Inter Company Sales process

Inter Company Sales process

SD Inter Company Sales process

SD Inter Company Sales process

Inter company sales is the process in which a certain legal entity sells products from within a delivering plant that does belong to another legal entity.

A company arranges for direct delivery of goods to its customers from the stocks maintained by the other company, but belonging to the same corporate organization. Thus leading to Inter Company Sales.

This prevents the company from over stocking the goods beforehand in the their own warehouse and can choose from whom to deliver the customer.

Occasionally we come across companies that operate several companies and carry on trading of goods and services among themselves. A Customer -Vendor relationship is established between them.

The organization may be required to handle several production and sales companies. They have to ensure that the flow of documents between two companies adheres to the same overall organization. 

Prices need to be set up either as the cost price + extra charges or by trade agreements. Any change in values or information need to be synchronized immediately in the other company. A process shall enable to ensure the integrity of orders and documents in during sales

Inter Company Sales process prevents the company from over stocking the goods beforehand in the their own warehouse and can choose from whom to deliver the customer. 

Benefits of Inter comapny sales process

Enables all company codes to share information on inventories, tracking inter-company shipments, and viewing 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

Lets focus on configuration  part of it .

Pre-requistites configuration Org’ Units

• The ordering sales organization and delivering plant must belong to different company codes. 
• Required combination of Sales Organization and Delivering Plants have to be maintained. 
• Sales Area-Sales Organization, Distribution Channel and Division, must be assigned to all the plants in which Inter company sales processing is being carried out

Pre-requisites – Others

• Inter company Billing Document type must be assigned for required sales document types.
• An internal customer number must be created, to represent the ordering Sales Organization, in the Sales organization representing the delivering plant. 
• Material must exist in all the plants participating in Inter Company Sales process.
• Condition types representing the Inter company sales processing is to be maintained in the pricing procedure. 
• Condition records have to be maintained for the required combination of sales organization and plants

Posting of the Inter Company Invoice

The delivering company and the ordering company belong to the same corporation. Therefore, the inter company billing document for the delivering company is posted as invoice receipt for the ordering company. The ordering company can post an invoice receipt either: 

• manually after posting goods issue and can print out an invoice document with the help of output type RD00, which is then sent to the end customer or 
• automatically with the inter company billing document: via IDOC/EDI. The system uses the output type RD04 contained in the output determination procedure V40000, which is assigned to internal billing type. 

The delivering company must be created as a vendor to enable posting to the financial document of the ordering company

Configurations

Menu Path: IMG-> Sales & Distribution ->Billing->Inter Company Billing-> Define Order Types For Inter company Billing.Define Order Types For Inter company Billing: 

Inter company billing document type ‘IV’ is assigned to all those order document types for which inter company sales processing can be carried out.

Menu Path: IMG-> Sales & Distribution ->Billing->Inter Company Billing-> Assign Organizational Units by Plant

Assign Organizational Units by Delivering Plant:

Sales organization, Distribution Channel and Division are allocated to the plants for which intercompany sales processing is possible. The delivering plant uses these specifications to process intercompany billing.

Menu Path: IMG-> Enterprise Structure->Assignment->Sales and Distribution-> Assign Plant to Sales Organization and Distribution Channel.

Assign Plant to Sales Organization and Distribution Channel:

Sales Organization and Distribution Channel have to be assigned to the Delivering Plant to enable sales processing.

Master Data Maintain– Customer

Menu Path: Easy Access -> Logistics -> Sales & Distribution -> Master Data -> Customer -> Create.

Code: XD01

A Customer Master record is to be created in the Sales Organization representing the Delivering Plant. The Internal Customer created represents that Sales Organization belonging to the ordering Company Code

Menu Path: IMG-> Sales & Distribution ->Billing->Inter Company Billing-> Define Internal Customer Number By Sales Organization
Define Internal Customer Number By Sales Organization:
The Internal Customer number has to be assigned to the Ordering Sales Organization.

Master Data – Material  .Extend the material in the Delivering Plant:
Enter the Delivering Plant in the material records, which will be relevant for sales processes carried out by the Ordering Sales Organization.

Menu Path: IMG - Sales and Distribution -Basic functions - Pricing -Pricing Control - Define Condition type.

T-code: V/06

Condition Type -Creating Inter Company Condition Types:
The delivering plant uses one of the following condition types to bill the sales organization.

PI01 Inter company: fixed amount per material unit

PI02 Inter company: percentage of the net invoice amount.

These condition types specify that the price charged by the delivering plant to the sales organization is shown as a statistical value in the sales order and an effective charge in the internal invoice.

SD Letter of Credit

Functionality of a condition Type

Price condition type can be control with the below selection ,

• Access sequence :- specifies the corresponding access sequence of the condition type

• Condition class:- Specifies the preliminary condition type that allows you to control each condition type differentlyEg:- A). discount or surcharge B). pricing C). insurance D). Tax

• Plus/minus :- For a condition type if we specify “Negative” it becomes a discount , and if we specify “Positive” it becomes a surcharge

•  Calculation Type :- Specifies how the system calculate the condition amount of a condition type. Eg. The system can calculate the price based on quantity weight or volume etc.

• condition category :- Specifies a classification of condition according to the pre define category Eg;- all the condition that relate to fright and tax .

• Rounding Rule :- Specifies the rule that determines how the system rounds off the condition value during pricing always the last digit will be rounded

• Manual entries :- (C) Specifies whether the condition type can be entered manually or whether it has to be determine automatically during pricing in the sales document.

•  Amount or percent : If we check this field the condition amount of condition type can be change during pricing in the sales document

• Value :- If we check this field the condition value of condition type can be change during pricing in the sales document .

• Delete :- If we check this field the condition type can be deleted during pricing in the sales document

• Calculation Type :- If we check this field the calculation type of condition type can be change during pricing in the sales document.,the changes made to the calculation type applies for that particular item only for which it is changed

• Item condition :- If we check this field for a condition type it becomes an item condition where it has to be entered at item level in the sales document the condition amount of an item condition will be applicable for that particular item only for which that condition type is entered.

• Header condition :- (RB00) If we check this field for condition type, it become a header condition, where it has to be enter at header level in the sales document. The condition amount of a header condition will be copied as it is to all the items in the document. header condition type don’t have the any access sequence. after enter the header condition type in the sales document we have type select the button“Activate” in the down of the sales document

• Group condition : (HB00) If we check this field for a header condition it becomes a group condition where the condition amount will not be copied as it is to all the item rather it will be distributed proposes among the items in the document

• Valid From Specifies the begging and ending of the validity dates that the system

• Valid To automatically proposes while maintaining the condition records for the condition type

• Reference condition type:- specifies a condition type which can be used as reference so that the condition type will be copied to the other condition type Note:- before specifying reference condition type we have to specify reference application (V)

• Scale basis :- Specifies how the system calculates the scale amount for a condition records Eg:- the scales can be calculated based on quantity weight volume etc.

• Check value :- Specifies weight the scale rates must be enter in ascending and descending order

Pricing condition and usages

Please find few priceing condition type & their usage  

HM00 Manual order value-It allows us to enter order value manually the difference between the old and new order value is distributed between the items (by taking into the account net item value) taxes are re-determined for each item.

PN00 Net Price-The PN00 condition type in the standard system allows us to specify net price per item manually.

PMIN -Minimum Price-It is a surcharge. PMIN can be used to charge as a surcharge, if the system determines the line item price less than the predetermined price.

Minimum order values: AMIW and AMIZ- We can create a minimum value for each order using condition type AMIW.If the value in the order header falls shorter of this minimum order value during pricing, then the system will copy it as the net order value automatically.It is a statistical condition and group condition.Calculation formula 13 is assigned to AMIZ.That calculates minimum value surcharge by subtracting the net item value from minimum order value that isAMIW.

Discounts can be given on pallets KP00, KP01, KP02, and KP03

• KP00 = Discounts on full pallets
• KP01 = Incomplete pallet Surcharge
• KP02 = Mixed Pallet Discount on Full Pallets- It accumulates the quantities of the individual items calculates discounts for complete pallet only.
• KP03 = Surcharge for incomplete mixed Pallets- It accumulates the quantities of the individual items. It then calculates the surcharge on any fractional portion of the total quantity.

SKTO = Cash Discounts- It is used to retrieve the cash discount rate. It is used as a statistical value by the pricing procedure. Table T052 is accessed using condition category “E” and amount is calculated from the first percentage rate of the item payment terms.

Customer Expected Price- This price either entered manually in the order or retrieved from the incoming I DOC through EDI. Customer expected price differs from the automatically determined price or value by more than the maximum difference allowed. Then that will regard this order as incomplete when it is saved.

VPRS = Cost- It is used to retrieve the standard cost of the material. It is a statistical value

K029 = Group conditions- By defining a condition as a group condition we can maintain a single condition record for a number of materials. So that the materials are linked to condition record via “pricing group” field in material master, then system allocates the value from condition record according to its scale and applies to each item proportionately

DUPL = Duplicate condition DUPL is copied during pricing to the entire sub items assign to the main item. It makes sense to use this condition type only for BOM items and configurable material. Ex: Material 1 has 10% of condition type UDPL and it has sub items Ex:M2 and M3 during sales order processing the duplicate condition of 10% is displayed in components M2 and M3.

KUMU = Cumulative condition It enables the end user to display the total of the net value of an item and the sub items that belongs to that item.Cumulative conditions cannot be used as a header conditions.

Gross Price -The gross price is relevant when selling goods to end customer.The pricing procedure RVAB02 is available as a reference for this sales process.

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MWI1 -Determination of tax contained in price 

MWI2 -Determination of tax contained in discounts

Group condition in Priceing condition

Priceing group condition section in Priceing document

Group condition: It indicates whether the system calculates the basis for the scale value for more than one item in a documented: If a sales order contains two items and both items belongs to the material group 01. The group condition indication typeset in the definition of condition type for material group discount. [Ex: K020]. Then the condition record for material group 01 includes the following pricing scale like [From 1 PC- 1% From 200 PC -2%].Then the order has been placed for 150 and 100 quantities for each material. Then system takes the total quantity as 250 and applies discount 2% as both materials belongs to same material. If those materials not belong to one group, then group condition cannot be applied and system cannot apply the discount value.

Rounding difference comparison: It is an indicator that controls whether rounding difference is settled for group conditions with a group key routine. That means the system compares the condition value at header level with the total of the condition values at item level. Then the difference is added to the largest item.

Group condition routine: We can specify the routine to the group condition type [Ex: 1 Total document] to meet the business requirement like, if the total weight of the materials of order exceeds certain weight then only the  Sold – to – party eligible to have certain discount amount.

Controls of Schedule line category in SD

Here are some controls of schedule line category 

Schedule line category controls -Transation Code _VOV6

Delivery block: We can specify delivery block that the system applies automatically during processing.Ex: We can specify delivery block for all free of charge deliveries as these documents have to be approved before processing.

Movement type: [601] = GD goods issue: delivery.Inventory management for goods movement into different purposes uses this movement. Goods movement is nothing but a physical or logical movement of materials leading to a change in stock levels is resulting in the consumption of the material.

Movement type 1 – step: It is used for inter company billing movement type.

Order type: It is a purchase order type. Ex: Document type NB can be assigned. In individual purchase order and third party sales order system automatically creates purchase requisition. So as to create it automatically purchase requisition document type should be assigned here.

Item category: We can specify the item category for purchase requisition documents.

Ex: “0” for individual purchase orders and “5” for third party orders.

Account assignment category: We can assign account assignment category for third party and individual purchase order transactions. So that respective accounts get updated.Check item relevant for delivery: It indicates the document item is relevant for delivery and it causes to create delivery document.

Purchase requisition delivery schedule: In third party and individual purchase orders the vendor supplies materials to the end customer through the company or directly. When the vendor has to send the materials the

business requires certain time for goods receiving process. The time can be specified as a delivery schedule lines in purchasing documents. This indicator creates those schedule lines in purchase requisition documents.

Incompletion procedure: [30] = Delivery relevant schedule line.Incompletion procedure has been defined and assigned to the schedule line category CP. System follows this in completion procedure and remains the end user if do not maintain any values in schedule line category fields before saving the document.

Check transfer of requirements (Req. / Assembly): Requirements of sales document whether individual or summarized should be transfer to MRP by system automatically to create demand.Check availability check: If the system has to carryout availability check for materials and quantities in the sales order it should be checked.

Product allocation: Through product allocation we can allocate products for customers evenly.

Controls of Item Categories in SD

Define item categories: Transaction code: VOV7

Business data section

Item type:  Standard item

System process item that refer to a specific material differently then items that don’t refer to a material Ex: TEXT items. As text items does not require processing pricing, taxes, and weight and volume calculations.

Completion rule: - Not relevant for completion (It is for quotations and contract items). We can specify that a quotation is complete only after its quantity has been fully referenced by subsequent document.

Dependencies: In copy control sales document to sales document, check update document flow option at item category level.Ex: If the item category for quotations is “AGN”, then the value will be “8”.

Special stock: - We can specify a separate stock Ex: consignment stock of material. In inventory management stock of materials must be managed separately for reasons of ownership or location. Specify “W” for item category“KEN” (consignment issue)

Billing relevance: [A] = Delivery related billing document.The value determines what kind of billing document it has to generate for this item. That is order related billing document or delivery related billing document.

Billing plan type: - We can assign billing plan type for this particular item that is standard billing, periodic billing and milestone billing.

Billing block: - The billing block indicator is used to block each item of this category for billing.

Pricing: [X] = Pricing standard It indicates whether the system automatically carried out pricing for this item.Ex: For text item it is grade out.

Statistical value: - = System will copy item to header totals.It indicates whether the system takes the value of an item into account when it determines the total value of document.85

Business item: It allows the business data at header level differs with item level business data.

Business data: Business data is nothing but sales, shipping and billing data that is called as a business data. Ex: We maintain payment terms in customer master. When we raise the sales order for this customer the payment terms are copied into the sales document header from customer master. If we do not maintain payment terms in the customer and we maintain payment terms in the sales document header manually then those payment terms applies whole item in the sales order. If we have number of items in the sales order and if we want to change payment terms for particular line item, system allows us to do so,if business item field has been checked. Otherwise system will not allow changing the payment terms at item level.

Schedule line allowed: It indicates whether we can create schedule lines for the item. Sales order items always will have a schedule lines. The items like credit memo request and contracts do not have any schedule lines.The items that have a schedule lines will be copied into the delivery document. The only one item category that is text item has an exemption. For text items with or without schedule lines we can create delivery documents.

Item relevant for delivery: It indicates whether a text or value item is relevant during delivery processing. The item itself is not delivered. But it serves only for information purpose in delivery documents.

Returns: It indicates the item is return item Ex: REN

Weight/volume relevant: This indicator enables the system to calculate weight and volume of materials.

Credit active: This indicator enables to configure credit management functions for this item.

Determine cost: This indicator enables the system to calculate cost of the material of this item category (conditiontype VPRS is used to calculate the cost price).

General control section

Automatic batch determination: This indicator enables the system to determine batch automatically of this item category.

Rounding permitted: If you check it system rounds of the quantity of the material for this item category type.

Order quantity = 1: If you check it system enables one quantity for line item. it does not accept more than one quantity.

Transaction flow section

Incompletion procedure: [20]: Incompletion procedure has been defined in IMG and assign to item category ofthi s type. System follows this incompletion procedure and remains the end user if he does not maintain any values at item category level in the sales document.

Partner determination procedure: [N]: Partner determination procedure “N” has been defined and assigned to item category. So that system follows this partner determination procedure at item level and decides itself sold – to – party, ship – to – party, bill – to – party and payer for this item.

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Text determination procedure: [01]: Text determination procedure 01 has been defined and assigned to item category of this type (TAN). So system follows this text procedure to determine output.

Item category statistics group: [1]: It specifies a statistics group for this item category and helps to determine which data the system should update in LIS.

Screen sequence group: [N] = Item It controls which screens we see during the particular transaction and in which sequence they appear. Ex:We can differentiate sequence of screens in inquires and quotations with sales order.

Status profile: - status profile can be defined and assigned to the item category that defines use status by which we can restrict the user to access the item.

Create PO automatically: This indicator used in third party and individual purchase order items where the system has to generate purchase orders automatically when R/3 is connected to ALE (application link enabling).

Bill of material configuration section

Configuration strategy: - It controls checks and processes that are run automatically or are allowed during configuration. System takes this value while we configure of material of item category of configuration material.Ex: Item category TAC = Variant configuration.

Material variant action: - It controls how the system reacts when it determines that an existing configuration is already used as a stock able type.

ATP Material variant: - = No ATP check We can specify ATP check for material variants in the variant configuration.

Structure scope: - = Do not explode material structure.This field will be used for BOM items.

 BOM: When specific material consists of number of items and those items can be sold as a individual items, then that particular item is called as a BOM.Ex: [Computer]: As computer consist of header item (monitor) as well as sub items (keyboard, mouse, hard disk,etc). Business treats this item as a single item and sells the item to the customer as one. When we raise the salesorder we have to specify only header item that is monitor. Then system automatically explodes remaining items as

a BOM. The BOM can be single level or multi level. The value of this field determines whether the item is a BOM item. If it is so, how it should be exploded.

Application: - As the BOM can take place in production planning, materials management, sales and marketing areas. System should know where it is to be applied. As it is a sales area we have to specify as SD01 that is for sales and distribution.

Variant matching: This will activate variant determinations during variant configuration of the material.

Create delivery group: [Delivery group]: In the sales order if there are items with different schedule lines then wecan create delivery group for all items into a single delivery with latest schedule line confirmed quantity of line item.

Ex: If we have three items with delivery dates that is today, tomorrow and day after tomorrow. Then we have to specify in the sales order in overview screen shipping tab specify the delivery group number in delivery group field.Th en system confirms latest delivery date for all items in the sales order.As the BOM contains number of items, the sub – items may not be confirmed by the system on a singleday. Then system reschedules all items confirmed quantity dates with same or latest schedule line and creates delivery group.

Manual alternative: It allows choosing alternatives for BOM items manually.

Check parameter affectivity: Parameter affectivity is a concept through which we can change the property of material or product.Ex: Seasonal changes (color) to a certain period. It is integrated with engineering changes management cross functionality function.

Value contract section:

Value contract material: - The system copies value contract item that we specified here into the value contract, ifit has not already been maintained in contract.

Contract release control: [B]: Here we can specify the system responses when the target value of value contracthas been reached while releasing the contract.

Service management section

Repair procedure: - We can assign repair procedure for service items.

Control of resource – related billing and creation of quotations section

Billing form: - The billing form specifies whether a flat rate or the dynamic items are invoiced individually when performing billing using a resource related billing document (it is for service items).

DIP profile [Dynamic Item Processor]: We can assign dynamic item processor profile for dynamic item.Dynamic item processor is a toll that the system uses to summaries data into dynamic items in sales price calculation, resource related billing or data determination.

Dynamic items: Customer service items are called as dynamic items. 

Sales Document Type Control in SD

Please find few key control for Sale document configuration 

Sales Doc type: A classification that distinguishes between different types of sales document. The sales document type determines how the system processes the sales document

Document category: The document category determines how the system stores and keeps track of document data. It enables the system to provide you with status information about delivery processing, billing, and documents that are used for reference (for example, inquiries and quotations).

Sales Document block  If you block a sales document type, users cannot create new sales documents of this type. Sales documents created before you set the block can still be changed and displayed.

External number range: when creating a document with external number assignment, the system assigns a number that appropriate configure as external number  

Internal number range:when creating a document with internal number assignment, the system assigns a number that lies within the appropriate number range.

Item increment :The increment by which you want the item numbers in a sales, delivery, or billing document, to increase when the system automatically generates item numbers.Increment by which the item number in a sales document is increased, if the system automatically provides item numbers


Reference mandatory: Indicates whether, when you create a sales document, a reference document is mandatory. If so, the indicator also specifies which type of reference document you should use.


Division Checks :Controls how the system reacts during sales order processing when a division that is entered or proposed at the item level differs from the division in the document header.

Order Probability:The system uses the probability and net value of each item to calculate a total expected order value for the sales document. The expected order value appears in the double-line entry screen.

Credit Check Specifies whether the system runs credit checks and how it responds to the check during sales order processing.

Credit group:Credit group enables you to combine different sales document types for the purposes of credit management.

Output application: Identifies the applications from which output can be sent (for example, sales order processing or invoice processing). The output is divided according to output types and assigned to these applications.

Item Division :If you mark this field, the system proposes the division from the material master record of the item. If you leave the field blank, the division in the document header also counts for all items.

Read info record If customer-material info records do not exist, you can leave the field blank.

Screen sequence group: Controls which screens you see during a particular transaction (for example, creating a quotation) and in which sequence they appear.


Incompletion procedure:The system uses the incompletion procedure to determine which fields appear in the incompletion log when the user does not enter information during sales order processing. In SD Customizing, you can specify an incompletion procedure for each type of sales document.

Transaction group:the transaction group controls,the types of sales documents you can process with certain system transactions in sales processing for which sales, shipping and billing documents the system should update reporting indices (in tables TVIND and TINPA).

Doc price procedure Key that specifies the pricing procedure for this type of sales document.

Delivery type :delivery type that the system automatically proposes for this type of sales document during delivery processing

Billing type: billing type that the system automatically proposes for this type of sales document during the creation of billing documents (invoices, credit memos, etc.) that refer to deliveries

Inter-company billing:Specifies the billing type that the system automatically proposes when you create billing documents for inter-company billing.

Billing Block :Indicates if the item is blocked for billing.

Condition type line item:This is where you enter the condition type which you want to use to determine the results of the sales order pricing for a sales and distribution document item.

Billing Plan Type:Periodic billing is used to bill rental or maintenance contracts. Milestone billing is used to bill projects.

Payment guarantee procedure:This key identifies the document payment guarantee procedure for this sales document type.

 Payment plan type :Specifies the payment plan type for payment cards.In the standard system, this is referred to as the "payment card plan type".


Checking group :Defines how the system carries out checks on payment card data in different SD documents.This is done on the basis of checking group assignments to the different sales document types.

Propose Delivery Date :Indicates whether the system automatically proposes the current date as the delivery date.

Structure of Group Key in priceing routine

A structure of group key formula can be used to influence the basis the system uses when reading the scale of a group condition. Group conditions are used to cumulate quantities from more than one sales document line item to read pricing scales. For example, when pricing a particular sales document line item, the user would like the system to not just consider the quantity of the current line item, but the sum of the quantities of all line items that share the same material pricing group as the current line item. The formula is assigned to a group condition type in customizing. When looking at the code for the standard delivered structure of group key formulas or when writing your own, XVAKEY is the field name that the structure of the group key should be assigned to. Following is a description of the structure of group key formulas delivered in the standard system.

STRUCTURE OF GROUP KEY FORMULA 1: OVERALL DOCUMENT

Formula '1' adds up the quantities / values of all of the line items in the sales document that have the same condition type as the group condition currently being processed.

Example:

A company defines a particular discount (condition type Z001) with scales based on weight. When a sales order line item is priced that is eligible for the Z001 discount, the user would like the system to read the scale with not just the weight of the current line item, but the combined weight of all items in the sales document where the Z001 discount applies. To accomplish this, the user defines condition type Z001 as a group condition and assigns structure of group key formula '1' to it in customizing.

STRUCTURE OF GROUP KEY FORMULA 2: ACROSS ALL CONDITION TYPES

Formula '2' adds up the quantities / values of all of the line items in the sales document independent of which condition types have been applied.

Example: A company defines their prices with scales based on weight. When a sales order line item is priced, the user would like the system to read the scale with not just the weight of the current line item, but the combined weight of all items in the sales document. To accomplish this, the user defines their price condition types as group conditions and assigns structure of group key formula '2' to them in customizing.

STRUCTURE OF GROUP KEY FORMULA 3: MATERIAL PRICING GROUP

Formula '3' adds up the quantities / values of all of the line items in the sales document that have the same material pricing group (field KONDM) as the current sales document line item.

Example:A company defines a particular discount (condition type Z001) with scales based on weight. When a sales order line item is priced that is eligible for the Z001 discount, the user would like the system to read the scale with not just the weight of the current line item, but the combined weight of all items in the sales document that have the same material pricing group as the current line item. To accomplish this, the user defines condition type Z001 as a group condition and assigns structure of group key formula '3' to it in customizing.

STRUCTURE OF GROUP KEY FORMULA 10: SHIPPING MATERIAL

Formula '10' is only relevant for shipment costing in the shipment cost document. Formula '10' adds up the quantities / values of all of the sub-items in a shipment cost document item that have the same shipping material as the sub-item currently being processed.