Achieve Complete Integration of Your Inter-Company Transactions within SAP ERP

  • by Anton Karnaukhov, Senior IT Manager, Pacific Coast Companies, Inc.
  • May 6, 2010
Take a detailed look at the configuration steps within SAP ERP that are necessary to process an inter-company transaction from start to finish.
Key Concept

Many companies consist of multiple subsidiaries and each is regarded as a separate legal entity. Some companies create this type of distinction for legal and regulatory reasons, while others simply want a clear separation of their business entities when it comes to financial reporting. This typically translates into the creation of multiple company codes within the SAP ERP system. Any activity that takes place between these internal company codes is typically referred to as inter-company. Inter-company billing is a process for invoicing business transactions when the organization that sells a product and the organization that delivers the product belong to different company codes within the same enterprise. 

Often, organizational and political factors can make it harder to keep accurate and timely tracking of inter-company transactions within your SAP ERP system. Fortunately, SAP ERP Central Component (SAP ECC) comes with a number of standard pieces of functionality that make the processing of inter-company postings a whole lot easier and cleaner. Specifically, SAP ECC provides the tools to create a purchase order, convert it to a corresponding delivery note and billing document on the supplying company code’s side, and automatically apply that billing document as a purchase order payment at the receiving company code.

The use of the inter-company stock transfer process in SAP ERP has a number of advantages. Foremost, it enforces tight integration between purchasing, delivery, and invoicing steps. This greatly reduces the number of errors upon invoice receipt at the receiving company code, which is often one of the main pain points within the inter-company process. Second, even though some electronic data interchange (EDI)-related configuration is used in SAP ERP, the inter-company functionality completely bypasses the EDI server translations, keeping all the postings inside SAP ERP. This eliminates the need for a separate EDI server. One of the disadvantages to the inter-company functionality is the need to use identical material numbers in both supplying and receiving company codes. Take that into consideration when planning the implementation of this functionality.

Anton Karnaukhov

Anton Karnaukhov is a senior IT manager at Pacific Coast Companies, Inc., in Sacramento, California. He earned an MBA degree at Heriot-Watt University and a BS/BA degree with a specialization in computer information systems at Western Carolina University. Anton has more than eight years of SAP implementation and development experience focusing on business intelligence and logistics modules in the manufacturing and resale industries.

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