One of the key features introduced with the new Advanced Global Intercompany (AGIS) in R12 of Oracle E-Business Suite is the ability to create documentation for Intercompany transactions. The correct documentation is required in many countries for Intercompany trading, this essentially means I need to provide a Receivables Invoice for the Legal Entity Providing the goods or service and a payables invoice for the receiving Legal Entity. These invoices should have any taxes that are applicable in the jurisdictions, for that type of service.
We do not firce you to create invoices for all Intercompany Activity, you can still create just a GL Journal entry if you prefer. The AGIS transactions flow is illustrated in the diagram below.
You can see that we check if invoices are required and there are two places that we look for that. First is the AGIS transaction type flag, seen on the AGIS Transaction Page in the Set Up Tab.
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You can also create a rule in the Legal Entity setup, we create that rule at the registration level. This is set by selecting the Legal Function ‘Create Intercompany Invoice’ when entering the Legal Entity Registration. If the this rule is set for one of the Legal Entity involved in an AGIS transaction it will take precedence over the Transaction Type rule and the invoice will be created.
We create an AR invoice (via an Invoice API or the Open Interface tables) at that point the eTax module will kick in and calculate the tax for you and add that to the invoice. When the AR invoice has been created we create the AP invoice (via the AP Invoice Interface) using the invoice number from the AR invoice – so should be easy to match those invoices. We also ensure that the same information required by eTax is on the AP invoice so the tax calculation will be the same on the AR and AP invoices.
On of the key aspects of AGIS is that we will not create an AR or AP invoice or a GL journal until both sides of the transactions have approved it and we checked that the appropriate periods are open in GL, AP or AR. This means that there is no possibility of one side of the transaction going through and then the other side rejecting or changing the Accounting Date so they hit different periods or anything else that will make reconciliation and elimination of Intercompany cumbersome.