you could create 2 events (one for each company/ledger/party to the transaction) for the sales invoice and get the full accounting out of the single system integration.
2) Enter these transactions in AGIS, the specific accounting will be entered/generated and approvals from company A and B obtained before AGIS either books it direct to GL or generates the Invoice for company A and B if required.
3) It may not be ideal to force users to navigate to a different screen (or change some import process, EDI, XML feed etc) to issue Intercompany invoices from other invoices as in 2) above. So continue to enter in your regular sales invoice system but run a process which detects an invoice is Intercompany and cancels it, then generates a transaction for it in AGIS (via the Open Interfaces) or FSAH.
I don't think any one of these is right for all situations, detailed analysis of the particular implementation environment and requirements needs to be done to figure out the best approach. If you have any thoughts, better suggestions or experience then please share them in the comments.
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9 comments:
Happy 1st Anniversary DH! Carry on carrying on blogging!!
Hi David,
At the FSAH implementation I’m currently working on we plan on adding intercompany logic to our FSAH create event procedure. So if we detect that an event requires intercompany to be generated we duplicate the original event and stamp this additional event with the counterparty’s ledger_id. To generate balancing journal lines with the appropriate account / intercompany segment values we use the seeded SLA/FSAH functionality (let SLA do what SLA does best). So this is your option 1.
Regarding the other possibilities: personally I don’t like the idea of AGIS generating accounting directly in GL because that accounting would be missing from my FSAH/SLA accounting repository. I’m thinking here of the scenario where SLA is being used in the way I think it should be used: as the single source of truth / detailed accounting repository in combination with a thin ledger.
This is also the main reason why we choose option 1: SLA is our detailed (full) accounting repository so we can feed multiple GL systems and a datawarehouse from FSAH. If you let AGIS generate intercompany accounting then I would only have these entries in my Oracle GL and I would need to either feed them back to the FSAH/SLA accounting repository or feed them from Oracle GL to my other GL’s and datawarehouse. That sounds a bit messy…
Another reason we choose option 1 is because in this specific implementation we’re not integrating FSAH with EBS GL. So in fact we didn’t have the option to use AGIS in the first place, but even if we did we still would have picked option 1 for the reason stated above.
I think in the future product AGIS should be allowed to kick in as part of SLA’s Create Accounting program. That way we can add the accounting generated by AGIS directly in the XLA tables thus making them part of the SLA accounting repository.
Regards,
Sven
p.s. there’s a small typo in your title and it’s leaking through to all RSS feeds! ;-)
Hello,
just wanted know if it is necessary to set up the Intercompany Flexfield Qualifier to be able to do Inter transactions
I think this post should answer your question in detail.
http://davidhaimes.wordpress.com/2007/11/20/intercompany-segments-and-vision-demo-data/
The answer is not required, but recommended.
Hello David,
I am facing a problem with customer supplier association in AGIS set up. In fact, for the customer side, its ok, but when the recipient tries approve, an error msg pops up, "Transaction Requires Invoice And A Supplier Association Does Not Exist". But i have set up an association and the dates are also correct. Can you please help me out urgently please about the customer supplier relation.
Thnaks
Ashvin,
It's difficult to diagnose the issue, you should contact Oracle support so they can work with you to figure out if it is a set up issue or a bug.
David
I have set up AGIS and have transactions flowing through creating invoices in AR/AP and transactions in GL. I have a number of SR's with Oracle to fix problems with AGIS but have workarounds for most of those. The issues I have which I hope you can help me with are:
1. I cannot find how to access the SLA. The user guide says SLA responsibility but I cannot find one.
2. I now have the batch reference in AR. Is there a field to hold this in AP and GL
3. Can I use AME to reach out to approvers not set up in AGIS i.e. cost centre managers. Is this difficult to set up
4. The business I am currently working for want to create a settlement transaction type and process settlements via this rather than payment in AP or receipt in AR. What are your thoughts on this?
Thanks
Hi,
I understand that we can copy the Application Accounting Definition with Journal related set up, account derivation rules, mapping set's through standard export concurrent program. Can anybody please guide me whether a similar concurrent program or script is available for copying Event Model from instance to instance or within the instance.
Thanks for your help.
Regards
Manas
Multiple dollar amount (for sub accounting event) scenario for single event .
Following is the business case -
Event = Withdrawal
Gross Amount $500 Debit Expense
Federal Withholding Tax $50 Credit FTX Liability
State Withholding Tax $40 Credit STX Liability
Net Amount $410 Credit Suspense
The issue is how to relate the specific dollar amounts to the particular journal when all four "records" are related to the same event. I mean event model is set up at the withdrawal level.
I thought about to options to resolve this issue -
Option 1 - Event model need to set up at the granular level what is deriving the accounting so in this case Event Class should be set up at Federal Withholding tax etc level and source system or IAS transformation should pass individual rows for each entry with the granular level accounting event description
Option 2 - Event class will set up at 'Withdrawal'. Source/ IAS will send the individual entry for the above cases with 'Withdrawal' event not with the granular accounting event. But each row will have a granular level accounting event identifier. By using that column we will create mapping set through which right granular level of accounting will be derived when needed.
Please provide comments and guidance.
Thanks and Regards
Manas
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