Presentation to OAUG - SIG

Atlanta

21-Oct-2005
Inter – Company Transactions

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Agenda

Overview of Inter-Company Transactions

Organization Structure
Business case – Solution

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Inter-company Transactions
Movement of Goods :
 Between Divisions belonging to Same Legal Entity
 Across more than one Legal Entities within US
 Across Many International Subsidiaries

Single face to Customer (One Selling Company – Multiple Internal Supply Companies)
 Selling Company Books Order & Raises Bills on Customer
 Supply Company drop-ship goods directly to Customer warehouse.
 Intercompany Billing between Selling and Supply company.

Multiple Selling Companies – Single Supply Companies

Multiple Selling Companies – Multiple Supply Companies

Cross Charging for Goods & Services across Projects

Inter-project Billing between projects owned by different legal entity.

Intercompany Journals

Shared Bank Accounts across Legal Entity :

 To receive Customer payments
 To disburse Supplier Payments

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Business Case
Single face to Customer
 Single Selling Company – Multiple Supply
Companies
 Multiple Selling Companies – Multiple Supply
Companies

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 Why Single Face to Customer ?
1. What the
customer was Customer 2. Multiple businesses servicing a single customer
seeing order…time consuming internal negotiations
before…multiple
legal entities, no Customer
single interface

LE 1 LE 2 LE 3 LE 4 LE 5 LE 6
LE 1

3. Multiple
acquisitions…many LE-2 LE-3
faces to the customer.
ITO / Application LE-1 LE-4
confusion etc.

LE-3 LE-2

Customers

LE-6
LE-4

LE-5

Customer desired a single ITO face…One Brand

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New Simplified Organization / LE Structure
“New” Organizational / Legal Entity Structure

HR Legal IT

Parent Company
Primary Objectives Finance Leadership

Single Face to
Customer
Compliant Legal Commercial Statutory Entity - CSE
Structure & (Selling Company – Customer facing)
Branding
Rationalize multiple
USA Benefit Plans
Re-align people to
operational owners
Single ITO Platform LE - 1 LE - 2 LE - 3 Future
Acquisitions
Product
(US / Non-US)
Product
Line Line

Home Base Statutory Entities - HBSE

(Supplying Company – Fulfillment Center) 7
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Oracle Solution :
Multi – Org Structure & Transaction Flow (Within US)

USD

Sales Order
Set of
Set of Books
Books

AR Invoice

Shipment
Legal
LE - US
Entity

IC-AR
Operating
Selling OU Supplying OU
Unit IC - AP

Inventory Average Average Average Average

Organization Cost Cost – Cost- Cost -
Entity 1 Entity 2 Entity - 3 Entity - 4

Sub-
Sub - Inv Sub - Inv Sub - Inv Sub - Inv
Inventories
…..

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Oracle Solution :
Multi – Org Structure & Transaction Flow (Intl. Outside US)
Consolidation Set of Books
(Financial Consolidation + I/C Elimination)

MRC
USD Non-USD
MRC USD
Set of Sales Order Set of Books Set of Set of
Books Books
Books

Legal LE - US LE –
Entity Non-US

Operating Selling OU Supplying OU Supplying

Unit
OU

Inventory Average Average Average Average Average

Cost Cost – Cost- Cost -
Organization Entity 1 Entity 2 Entity 3 Entity 4
Cost
Entity 5

Sub- Sub - Inv Sub - Inv Sub - Inv Sub - Inv

Inventories Sub - Inv

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Oracle Solution : Process Flow Diagram
Supply Chain Model - Selling Company (Order Management)

Select One of the Fulfillment Org

as Shipping Warehouse on Sales
Order

CSE – Generate
Progress Run Import
Selling Create
Auto Bill Cycle
Create Inter- Inter-
Book Receiver from
OU Project
invoice company
Receiver Company
Order Import Project to
AP Invoice AP invoice
Customer Inter-
company
Invoice
Settlement
&
Run Custom Auto Elimination
HBSE – Ship Goods Create Inter- Program Invoice
Supplying to company updates the Import Inter-
OU Customer AR Invoice Inter-Co Inv company
Amount

Manual Automatic Manual or

Automatic

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 Oracle Solution : Process Flow Diagram
Manufacturing Model - Selling Company (Project Accounting)
Select One of the Fulfillment
Book Order
Org as Shipping Warehouse
on Sales Order

Create Generate Generate Import

CSE – Receiver Progress Final Inter-
Book
Selling Project Bill Cycle Bill and company
Order From Receiver Recognize AP Invoice
OU Project Revenue
Inter-
company
Invoice
Settlement
&
Generate an Elimination
Create
Intercompany
HBSE – Receiver Accumulate Ship Goods to
AR invoice on
Project Cost against Customer
Supplying CSE from
Provider
OU Project Provider
Project

Manual Automatic Manual or

Automatic

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Oracle Solution : Setup Details & Customization Details
Selling Company
Supply Chain Model Manufacturing
Module Involved : Modules Involved :
OM, AR, AP, INV ) (OM,PA, INV, AR, AP)
Define Intercompany Customer & Define Intercompany Customer & Supplier
Supplier Define Implementation option in PA (Internal
Billing)
Create Intercompany Relationship in
Define Billing extension. (Optional)
Inventory Module
Set up Automatic Billing (Optional).
Setup Auto-accounting Rule in AR
Setup Auto-accounting Rule in PA
Setup AR Transaction Type and link to Setup Auto-accounting Rule in AR
Order Transaction Type. Setup AR Transaction Type and link to Order
Create Custom Program to calculate Transaction Type.
Transfer price and update AR Auto Define and link Receiver project & Provider
invoice Interface table. project. (Required)
Create custom program in AP to handle one to
many Supplier relationship.

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Operational Structure – Process Flow &
Accounting
Order Booking  CSE Books order from Customer
No Accounting Entries

Order Assignment  CSE Assigns order to appropriate HBSE

(Internal Demand) business @ Established TP No Accounting Entries

 HBSE makes or buys Parts Dr. Inventory (HBSE-LE)

Make / Buy
Cr. Cash (HBSE-LE)

Ship to Customer • HBSE business drop-ships parts to Dr. COGS (HBSE – LE)
Customer Warehouse. Cr. Inventory (HBSE-LE)

Invoice to Customer • CSE raises Invoices to Customer. Dr. External Receivables (CSE-LE)
Cr. External Revenue (CSE – LE)

Intercompany AR • HBSE raises an Inter-company AR invoice Dr. Due From CSE (HBSE – LE)
Invoice on CSE @ agreed Transfer Price. Cr. Internal Revenue (HBSE – LE)

Intercompany AP • CSE creates an Inter-company AP invoice Dr. Internal COGS (CSE-LE)

Invoice on HBSE @ agreed Transfer Price Cr. Due To HBSE (CSE – LE)
Intercompany • Intercompany Revenue (HBSE) is
Settlement & eliminated with COGS (CSE) a) I/C Revenue & COGS Elimtn
Elimination • Due From & Due To Elimination b) DF/ DT Elimination

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Contact Information

Name : Hari Mundhra

E-Mail : hari.mundhra@ge.com
Phone : +1-678-844-4062

www.genpact.com

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Disclaimer

This presentation was prepared exclusively for the benefit and

internal use of Genpact in order to indicate, on a preliminary
basis, the feasibility of a possible transaction or transactions
and does not carry any right of publication or disclosure to any
other party. This presentation is incomplete without reference
to, and should be viewed solely in conjunction with, the oral
briefing provided by Genpact. Neither this presentation nor
any of its contents may be used for any other purpose without
the prior written consent of Genpact.

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