How to Use Internal Invoicing

Setting up Internal Invoicing

Before internal invoicing can take place, a number of settings must be set up. You will find all actions in the table, the explanation of most of these actions follows below.

Step 1. Set up the Administration Cross Table

First you set up the Administration Cross Table. For more information, read the article Administration Cross Table.

Step 2. Check the Administration Settings

Ensure that the administration setting ‘Plan Administration Independently’ = true.

Create separate journals: a sales journal for the source administration, a purchase journal for the target administration. Then enter the journals created for internal invoicing in the administration settings:

• Sales: is entered in the source administration.
• Purchase: is entered in the target administration.

Step 3. Set up ledger accounts

Create ledger accounts for Inventory Group, Sales Group and Outsourcing Suspense Account (this is only necessary if these costs need to be broken down). Then set up the Sales Group and the Inventory Group (if the internal hours need to be booked separately on a general ledger).

Step 4. Link the operation to the resource

Link the operations (of the purchasing organization) to the resources (of the selling administration):

• Sales: is entered in the source administration.
• Purchase: is entered in the target administration.

Target Administration

A link must be established between the 'Assembly' operation in the target administration (Administration 001 - De Koning Metaalbedrijf) with a resource in the source administration (Administration 002 - De Koning Montage). Open the Operations table, find and select the correct operation and go to the 'Planning and Shopfloor' tab. In the 'Resource Link' section you link the operation to the resource of the source administration.

Source Administration

The operations in this administration must be linked to their own resource on the 'Planning' tab. Choose the correct net hourly rates and billable hourly rates for each operation. These will be used to determine the amount to be invoiced and are therefore very important. You select the hour type in the Hour Types table. These must be entered on the 'Hours' tab of the Operations table.

In Planning, the production order created by Metaalbedrijf de Koning (Administration 001) is only shown for the linked resource in the other administration. By manually entering hours via the Time Registration module or by using the Shop Floor, the hours can be booked directly on the relevant production order.

How does Internal Invoicing work?

In the source administration (De Koning Montage) it is now possible to justify the costs on production orders in the target administration (Metaalbedrijf De Koning) by means of timesheets.

The operation of the time registration/hours entry is the same as in a standard setup. The hours must be processed provisionally and definitively before they can be invoiced within the administrations.

Processing hours

Hours clocked on a production order from the other administration are transferred to the Internal Invoicing action after definitively processing. Hours clocked on a production order from your own administration are transferred to your own production order after definitively processing and do not go through to the Internal Invoicing action.

All hour lines that can be invoiced internally appear in the Action List. Select this and choose Save. If no internal invoicing is required, you can choose the Don't Invoice button.

Outstanding items are automatically created in both the source and target administration. In the source administration, the basis for the outstanding item is a manual sales invoice (automatically created) with a sales group, as specified in the cross table. In the target administration, the basis for the outstanding item creditors is a manual purchase invoice (created automatically). If a physical invoice is required, it can be printed out using the Sales Packing Slips or Sales Invoices module. The line description of the invoice is automatically generated by MKG.

Actual costing data

The AC data is shown as hours under the operations. The costs are made visible with the materials: these outsourced hours are created as unlinked material line(s). Open the line of the sub-assembly and open the ‘PC-AC’ to view the bookings. In the production order line, the total times are visible on the ‘Summary’ tab.

Financial data

By using the Internal Invoicing functionality, hours can not only be booked across multiple administrations, but MKG also takes care of the financial handling. Changes are made in the financial administration for:

• Sales invoice in the supplying administration (source). The settings from the process tables discussed earlier are used.
• Purchase invoice in the receiving administration (target).

A link is automatically created from the hour record that is being invoiced to the corresponding invoice (purchase or sales). In both the source and target administration you can then see to which manual sales or purchase invoice this hour booking is linked. To do this, use the field selector to add the Invoice, Invoice Line, Purchase Invoice and Purchase Invoice Line fields.

When MKG Financial is set up, creating these invoices will also lead to an outstanding item for the debtors in the source administration and an outstanding item for the creditors in the target administration.