General Ledger & Intercompany

Get Involved. Join the Conversation.

Topic

    Bryce Wied
    Internal Billing/Recharge Functionality
    Topic posted August 22, 2018 by Bryce WiedRed Ribbon: 250+ Points, last edited January 30, 2019, tagged Allocations, Configuration, Financials, General Ledger, Help Center, Intercompany, Payables, Public Sector, Receivables, Tip 
    165 Views
    Title:
    Internal Billing/Recharge Functionality
    Summary:
    How do large institutions process internal payments between organizations/departments
    Content:

    Background:

    In the University setting, it is common to have various service units, such as IT Services, Catering, and Printing Services that provide goods or services to other areas of the organization, and that service must be billed for these internal service units to properly record expenses and internal revenue. The business process is quite similar to external customers procuring services from the Organization, but it does not produce AR nor real external revenue - it is just money changing hands within the organization. Additionally, how can the system transact the procurement of these goods and services, and appropriately charge the ordering/providing departments. We've identified a few ways to process these transactions, but still have a few issues with each:

    System Options:

    1. Use GL journal entries to re-allocate funds
      1. Example:
        1. Debit: $100 Ordering Unit Expense Account
        2. Credit: $100 Service Provider Unit Revenue Account
      2. Issues:
        1. This requires giving many people across the organization access to create journal entries
        2. To charge or fund a Project in PPM requires the use of a PPM Miscellaneous batch upload. This means uploading these charges is a bifurcated process based on whether the Service Unit or Provider Unit is related to a PPM Project.
        3. There is no way to procure the services that integrate well with a GL journal entry
    2. Use the Intercompany Module without AR/AP involvement
      1. Example:
        1. Debit: $100 Ordering Unit Expense Account
        2. Credit: $100 Service Provider Unit Revenue Account
      2. Issues:
        1. To charge or fund a Project in PPM requires the use of a PPM Miscellaneous batch upload. This means uploading these charges is a bifurcated process based on whether the Service Unit or Provider Unit is related to a PPM Project.
        2. There is no way to procure the services that integrate well with a GL journal entry
    3. Use the Procurement module requisitioning tool to order goods and services, then a zero-dollar AP invoice to charge the appropriate provider/receiver of goods and services
      1. Example Requisition:
        1. + $100 Ordering Unit Expense Account
        2. - $100 Service Provider Unit Revenue Account
      2. Example AP Invoice. The total is $0 with 1 positive and 1 negative invoice line.
        1. + $100 Ordering Unit Expense Account
        2. - $100 Service Provider Unit Revenue Account
      3. Issues:
        1. Oracle does not allow a negative requisition line
          1. This requires the AP invoice to be manually populated with the negative transaction amount after the req has turned into a PO and the service has been performed.

     

    Code Snippet: