Intercompany Transaction in Project Management & Accounting Module in MS Dynamics AX 7
A common daily intercompany transaction that happens as we bill our customers for projects. This concept can be used in multi legal entity company or organization where they might hire resources to perform a certain task through lending intercompany and bill customer through borrowing company.
Example: Borrowing Company could be the main corporate office and lending company can be a small company (legal entity) located elsewhere who just uses GL, AP and AR module for their daily business process. Whereas the borrowing company is the main company who maintains direct relationship with the customer and ultimately bills invoices.
Lending Company – Resource are a part of Lending Company. (Here USSI)
Borrowing Company – Main Company who issue invoices to customer for payment. (GBSI)
· Lending Company supplies resource and expenses
· Lending Company will schedule the resources from the lending company
· Resources from Lending Company works and enter timesheet against the Project
· They can also record their expense to their project as well
· Resources will enter hours and expenses in the lending company ( No need to log in to borrowing company)
· Once all the hours and expense are recorded for the Project from within the lending company, the lending company will actually issue an intercompany project invoice.
· That means the lending company is billing the borrowing company for the work and expenses that they recorded towards Project.
· Now the intercompany Invoice gets posted and a vendor invoice gets generated in the borrowing company.
· The Borrowing Company should go in to the vendor invoice, review it and posts it, it now becomes hour and expenses on that Project that can be billed towards the customer.
Steps to Accomplish this in Microsoft Dynamics AX 7
1. Setup an Intercompany Customer in Lending (USSI) Company (create a new customer or use any existing customer).
Make sure Activation check box is checked and it is setup for GBSI company.
Make sure to use the GBSI vendor account and USSI customer account to use for intercompany billing.
2. Setup an Intercompany Vendor in Borrowing (GBSI) Company. (create a new vendor or use existing vendor). [Same as Customer]
· Create one vendor, switch to General tab and click intercompany
· Select Active checkbox yes
· Select Customer Company
· And in my account select the customer you created above.
3. Setup for Intercompany Transaction in Lending (USSI) Company
· Go to project management and accounting parameter and switch to intercompany tab
· Select default category and add borrowing company
· Setup transfer price
· Project accounting >>setup>>price
4. Enter Intercompany Transaction: Timesheet in Lending (USSI) Company
· Enter timesheet for borrowing entity and select a project
· Project accounting >>timesheet
· Approve and post
5. Go to Borrowing (GBSI) company and navigate to Accounts payable and click on pending Vendor invoices
Create a new vendor invoice and associate with the project company and project ID.
6. Open intercompany customer invoices (project accounting >>project invoices>> intercompany invoices in Lending (USSI) Company.
· Click on new intercompany invoice
· Select borrowing (GBSI) legal entity and click search
. SELECT all lines and click ok and post.
7. Now If You Switch to Borrowing company GBSI and check Pending Vendor invoices, you will see a new invoice what we posted in above steps.
Post the invoice.
When you post invoice It will hit the sub ledger that means the project in GBSI company is getting the actual amount recording in it.
You can verify the same.
8. Switch to Project account and Management >> All Project
Select the Project and check posted transaction.
That’s a complete process you can record all transaction is one legal entity and defined and bill in different legal entity.
Create a customer invoice, once your customer invoice posted in your borrowing legal entity, you will see a vendor invoice in pending status, once you post you will see all transaction in project transactions.
Intercompany Transaction in Project Management & Accounting Module in MS Dynamics AX 2012 R3
Intercompany process in AX 7 and 202 R3 is almost same, here I have explained complete end to end project intercompany billing step by step with screens.
Steps to Accomplish this in Microsoft Dynamics AX 2012 R3
7. Create an Intercompany Customer in Lending (USSI) Company
8. Create a Intercompany Vendor in Borrowing (FRSI) Company
· Create one vendor, switch to General tab and click intercompany
· Select Active checkbox yes
· Select Customer Company
· And in my account select the customer you created above
9. Setup for Intercompany Transaction in Lending (USSI) Company
· Select default category and add borrowing company
· Setup transfer price
· Project accounting >>setup>>price
10. Enter Intercompany Transaction : Timesheet in Lending (USSI) Company
· Enter timesheet for borrowing entity and select a project
· Project accounting >>timesheet
· Approve and post
11. Open intercompany customer invoices (project accounting >>project invoices>> intercompany invoices in Lending (USSI) Company
· Click on new intercompany invoice
· Select borrowing (FRSI) legal entity and click search
· SELECT all lines and click ok and post
· Go to Borrowing (FRSI) company and navigate to Accounts payable and click on pending Vendor invoices
· Select Invoice and Post it
· Switch to Project accounting >>Invoices>>Project Invoice Proposal
Click new Invoice Proposal in Borrowing (FRSI) Company and select the same project which you entered at the time of timesheet and post it.
Congratulations! You can now understand the process flow of creating intercompany transactions and invoicing these transactions in lending company. AP Invoice is now created in Borrowing Company which is reviewed and posted. Once AP Invoice is posted expenses incurred on the project can be billed to the customer.
