Profit Center P/L in Intercompany scenario across different profit centers

[former_member306668]

We have a scenario with different LoBs each represented by a cost and profit center. Usually consultants from different LoBs work on the same project. Projects are created in one company code and the consultants are in a different company code.

Our profit center structure LoB A, LoB B, LoB C is valid across the company codes. At the end of a period we want to view a profit center P/L.

For example the project is created against LoB A, and we have LoB B and C both entering 1h @ $100. (Assume charge out rate of $130).

Before running IC billing, we now have Profit Center for LoB A showing $260 profit (the $200 show as debit to Consulting and credit to IC Clearing). The other two profit centers have a 0 balance ($100 each showing as credit Consulting and debit IC Clearing).

If we now run intercompany billing (assuming no margin), it will show the $200 as income against the profit center of the intercompany sales order. However this is not a true representation. The result should be:

LoB A showing $60 profit ($260-$200) and both LoB B and C should show $100 profit. We can use the origin profit center and produce a report, which we can use as a basis for manual period end journals but we would like to automate this and ideally have the IC clearing account cleared as well as there doesn’t seem to be a process to do this.

I would think this is a common scenario and would like to know how others have solved this.

Thanks

Thomas

[Feras_Al-Basha · Accepted solution]

Hello borntosucceed ,

Thank you for bringing up this hot topic.

May I ask if after the inter-company billing is run whether you have also run the period end revenue recognition job run for the example at hand? Would that not trigger the necessary adjustment to the IC clearing account?

The origin profit center approach you mentioned is indeed a recommended reporting technique and I thank you for sharing.

Kind regards,

Feras

[ana_goncalves]

Hi borntosucceed, dmaldji,

The origin profit center was enabled to allow project margin analysis for all the contributing profit centers. As ferasbasha3 mentioned, this is indeed the recommended approach for reporting.

Kind regards,

Ana

[Djallal]

borntosucceed We are currently facing the same problem for our transport created as material. We're you able to find a solution ? Maybe a derivation or something.