Intercompany Customer Invoicing for Project resources sharing in CU7 and AX 2012 R3

Intercompany Customer Invoicing for Project resources sharing in CU7 and AX 2012 R3

Hello,

Multinational Professional Services firms often share workers between their legal entities to staff the projects with the right skill sets. When the workers of one entity works on the projects of another entity of the same organization, they bill their time and expenses to those legal entities for which they work on the projects.

Microsoft Dynamics AX has introduced several enhancements to this area over the last few releases to facilitate how these business scenarios can be easily accomplished in the ERP solution.

In one of my earlier posts, I explained how the intercompany timesheets and expenses works in AX 2012 R2 CU6. With the release of CU7 and the R3, AX has taken a step forward by enhancing this feature and adding the capability for the legal entities to be able to invoice each other for the resources they share for projects and also allow them to stay true to the compliance and the legal requirements of tax liabilities etc. Until the CU6 release, the intercompany transaction was directly handled in the ledger transactions only and the ledger accounts were updated as soon as the timesheets were posted. In the R3 release with the introduction of this new functionality, the companies can adjust the amount which are charged between them.

In today’s post let us take a look at this new enhancement which has been introduced in the CU7 and the R3 release.

Throughout the demonstration in this post we will consider “USMF” as the Resourcing entity(Lending company) and “USSI” as the Contracting entity(Borrowing entity). Sandeep Chaudhury is a full time employee of USMF, and works on the project of USSI as he has the desired skill set required for the project.

Setup and Configurations:

  • The first thing to notice is the necessary setups which are needed for this new functionality to work. Go to PMA > Setup > Project Management and Accounting Parameters form.
  • Notice the new “Intercompany” tab link which contains the required setup parameters for this new functionality.
  • You can setup the option of ‘Accruing the revenue’ in the resourcing entity for each of the entities to which the resources are lend. When the ‘Accrue revenue’ check box is marked, the revenues in the resourcing company will be accrued immediately when the intercompany timesheet is posted and these revenues will reverse automatically when the intercompany project invoice is posted.

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  • The next setup is to establish the trading relationship between the resourcing and contracting company. This means that the Contracting company needs to be a Customer in the resourcing entity and the resourcing entity needs to be setup as a Vendor in the Contracting company.

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  • The other miscellaneous setup are to setup the Transfer prices and the necessary ledger posting profile for the Intercompany accounts in the resourcing company. You will notice here that there are several sales price models which you can now specify for the transfer pricing between the entities.

Timesheet Submissions and Ledger Posting:

  • Sandeep Chaudhry submits the intercompany timesheet as shown in screenshot below.

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  • Below screenshot shows the voucher transactions and ledger account postings when the above timesheet is approved and posted. Notice that system has updated the “Intercompany cost” and the “Payroll allocation” amounts for each of the timesheets lines and also notice that the “revenue is accrued in the designated ledger account” (marked in screen below) and intercompany revenue is not yet updated. This will get updated when the intercompany invoice is posted.

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  • At this point you will also  notice that there are no transaction created in the “Contracting legal entity” for the Project and the general ledger. The timesheet transactions will appear as Pending Transactions and are not yet posted.

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Intercompany Project Invoicing and End Customer Invoicing:

  • When it is time to bill the end customer, the resourcing company will generate the intercompany invoice to the contracting legal entity and this will automatically create a Vendor Invoice in the Contracting entity. Let us now see how the Intercompany project invoice is initiated.
  • In the ‘Resourcing Company”, go to Project Management and Accounting > Common > Project Invoices > Intercompany Customer invoices.

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  • Click New > Intercompany Customer Invoice to launch the “Create Invoice Proposal” form. Note that this is not the typical project invoice proposal form of the standard Project invoicing process. This is specifically designed for the Intercompany customer invoicing. (This works like a Free Text Invoice)
  • Select the Legal entity and other applicable filters such as Project Contact, Project, Start and End dates and also Select the transaction types which you want to include in this invoice (Hour/Expense/Vendor Invoices) and click the Search button. The below screenshot shows the transactions which for the timesheet for Sandeep Chaudhury which was posted above.

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  • Select the transactions which you want to include in the invoice and click OK button. The system will generate the “Intercompany Customer Invoice” open the invoice details screen. Notice that Customer details are auto populated from the trading relationship which we have setup above.

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  • Notice here that you can Add or remove the lines from the invoice. You can also adjust the amounts (Prices) which are charged between the companies. After verifying all the details of the invoice, Click Post and print the invoice and send it to the Contracting company.

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  • After the invoice is posted, notice that the revenue which was accrued in the resourcing company has now been reversed and the Actual intercompany revenue is updated.

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  • The next step is to verify that system has now automatically created. Navigate to the USSI legal entity > Accounts Payable >  Vendor Invoices > Pending Vendor Invoices.
  • Notice that the vendor invoice for the Resourcing company is automatically created and ready for validation and posting.

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  • Once you validate and post the vendor invoice, the system will also post the Project transactions updating the Project Cost in the Contracting entity and also creating the transactions which can be ultimately billed to the end customers.

Well, this is it for today. Stay tuned and keep learning…Till next time..

-Sandeep

An insight to the new and improved Timesheets Management Functionality in Microsoft Dynamics AX 2012

Microsoft Dynamics AX 2012 - Powerful, Simple, Agile

Hi Friends,

I thought of writing about one of the most talked about enhancements in Microsoft Dynamics AX 2012 which is the employee timesheets functionality in Project Management and Accounting module.

Recording the employee’s times(hours) and expenses is one of the key processes in any services industry today, especially the IT consulting and Management services firms. These firms always look for a timesheet management system in the ERP system which they evaluate for their organization which can make it efficient and easy for their employees to enter their timesheets and expenses.

Microsoft Dynamics AX 2012 empowers the professional services industries with a powerfully simple employee services portal refered to as the Enterprise portal which is based on the Microsoft SharePoint 2010 foundation server, one of the most successful products that MS has released ever.

Now let us discuss about the various capabilities and improvements of the Timesheet system in AX 2012.

Few of the pre requisites for the timesheet functionality to be working are as below.

  • Setup timesheet periods. ( Ax 2012 supports Daily, Weekly, Bi-weekly, Semi-monthly and Monthly etc. periods for registering hours/times).
  • Setup the project management setup for the workers. ( Employees and Contractors).
  • Create required user relations.
  • The project management and accounting module setup. (Projects, activities, categories, line properties etc.).

Assuming that all of the above required setups are done, employees of the organization can log into the employee services portal and start entering timesheets.

The Home page of the employee services portal displays role tailored information depending on the user profile/role which is assigned to the employee.

When an employee/contractor who has system administrator role logs into the enterprise portal, the screen looks as shown below. This shows all the various capabilities and functionalities present on the enterprise portal of AX 2012.

Employee Services Portal

However, assuming the case of a typical service industry/IT consulting services industry, where employees (both salaried and hourly based) deal mostly with timesheets, expenses and their approvals, I have customized a role to prepare the employee services portal to look as below. Ax 2012 provides the flexibility of customizing the enterprise portal content the way you want it.

Role customized Employee services screen - AX 2012

Timesheet Management functionality Highlights in AX 2012:

  1. Provides flexibility for defining different timesheet periods depending on need.

Timesheet Periods

2. Timesheets overview screen displaying details of exiting timesheets.

Timesheets Overview Screen - AX 2012

3. Option to set timesheet favorites/favorite lines and functionality to load timesheet lines

these from favorites.

Timesheets Favorites Management

4. Option to create new timesheet by copying an existing timesheet (Previous).

Copy timesheets Function

5. Setup delegates for timesheet submission, who can enter timesheets on your behalf in

your absence and manage your timesheet delegates and timesheet favorites right on the

web enterprise portal.

Manage Timesheet Delegates

6. Record time on each individual task/activity or the project by entering suitable internal

and external comments for the description of the work. Week summary to date fact box

which displays the total number of hours entered in the week.

Timesheet Entry Screen AX 2012

7. Employees will have to spend less time in entering comments for each line with the consolidated comments entry screen.

Consolidated Timesheet Comments

8. Automatic workflow can be setup for timesheet approval/review. When timesheets are

submitted, they  get automatically assigned to the respective reporting manager’s queue

for review.

9. Print your timesheets right from the enterprise portal.

Print Employee Timesheets

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Apart from the timesheets management functionality, the enterprise portal  in AX 2012 provided several other powerful business process capabilities and this will definitely help every organization in a very great deal.

Till next time !! Keep exploring. 🙂