Setup and process for intercompany trade in Microsoft Dynamics AX 2012 R3

Dynamics AX 2012 R3 allows for the capability to handle intercompany trade transactions. Intercompany trade transactions allow organizations to sell products and services to other business units or legal entities within the organization for fulfillment of a customer order. This blog will outline the setup and process of creating a sales order for an external customer with the help of intercompany trade process.

For example, we have an organization with two legal entities, GCCI and USMF. GCCI receives the order from a customer, but does not have inventory to fulfill order. Therefore USMF will fulfill the order with their inventory and deliver directly to the customer on behalf of GCCI. For this to occur, GCCI will use the intercompany trade transactions process.

1. The first step is to create a vendor in GCCI in the USMF entity. A new vendor can be create by navigating to Accounts payable > Common > Vendors > All Vendors.
2. Next, let’s create a customer record in USMF for the GCCI intercompany customer. To create a new customer, navigate to Accounts receivable > Common > Customers > All Customers. Once the customer record has been created, open the customer record and open the miscellaneous FastTab. Then check the create intercompany orders option.
3. Then go to the general tab in the action pane and select Intercompany.
   
   Once in the intercompany menu, check Active to setup trading relationship. Under Purchase relation, select the vendor company and specify the intercompany vendor record created in GCCI.
4. In the purchase order policies tab, a set of options will be available for a user to select. These options dictate how the intercompany purchase orders and intercompany sales orders will behave. To fully understand the various options available for intercompany trade relation setup, refer to this TechNet article: Set up intercompany trade [AX 2012]. In this example, Post invoice automatically under Original sales order (direct delivery) and Post invoice automatically  under Intercompany purchase order (direct delivery) are checked.
5. In the sales order policies tab, the intercompany sales order tab lists options that dictate how the intercompany sales will function. In our example, the sales order numbering and customer payment journal is specified.
   
6. Once the trading relationship setup is completed, close the intercompany form and go to the GCCI company to begin creating the intercompany sales order. Keep in mind that after the intercompany trade setup is activated, the intercompany vendor account in GCCI will be automatically setup. To process an intercompany sales order, navigate in the GCCI entity to Accounts receivable > Common > Sales orders > All sales orders. Create new sales order and specify the customer for which the order will be fulfilled. Then proceed to fill the necessary information like item, quantity, site and warehouse, and etc. After the sales order is filled, select Header view in the action pane.
7. In the intercompany FastTab, check the Autocreate intercompany orders’ and Direct delivery options.
   
8. Then in the action pane, select Direct delivery. Specify the intercompany vendor account and then flag the Include flag. Then select OK.
9. An infolog will then appear indicating that a purchase order and an intercompany sales order have been created. Then close the sales order form.
10. Now the user will go to the USMF entity and navigate to Accounts receivable > Common > Sales orders > All sales orders. Locate the sales order that corresponds to the sales order created in GCCI. In this example, the intercompany sales order can be identified by number sequence.
    
11. Open the sales order and process the order as normal. At the end of the process, the sales order should show the status as Invoiced.
12. After successfully invoicing the sales order in USMF, go to the GCCI company and navigate to the intercompany purchase order. It can be noticed that the purchase order was invoiced automatically. Keep in mind that the status of the purchase order will appear as invoiced because we had set the option in the intercompany relation setup.
13. Navigating to the original sales order, you’ll notice that the status of that order will also show as Invoiced. Upon completion of the transaction, users can make and receive payments by using the AP and AR payment journals.
    

Module access level – specify which users can post to a period in AX 2012

In AX 2012, it is possibly to specify which user groups are allowed to post accounting transactions to a certain period for a given module by using the Ledger calendar form. The form is found in General Ledger>>Set up>>Ledger>>Ledger Calendar>>Module access level (please see screen shot below). Here, you can specify if All, None or specific user groups should be able to post to this period via the specified module. If there is a need to specify access for a group of users, the user group must be set up first. This is managed in System administration > Common > Users > User groups.

Below is a summary of the postings controlled by each module’s parameter in the above form:

Ledger

This parameter controls the posting of all journals in the modules General ledger, Accounts receivable, Accounts payable, Project and the posting of the periodic Exchange adjustment jobs in the modules General ledger, Accounts receivable and Accounts payable to the general ledger.

Customer

This parameter controls the ledger updates of Free Text Invoices and the exchange adjustment ledger postings caused by manual settlements via “Open transaction editing”.

Vendor (Supplier)

This parameter controls the exchange adjustment ledger postings caused by manual settlements via “Open transaction editing”.

Sales order

This parameter controls the ledger postings caused by sales order updates.

Purchasing

This parameter controls the ledger postings caused by purchase order updates.

Inventory

This parameter controls the inventory posting to general ledger via the journals Movement, Profit/Loss, Counting, and Inventory to fixed assets and also from the periodic job “Closing and adjustments”.

Production

This parameter controls all ledger updates from production journals.

Project

This parameter controls ledger updates posted by project invoice and on account invoice.

Payroll

Will be updated.

Sales tax

This parameter controls the posting of the periodic job “Sales tax payment” to the general ledger (when selecting “Update”).

Fixed assets

This parameter is currently without any function.

Bank

This parameter controls the posting to general ledger during bank account reconciliation when bank transactions are created.

Cost accounting

Will be updated.

Expense

This parameter controls ledger updates posted by expense reports.

Scenario based implementation using CRP Approach

A key consideration of choosing enterprise solution packages like Dynamics AX and Dynamics CRM over custom development is to accelerate time-to-value. Organizations are looking for extremely fast concept-to-cash realization cycles which require rapid value driven delivery. 

Package solutions offer high percentage of generic industry scenarios out of the box, which can be deployed rapidly to delight customers and realize business value quickly. While more complex and business specific scenarios can get injected later in a phased effort.
Idea in brief: Use Conference Room Pilots (CRP) to model business scenarios starting with ‘Out Of the Box’ solution and progressively refine scenarios through a series of CRP workshops to gain business SME acceptance. Deploy and release the solution to business in rapid cycles. 


  Considerations for CRP success:

1. Focus on modeling business scenarios rather than individual requirement fit-gap.
2. CRP iterations are short sprints demanding business decisions and execution in much shorter cycles than traditionally done.
3. CRP workshops bring business, IT and delivery teams in sync with solution. Hence these are best executed by consultants with advance capabilities in business understanding, application knowledge and delivery skills.
4. Rapid value driven delivery with tight change control & governance.

Benefits of Scenario driven delivery using Conference Room Pilots:

• Speed and quality – better, faster and cheaper delivery
• Opportunity for innovating, learning and improving in between delivery cycles
• With rapid iterative cycles, IT service providers can move beyond implementation to support users in technology adoption and consuming value from IT investments.