Intercompany Debit Note

[Former Member]

Hello Peers

My client has come up with a peculiar requirement ( one of many lately ! )

For an intercompany sale process , they  required proforma invoices before goods issue of the intercompany sale invoice and the intercompany stock transfer invoice for customs purposes . I have catered for this using the intercompany proforma invoice.

Now the twist to the tale is they need a proforma invoice for the Intercompany Debit Note before actual Goods Issue.The intercompany debit note is created with reference to intercompany debit note request which in turn is created with reference to the Intercompany sale invoice ( IV ).

Has anyone come across this before? Chances are yes for European clients with manufacturing facilities outside Europe .

Thanks in advance for help.

Regards Hari

[Former Member · Accepted solution]

Hi Hari,

Please try to go ahead and create copy controls betwen your Intercompany Debit note request and Proforma Invoice. There is no problem in creating the same as it will not have any impact from a financial perspective.

Regards

[Former Member · Accepted solution]

Hi Raj

I need to create a proforma for the intercompany debit note even before goods issue.How can we create an intercompany debit note request without doing goods issue and creating intercompany invoice ( IV )?

Regards Hari

[Former Member · Accepted solution]

Hello

Thanks Raj for the tip.

I was able to solve the problem by creating copy control from IC proforma to debit memo request. This allows me to create debit memo before goods issue. Although it posts to accounting but I can configure a posting block for the intercompany debit memo or put a posting block for the individual document while creation. It can then be released to accounting after goods issue and creation of F2 and IV invoices.

Thanks Hari

[Former Member]

Dear Lakka Raju,

This Business Process is very much in Practice in Global Trade. In International Trade, this is very well known as Switch Bill of Lading or Cross-Trade

Brgds

DS Rajan

[former_member182378]

Hari,

Thank you for this thread!

Your company is creating a billing document (F2) and also creating a debit memo (L2). Is it for the same sale?

In other words, are you billing the customer twice, for the same material?

[Former Member]

Hello TW

This is an intercompany sale . The debit note is created with reference to the IV invoice and not the F2 customer invoice.

Regards Hari

[former_member182378]

Hi Hari,

Thank you for your post!

But the same question still holds good - why does the client want IV and L2?

Do you think that the internal customer is being charged twice for the same goods?

[Former Member]

Hi TW

It is a 2 step intercompany process. Customer owned by US , delivered from China but the IV invoice is between China and Malta. Malta sends a debit note to US.

Malta is being used here for their favourable tax regime.

Regards Hari

[former_member182575]

Be careful with this process as the IRS maybe looking. I assume the goods are shipped to Malta first or not?  I assume the US customs would check the DM against the customs declaration details from Malta too.

A previous client had almost done the same thing with the Cayman Islands, but the issue was they were not shipping the goods and think this caused some issues.  Certain customs departments and tax authorities didn't agree with the process (Japan).

Regards

Waza

[Former Member]

Hello Warren

My sentiments exactly ! Also pointed out to the management of my client but it seems to be accepted practice in the auto industry for goods out of China  and no the goods are not shipped via Malta .In client speak Malta is just a "Washing Machine".

Best Regards

Hari

[former_member182378]

Hari,

1. Is your business process same as the standard intercompany sale process?

In other words, is the document flow OR>LF>F2, and then IV (ref. to LF)?

2. Who is the end customer?

3. As Malta is paying for the IV billing document, is it the internal customer?

4. The debit note process is initiated by Malta, towards US;

With reference to the IV billing document.

But could that mean, Malta ordered for the goods, the goods were delivered in US.

Now Malta is charging money to US.

Where is the "document" that "captures/shows" that US has ordered for some goods?

[Former Member]

TW

1. Yes it is a standard intercompany sale process , the deviation being it is a 2 step process.

2. The customer under US sales org is the end customer.

3.Yes Malta is the internal Intercompany Bill  to in this transaction.

4. The goods are ordered by US with a sales order created for the end customer under US sales org.