SAP InterCompany Integration 2.0 – Part I

If you are part of a growing organization, that controls more than one legal business entity, and you seem to face the challenge of how to share data and perform intercompany transactions between partner companies, this blog post might help you.

SAP InterCompany 2.0 – Part I

There are several topics where SAP InterCompany Integration Solution for SAP Business One has several advantages. In the following sections, you can read more details and find some examples.

SAP InterCompany – Centralized Payments

When you centralize your payments, your business benefits are:

• You have a better control on vendor payments and a more effective reconciliation
• You are able to minimize errors in transaction entry across your organization
• You have access to an easy and intuitive management of cross subsidiary financial information
• You are able to reduce your processing costs, such as administration and transaction costs by generating consolidated payments for invoices across multiple subsidiaries

Your head office can process invoices from multiple subsidiaries and generate a consolidated payment to a given vendor. Since the payment processing is centralized, a better control can be exercised for payments thereby increasing cash-flow management.

The head office can also delegate the vendor invoices to subsidiary to make payment on their behalf. Example: A subsidiary company (ACME-TX) delegates a vendor invoice to the head office company (ACMENY) for payment to a vendor:

 

Financial Consolidation

You can gain the following business benefits when using InterCompany for Financial Consolidation:

• Your consolidation takes place at a central location with data collected from subsidiaries running SAP Business One
• You experience reduced cycle time required to collate, consolidate and report financials
• You set standardized and transparent financial processes across business entities
• You can implement a consolidation of financial data based on minority interests
• You have a comprehensive financial visibility across business entities
• You have access to an easy and intuitive management of cross-subsidiary financial information
• You gain the capacity to audit and track data flow throughout the consolidation process
• Finally, you receive a single source of the truth, with a common chart-of-accounts, to support financial management and statutory reporting

The corporate financial controller needs an accurate and timely rollup of GL accounts for financial consolidation. InterCompany Solution provides in-depth insight in to consolidated financial data across the organization without intensive manual reconciliation or duplicate data entry. Example: There is no limit to the number of companies you can consolidate. Account balances can be rolled up to a group level within the consolidation hierarchy:

 

InterCompany Allocation

InterCompany Solution allows user to allocate income and expenses such as travel, payroll, and audit fees across branch companies, which leads you to the following business benefits:

• You minimize errors by automating allocation postings across participating companies
• You gain an improvement in quality and accuracy of data
• You can increase productivity by reduction in workload
• You experience an overall increase in organizational efficiencies

At the end of the month, an accountant allocates a portion of any centrally incurred expenses across all organization units that contribute to, or benefit from, that expenditure/income, based upon a calculation that represents a reasonable allocation of how that expense/income should be split. Example: marketing expense incurred in head office (ACME NY) company ledger is allocated to subsidiary 1 (ACME CA) and subsidiary 2 (ACME TX):

 

Consulting Support is recommendable

This entire topic is quite complex, especially because the differences can be found deep in detail. Our experience shows that a requirement workshop is mandatory to gain an holistic view of your entire business transactions with your collaborating business units. Our experience also shows that when setting up the InterCompany solution, all legal entities need to be involved in the discussion.
Feel free to drop us a line to get more into detail.