Set up intercompany trade
The following videos show how to set up intercompany trade relations between two legal entities.
Process intercompany charge allocations
As with prices and discounts, Supply Chain Management syncs miscellaneous charges between the intercompany sales order and intercompany purchase order, depending on whether your organization is debiting/crediting the customer/vendor, respectively.
Scenario
The intercompany vendor adds a handling fee as a miscellaneous charge to the intercompany sales order. The system automatically syncs this miscellaneous charge to the intercompany purchase order.
When using direct deliveries, you can select an allocation method to apply to the intercompany purchase order.
To use the Charges option, follow these steps:
Open Sales and marketing > Customers > All customers and then select a customer.
Select General and then Intercompany on the Action Pane.
Select Purchase order policies.
Select from the following Charges allocation options:
Net amount - The system allocates charges according to each line amount, relative to the total net amount for the purchase order or invoice.
Quantity - The system allocates charges according to the number of units for each line, relative to the total number of units for the purchase order or invoice.
Per line - The system allocates charges equally, according to the total number of lines.
Gross weight
Volume
Whole amount
Determine whether the charges apply to all items or stocked items by selecting the Stocked lines only parameter.
Charges: Cost price
In some intercompany relationships, the intercompany vendor is advised to sell the items to the intercompany customer at a price that's equal to the cost price instead of applying trade agreements or standard purchase prices.
Scenario
The intercompany vendor sells the items to the distribution company by using the cost price as a unit price. Instead of a margin, the vendor adds a miscellaneous charge as a percent of the unit price on the original sales order.
Example
The unit price on the original sales order in DEMF is 300.00 US dollars (USD). The cost price for the items in USMF is 125.00. Therefore, the sales price on the intercompany sales order is set equal to the cost of USD 125.00. The system syncs this sales price as the purchase price to the intercompany purchase order in DEMF.
If a miscellaneous charge on the sales order line of the intercompany sales order is set to Intercompany percent in the Category field, and the Charge value of 10 is set up, then the system adds 10% of the unit price of the original sales order. In this example, it's 10% of 300.00 or 30.00.
Procedure - Set unit price equal to cost price
To use the Cost price equal to unit price functionality, follow these steps:
Open Sales and marketing > Customers > All customers and then select an intercompany customer.
Select General and then Intercompany on the Action Pane.
Select Sales order policies.
Select the Unit price equal to cost price parameter to use the cost price instead of trade agreements or the defined sales price on the item.
If you select the Unit price equal to cost price parameter, you can select the Initiate original customer invoice posting parameter. As a result, if you stop the posting of the invoice on the intercompany sales order because of an error, the system posts the invoice on the original sales order anyway.
Procedure - Add an intercompany charge
If you use the unit price on the purchase order as equal to the cost price, the vendor doesn't receive any profit margin. To compensate for the loss of profit margin, the vendor can add a charge.
You can set up the special charge category called Intercompany percent on the original sales order lines. The value that you enter on those lines is the percentage of the unit price on the original sales order.
To add an intercompany charge, follow these steps:
Open Sales and marketing > Sales orders > All sales orders.
Select a sales order that you use in an intercompany chain.
Select Sell and then Charges on the Action Pane.
Enter a Charges code and then select Intercompany percent in the Category field.
In the Value field, enter a number to base the Intercompany percent on.
Close the page.
Sales and purchase agreements
A sales agreement is a contract that commits the customer to buying a product in a certain quantity or amount over time in exchange for special prices and discounts. The prices and discounts of the sales agreement overrule any prices and discounts that are present in any trade agreements that might exist. On the Sales agreements page, you can create, apply, and follow up on sales agreements that exist between your organization and its customer. For example, after you create a sales agreement, you can order directly from it.
A sales agreement is valid for a period that the creator of the sales agreement defines. The Requested ship date of a sale that you specify on the Sales order page should be within the validity period. By default, a sales agreement is on hold. You can order from a sales agreement only when it's set to Effective.
For more information, see Configure and use agreements in Dynamics 365 Supply Chain Management.
Intercompany has specific parameters for sales and purchase order agreements.
Set up purchase agreement action policies
On the Purchase agreement policies tab, on the Intercompany page, you can set up an action policy that controls whether the buying part in an intercompany trading relationship can modify certain terms in a purchase agreement, such as price, discounts, and validity period.
Set up sales agreement action policies
On the Sales agreement policies tab, on the Intercompany page, you can set up an action policy that controls whether the selling part in an intercompany trading relationship can modify certain terms in a sales agreement, such as price, discounts, and validity period.
Value mapping
In business relations, such as intercompany trade, the trading partners must find a common base for their company data.
The two companies in the intercompany scenario, with their vendor or customer relationship, can communicate with one another because they have the same value-mapping parameters.
Value mapping is necessary to define a common understanding in the company's languages between two or more trading partners.
In some cases, you might use the code from company A or always use the code from company B. When you can't use the code from one of the companies in an intercompany chain, you can define an external code to use. Then, you can select the external code in the value mapping.
For example, a potential problem might be the handling of different delivery methods or delivery codes:
Company A might have a Delivery code that uses a code "D" for a German courier.
Company B is handling the Delivery code for the same German courier with "DE."
Therefore, you must define one global mapping value for the trade between these two companies to function correctly.
External codes
You can access the External codes page from many pages. The fields differ depending how you open the page. For example, if you open the External codes page from the Procurement and sourcing > Setup > Distribution > Modes of delivery page, you can define external codes for the company's own mode of delivery.
If you open the External codes page from the Customers page, you can define external codes for the company's customer account numbers.
Set up purchase and sales value mapping
The available options for values of fields in the Set up purchase value-mapping and Set up sales value-mapping pages are:
Not specified - Specify code
Note
All value-mappings for intercompany must be different from Not specified. With this selection, the data synchronization between transactions will fail. We recommend that you never have Not specified codes for an active relationship.
Our - The system uses the customer/vendor number of the company account that you're in
External code - The value-mapping external code
The Set up purchase and sales value-mapping pages contain the following sections:
Other base data - Use these settings to determine the Mode of delivery code, Delivery terms codes, and Charges codes. This external code type defines how the system defines delivery and charge codes in the document and whether it syncs them or not.
Intercompany - Select the external code type for converting Return reason and Disposition codes. This external code type defines how the system describes intercompany return reason and disposition codes in the document and whether it syncs them or not.
Agreements - Select the external code type for converting intercompany classification. This external code type defines how the system describes intercompany classifications in the document and whether it syncs them or not.