Use the Intercompany Relations window to define, query, and update intercompany relations between two operating units in a multi-organization environment. These relationships are between either a shipping organization and a selling organization, or a receiving organization and a purchasing organization.

When you enter a sales order in an operating unit, the shipping organization is often part of a different operating unit, that has a separate ledger. Once the sales order is shipped to the customer, the inventory asset account for the shipping organization is credited and the cost of goods sold account is debited. Sales revenue must also be recognized in the sales organization. If the two organizations belong to different operating units, then the system must perform accounting distributions to record the intercompany revenue, receivable, and payable entries.

Oracle Inventory and Oracle Receivables must be installed before you can define intercompany relations. If Oracle Payables is not installed, then the system does not require you to enter information in the AP Invoicing for Selling region.

   To define intercompany relations:

1. Navigate to the Intercompany Relations window. You access the Intercompany Relations window from the Transactions Flow window. The shipping operating unit and the selling operating unit are populated automatically.

2. Enter either the customer name or customer number. When you enter one, Oracle Inventory displays the other automatically. See Creating a Customer. A customer is defined in Oracle Receivables to represent the shipping operating unit for AR accounting transactions. If the flow type is shipping, this information is provided automatically. If the flow type is procurement, you must enter this information.

3. Enter the location, if the customer has multiple locations. The list of values displays only locations that are defined for the customer for which Site Use is set to Bill To.

4. Enter the transaction type. See Transaction Types for more information.

5. Enter the Intercompany COGS Account. See Intercompany Invoicing Process Overview.

6. Optionally, select the currency code. The available choices are:

   • Currency Code of From Operating Unit

   • Currency Code of To Operating Unit

   • Currency Code of Order

7. Enter the supplier and, if available, the supplier site. .

8. Enter the freight account. The list of values is restricted to the Chart of Accounts of the selling organization.

9. Enter the Inventory Accrual account. This account is used for all logical transactions that result from the intercompany transaction such as drop ship.

10. Enter the Expense Accrual account.

11. Save your work.

   To update intercompany relations:

1. Navigate to the Intercompany Relations window.

2. Query on the desired operating unit in the Shipping field to display the existing relations for that unit.

3. You can update information in all fields except Shipping.

4. Save your work.