Streamline Cross-Company Postings Using SAP Parallel Valuation and Transfer Pricing in an LIV Process

  • by Surajit Mohanty, Independent Consultant
  • October 9, 2012
Learn how to implement SAP transfer pricing and parallel valuation in goods receipt and an accounts payable Logistics Invoice Verification (LIV) process.
Key Concept

Parallel valuation in an SAP system helps an organization with multiple legal entities or company codes to prepare for consolidation. Multinational companies can use transfer prices in their cross-company transactions through this parallel valuation method to make them tax compliant. At the same time they can use prices that do not take into account any intercompany markups or profits for their group consolidated reporting. Therefore, parallel valuation helps companies fulfill these two main business objectives. The basic concept of parallel valuation involves using two costs for each good or material in an SAP system and then carrying these costs through all logistics or supply chain transactions.

Organizations may have several variations of an intercompany accounts payable process based on whether both the parties are in an SAP system. If just the receiving side is in an SAP system, often the unavailability of an electronic data interchange (EDI) process can pose an issue for this company code if it uses the parallel valuation solution. The issue is that in a purchase order-based accounts payable invoicing process (transaction code MIRO), parallel valuation does not work. Therefore, if your business case is similar to the one I describe (i.e., only the receiving side company code is in the SAP system owing to a staggered SAP system transition), you need to choose an enhancement.

I show you the best enhancement to use. I demonstrate using one Business Add-In (BADI_MRM_TRANSFER_PRICE) how the parallel valuation postings can be activated in transaction code (MIRO) for Logistics Invoice Verification (LIV).

SAP Note 366968 advises that you post accounts payable invoices using an IDoc (intermediary document). An IDoc is usually used when electronic data interchange (EDI) is the method used to posting these invoices. In my business case this is not an option due to lack of availability of EDI infrastructure. However, if you use the BAdI available in SAP Note 1695310) that introduces this enhancement to the standard SAP transaction code MIRO, you can enable the parallel valuation in accounts payable invoices without having to use the IDoc/EDI method. Therefore, you can manage the intercompany transactions in two valuations (legal and group). I describe SAP Note 1253076 (which has some sample code) that you can use to enable parallel valuation transaction MIRO for both normal invoices and planned delivery cost invoices.

Any intercompany transactions need to be posted with two valuations (one with transfer prices and the other with the source company code cost. which is also called as group cost). Therefore, the objective is that the intercompany profit needs to be clearly identified during each inventory-related transaction as I describe later on in this article. If you do not use SAP parallel valuation, this determination of intercompany profit in each logistics transaction can be complicated to design. I describe four functionalities that are available with the parallel valuation solution described in this article:

  • How to activate the parallel valuation (legal and group valuation views) in a business scenario in which only the receiving side company code is in an SAP system and has no electronic accounts payable invoice posting process enabled.
  • How the exchange rates are handled in the case of legal and group valuation views.
  • Accounting posting during the goods receipt and accounts payable invoice posting with two valuation views (legal and group).
  • Group valuation accounting postings in the case of purchase order having delivery pricing conditions such as freight

Surajit Mohanty

Surajit Mohanty is an independent consultant with more than 14 years of SAP Financials consulting experience. In the past he has worked with various consulting firms such as IBM, Deloitte, and BearingPoint. He has vast experience in SAP CO (Controlling/Management Accounting) and FI areas spanning across nine end-to-end implementations. He has delivered solutions to a broad range of clients with various roles in the areas of product costing, material ledger average costing, transfer pricing, profitability analysis, revenue recognition, accounts receivable and payable, sales and use taxation, SAP General Ledger, and integration of the SAP General Ledger with materials management, production execution, and sales and distribution areas. He lives in Schaumburg, IL, with his wife and son.

 

 

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