Lesson 1 of 5
Cross-company postings
7 min
An intercompany transaction is any transaction between two legal entities of the same group. In SAP S/4HANA each legal entity is a company code, so intercompany means two company codes. This course uses a second Contoso entity: Contoso Parts Distribution LLC, company code 1810 (USD), a separate legal entity that runs the aftermarket distribution warehouse. Note what is not intercompany: a stock transfer between the Detroit plant (1710) and the Chicago plant (1720) stays inside company code 1710, so there is no receivable or payable between entities.
The simplest intercompany case is a cross-company code posting: one entry made by one user that affects two company codes. Typical examples are central purchasing (company code 1710 receives an invoice that partly belongs to 1810), central payment (1710 pays a supplier invoice owed by 1810), and expense recharges (1710 pays the group's insurance and charges 1810 its share).
What the system creates
SAP S/4HANA does not post one document across two company codes. It creates one document per company code and links them with a common cross-company code transaction number. Each document must balance on its own, so the system adds clearing lines automatically: a receivable from the partner in one company code and a payable to the partner in the other. The clearing accounts for each pair of company codes are defined in Customizing (transaction OBYA) and can be G/L accounts or customer and supplier accounts.
- User entersInsurance invoice USD 30,000: 1710 share 20,000, 1810 share 10,000
- Document in 1710Expense 20,000, payable to insurer 30,000, receivable from 1810 10,000
- Document in 1810Expense 10,000, payable to 1710 10,000
- LinkCommon cross-company code transaction number
- ResultEach company code balances; intercompany receivable equals payable
| Company code | Account | Debit | Credit |
|---|---|---|---|
| 1710 | Insurance expense | 20,000 | |
| 1710 | Intercompany receivable from 1810 (clearing) | 10,000 | |
| 1710 | Payable to insurer | 30,000 | |
| 1810 | Insurance expense | 10,000 | |
| 1810 | Intercompany payable to 1710 (clearing) | 10,000 |
The two documents created by one cross-company entry.
The trading partner
Every intercompany line should carry the trading partner, the company ID of the other entity. On cross-company clearing lines the system fills it. For customers and suppliers that represent group companies, the trading partner is stored in the business partner master, so every invoice posted to that customer or supplier carries it automatically. Consolidation, intercompany reconciliation and elimination all rely on the trading partner. A missing trading partner is the most common reason an intercompany balance "disappears" from reconciliation.
Displaying and reversing
To see all documents of one cross-company transaction, display any one of them and follow the cross-company link, or list them with the cross-company code transactions report (RFBVOR00). To reverse, use the cross-company reversal function (FBU8 in SAP GUI), which reverses all linked documents together. Reversing one side alone leaves the partner holding an open receivable or payable that the other side no longer recognizes.
Design choices about the clearing accounts matter more than they look. If the clearing accounts are plain G/L accounts, the intercompany positions are visible only in the general ledger and are settled by G/L clearing. If they are customer and supplier accounts representing the partner entities, the positions show up in the receivables and payables subledgers, can be included in payment runs and dunning, and carry the trading partner from the master record. Many groups prefer customer and supplier accounts for that reason, especially when intercompany balances are settled by actual payments. Whichever you pick, use the same design for every company code pair, so that reconciliation rules and reports work the same way everywhere.
What would you do?
An AP clerk at Contoso reverses only the 1810 document of a cross-company recharge, because the 1810 share was wrong. What is the consequence, and what should have happened?
- Intercompany means between two company codes; transfers between plants of one company code are not intercompany.
- A cross-company code posting creates one balanced document per company code, linked by a common number.
- Clearing lines are generated from the accounts defined for each company code pair.
- The trading partner identifies intercompany lines; reverse cross-company transactions together.
Check your understanding · not graded
Lesson check
1. How many documents does a cross-company posting between 1710 and 1810 create?
2. What keeps each company code's document balanced?
3. Is a stock transfer from plant 1710 Detroit to plant 1720 Chicago intercompany?
4. What is the trading partner used for?