- By Surajit Mohanty
Introduction
SAP Advanced Intercompany Sales (AIS) in S/4HANA automates cross-company sales processes when one company sells to a customer and another company delivers the product. AIS streamlines intercompany sales, billing, transfer pricing, and financial postings while improving visibility across the end-to-end process.
This article explains how SAP Advanced Intercompany Sales works and the key benefits of using AIS in SAP S/4HANA.
For a detailed walkthrough of the document flow, see our SAP Advanced Intercompany Sales Introduction.
What Is SAP Advanced Intercompany Sales (AIS)?
SAP Advanced Intercompany Sales was introduced with SAP S/4HANA 2022. With SAP S/4HANA 2023, SAP further enhanced the process, including improvements to transfer pricing and intercompany profit handling.
The traditional cross-company dropship process starts with a sales order in the selling company, while a separate company delivers the product to the customer, as shown in Figure 1. The delivery company creates an intercompany billing document, which generates an intercompany supplier invoice in the selling company. These documents support arm's-length transfer pricing. However, because they remain linked to the external customer invoice, the process can create additional complexity and potential audit concerns.
SAP Advanced Intercompany Sales automatically creates an intercompany purchase order in the selling company code and a corresponding intercompany sales order in the delivery company code. These documents carry the transfer and external customer prices and integrate with intercompany billing, supplier invoices, and the external customer invoice. Figure 1 illustrates the end-to-end Advanced Intercompany Sales process.
Figure 1: SAP Advanced Intercompany Sales Flow
Key Features of SAP Advanced Intercompany Sales (AIS)
SAP AIS offers the following six features to improve intercompany transactions:
1. Intercompany Purchase and Sales Order Automation
AIS automatically creates an intercompany Purchase Order for the selling company with the transfer prices, as shown on the top left in Figure 2. This purchase order uses internal intercompany Business Partners and a receiving plant in the selling company, such as the Transit Plant, shown in Figure 3.
Figure 2: Purchase Order and Sales Order
A corresponding intercompany sales order is automatically created in the delivery company code.
Figure 3: Transit Plant in the Selling Company Code
2. Automated Intercompany Billing
SAP Advanced Intercompany Sales automates the creation of intercompany billing documents and invoices, reducing manual data entry. The automated process supports consistent billing across the selling and delivering companies while helping organizations meet applicable tax and compliance requirements.
3. Transparent Pricing and Profitability
SAP Advanced Intercompany Sales provides transparent pricing between company codes by incorporating transfer prices, markups, and applicable taxes. Transfer pricing can be maintained in a purchase info record in the selling company and used in the corresponding intercompany sales order, helping provide consistent revenue and cost calculations across the intercompany process, as shown in Figure 4.
Figure 4: Example of Transfer Prices maintained in Purchase Info Record
4. Seamless Document Flow
SAP Advanced Intercompany Sales automatically creates and synchronizes sales orders, purchase orders, delivery documents, billing documents, and invoices across the selling and delivering companies. This integrated document flow improves end-to-end visibility and gives users access to the related transactional documents throughout the intercompany sales process.
5. Compliance with Tax and Legal Requirements
The separate intercompany purchase order and sales order establish the buy-and-sell relationship between the selling and delivering companies. This document structure supports clearer intercompany transactions and provides an auditable document trail for tax and legal requirements.
6. Enhanced Reporting and Analytics
SAP Advanced Intercompany Sales provides the Monitor Value Chains app to track the end-to-end intercompany process, as shown in Figure 5. Users can track the processing status of Advanced Intercompany Sales transactions and drill down into related documents to investigate and manage the process.
Figure 5: Monitor Value Chain App
How SAP Advanced Intercompany Sales Works
The SAP Advanced Intercompany Sales process follows an integrated workflow across the selling and delivering company codes:
- Sales Order Creation: The selling company creates the customer sales order with the product, quantity, pricing, and a delivery plant assigned to the delivering company code. This cross-company-code relationship triggers the Advanced Intercompany Sales process.
- Purchase Order in Selling Company: The system automatically creates an intercompany purchase order in the selling company using transfer prices maintained in the purchase info record.
- Sales Order in the Delivery Company: The system automatically creates a corresponding intercompany sales order in the delivering company code.
- Outbound Delivery: The outbound delivery is created for the external customer sales order. When post goods issue (PGI) is completed, SAP triggers the Stock in Transit (SIT) goods movements shown in Figure 6.
Figure 6: Stock in Transit (SIT) Movement Types
Stock in Transit (SIT) integration transfers inventory ownership from the delivering plant to the selling plant through a series of goods movements, as shown in Figure 7.
Figure 7: Stock in Transit (SIT) Process Steps
Step 1: Movement from unrestricted Stock in the delivery plant to Stock in transit
Step 2: Goods Issue from Stock in transit of delivery plant (Intercompany Cost of Goods Sold Posting in Delivery company code)
Step 3: Goods Receipt into Unrestricted Stock in Selling Transit Plant (Selling Company Code)
Step 4: Goods transfer from unrestricted stock to stock in transit in the selling plant (External Customer shipment)
Step 5: Goods Issue from stock in transit to external customer (cost of goods sold posting in the selling company code)
Billing Documents and Supplier Invoices: After the goods movements are completed, the external customer invoice (F2 billing document) and intercompany billing document (IV2) can be created. These billing processes can be scheduled using background jobs. SAP then automatically creates the corresponding intercompany supplier invoice, completing the Advanced Intercompany Sales process.
Figure 8: Billing Documents and Supplier Invoice
SAP AIS improves transparency and accuracy across the end-to-end intercompany sales process.
Use Cases for SAP Advanced Intercompany Sales
SAP AIS is particularly beneficial for organizations in industries such as:
• Manufacturing: Supports organizations where one company code sells to the customer while another company code manufactures or delivers the product.
• Wholesale and Distribution: Supports companies where sales and product delivery occur across different company codes within a global supply chain.
• Pharmaceuticals: Supports intercompany sales and product delivery across legal entities while providing a transparent document flow for complex global operations.
Conclusion
SAP Advanced Intercompany Sales in S/4HANA simplifies and automates cross-company sales processes by integrating sales orders, intercompany purchase and sales orders, deliveries, billing, Stock in Transit (SIT), and financial postings. The process improves visibility across selling and delivering companies while supporting consistent transfer pricing and intercompany document flow.
For organizations operating across multiple company codes, SAP Advanced Intercompany Sales can reduce manual processing and provide greater transparency across the end-to-end intercompany sales process.
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