printIQ inter-company billing 

Overview and setup options

Within printIQ, you have the ability to setup multiple sites.  Each site may be a separate entity feeding through to a separate set of financials or they may be business units or brands within the same entity.  

When two sites are collaborating on a job, there may be a need for one site to recognise part of the sale to represent their involvement in the job.  To achieve this, you have two options:

• Invoice at an operation level and assign appropriate general ledger codes to each operation.  In this scenario, you would differentiate tasks / operations completed by each site so that when they post to the general ledger, they will post to the appropriate account.  This option works best where you operate a single factory and both sites are posting to the same set of books.
  

• At the point of sending a sales invoice to the customer, printIQ can create a second invoice which represents the transaction between the two sites.  This option is available where you operate multiple factory locations as this is the driver for determining the contribution of each site.  This is an option for multiple sites running into a consolidated or separate set of financials.
  

This document outlines the workings and setup of the second scenario where you wish to raise a second sales invoice to recognise the inter-company transaction.

How it works

To best explain this, let’s use an example of Site A is completing a job for a customer.  Within printIQ, there is a second site, Site B which will complete part of the job for Site A prior to shipping to the customer.

Once the job has been completed and it’s time for invoicing, the standard sales invoice is raised by Site A to the customer for the full amount quoted.

At the same time, a second invoice is automatically generated by printIQ from Site B to Site A for the portion of work that Site B completed 

This invoice is created and saved as a printIQ Draft invoice  which can be reviewed or modified prior to being approved.

Once this second invoice is approved in printIQ, an additional  option will be presented to create the supplier invoice within printIQ.  In this case, the supplier invoice is processed in Site A and reflects the inter-company invoice from Site B.  Note, this is data only and is optional with the aim of keeping the impact on the general ledger as zero, i.e. the inter-company sales invoice is matched by a supplier invoice

The end result is an invoice to the customer as well as an invoice from one site to the other that represents their contribution.

To explain the process in simple terms

The aim of the process is to automate some of the transactions that take place when outworking.  If you think about the process of sending outwork to an external supplier, you would raise a PO, the supplier does the work and sends you an invoice.  You enter that invoice, verify it against the PO and then pay the supplier.
What we’re trying to do here is to automate the above transactions given that your supplier is using your version of printIQ.  As we know the cost of the outwork, we can raise the PO, create the sales invoice from the outwork provider and enter that as a supplier invoice.
While it seems complex, all we’re doing is replicating all the transactions that would normally take place if you were using an external supplier.

The mechanics behind the second transaction

Within printIQ, each piece of equipment has a factory location.  When you setup your printIQ instance, you setup each machine and then assign a Factory Location to each.  As the machine and factory location are set at a printIQ Operation Component level, a single operation can have multiple machines associated with it.

In order to calculate the amount of the inter-company invoice, we look at a breakdown of the pricing.  As an example, refer to the following pricing details view of a job.

Let’s say that the Printing  operation was completed by Site B.  We know that Site B is involved as the press used on this job was located in Site B’s factory.  

In this example, the Cost price of the printing is $55.97 and the Cost Plus price is $1125, depending on your preference (see Configuration settings below), the inter-company invoice will be created using either $55.97 or $1125.

Note, in order to accurately value the inter-company transaction, the task must be represented by an operation on the job and appear in the pricing details.  We’re unable to support raw materials and miscellaneous charges. For the same reason, we’re unable to support Shared Factory Locations, i.e. each piece of equipment must have a definitive location in order for the process to accurately calculate outwork.

Configurable settings

In creating the process, we have the following options that can be used to achieve the desired approach

• Inter-site billing is turned on/off
  
• Upon inter-site invoice approval, create a supplier invoice as well (on/off)
  
• The supplier used for this is configurable in Site Settings on the site record
• Use Cost or Cost Plus as the basis for the inter-site billing.  This allows you to choose between the outwork site to charge solely at cost or with cost+margin.  Note, this setting controls all inter-site invoices across the entire printIQ instance.
  
• Default general ledger code for inter-company billing.  Note that this will only be used if you have not specified GL accounts at the operation level 
  

Additional information

• The process will create an inter-company transactions for each factory location involved on the job.  i.e. if you have 3 sites involved, you will generate a single sales invoice to the customer and then two additional inter-company invoices
  
• The sales invoices created are standard sales invoices and will interface to your financials using the existing interface that you have running.
  
• For Xero users, you may opt to set up Tracking codes for each site.  This concept then flows through onto each invoice into Xero.
  
• As printIQ has three layers of markup, i.e. Cost Plus, Wholesale and Retail, the Inter-company transaction can encompass markup via the Cost Plus.  Wholesale and Retail markup do not impact on the inter-company transaction.
  
• Where Sales Tax types cannot be assigned automatically, they will need to be assigned on the Draft invoice prior to approving as we have no way of knowing what to use.