Configuring Intercompany Sales: Order Types, Pricing, and Internal Customer Setup
Learn the core configuration building blocks for intercompany sales: sales document and billing type assignments, the intercompany pricing procedure with the internal price condition, and the internal customer master linkage between ordering and delivering company codes.
Explanation
Configuring intercompany sales requires coordinated settings across sales document types, delivery types, billing types, pricing procedures, and customer master data, all of which must align so that the system recognizes a scenario as intercompany and can generate a correctly priced internal billing document. The starting point is the assignment of the delivering plant to a company code different from the sales organization's company code, combined with configuration that authorizes intercompany billing for that combination of sales organization and delivering plant. This authorization step tells the system which plants are valid intercompany delivering plants for a given sales organization, effectively acting as a control gate; if a plant is not configured as an intercompany-authorized delivering plant for the sales organization used on the order, the system will not attempt to create an intercompany billing document even if the company codes differ. Sales document types used for intercompany scenarios are typically standard order types, since the intercompany nature is driven by the plant/company code combination rather than a special order type, though many implementations use dedicated order types for clarity and reporting. The delivery type follows standard delivery configuration tied to the shipping point of the delivering plant. The critical configuration point specific to intercompany processing is the billing type used for the internal invoice, which is distinct from the customer billing type; this dedicated billing type is copied from the delivery based on copy control rules that reference the delivering plant's company code as the internal 'sold-to' and determine which items are relevant for intercompany billing. Pricing configuration is where most intermediate-level implementation work concentrates. Two separate pricing procedures are involved: the customer pricing procedure (determining the price and any discounts/surcharges the external customer sees on their invoice) and the intercompany pricing procedure (used on the intercompany billing document to determine the transfer price billed internally). The intercompany pricing procedure includes a dedicated internal price condition type, which is maintained as a condition record based on a condition table typically keyed by sales organization and delivering plant, or sales organization, distribution channel and material, depending on how granular the internal transfer pricing needs to be. This condition record must be maintained proactively; if it is missing for a given plant/material combination, the intercompany billing document will either fail pricing determination or be created with a zero or incomplete price, which is a common production defect. Another essential configuration piece is the internal customer master record. From the perspective of the delivering company code, the ordering company code is represented as a customer (sometimes referred to informally as the 'internal customer' or 'ordering customer'), and this customer number is linked in configuration to the ordering sales organization/distribution channel/division combination. When the intercompany billing document is created, it is billed to this internal customer number, and the customer master's account group, reconciliation account, and payment terms settings drive how the resulting intercompany receivable posts in FI. Missing or misconfigured internal customer assignment is one of the most frequent causes of intercompany billing document creation failure, often surfacing as an incomplete document or an error indicating no billing party could be determined. Copy control between delivery and intercompany billing type must also correctly map item categories and confirm that pricing type settings redetermine pricing (rather than copying customer pricing) so the transfer price condition record is actually applied instead of inadvertently reusing the customer's price. Testing this configuration requires creating an end-to-end test order with a genuinely cross-company-code plant, confirming both billing documents post correctly, and verifying that FI documents reflect the internal payable/receivable relationship as intended by the finance team's intercompany reconciliation process.
Real project scenario
During an S/4HANA implementation for a manufacturing group, the SD consultant configures a new intercompany corridor between a UK sales organization and an Italian delivering plant. After go-live testing, intercompany billing documents fail to generate with a pricing error. Investigation shows the internal price condition record was never maintained for the Italian plant/material combination because the transfer pricing team assumed existing condition records from a different corridor would apply. The consultant works with the controlling team to load correct condition records keyed to the new plant and reruns the test orders, confirming both customer and intercompany billing documents post with correct values.
Common mistakes
• Failing to maintain the internal transfer price condition record for every new plant/material or plant/sales-org combination introduced in a rollout, causing pricing failures at cutover. • Reusing the customer pricing procedure for the intercompany billing document instead of configuring a distinct intercompany pricing procedure and price condition. • Neglecting to authorize a delivering plant for intercompany billing with a given sales organization, so the system silently never triggers intercompany billing even though company codes differ. • Setting up the internal customer master with incorrect reconciliation account or payment terms, leading to unexpected FI posting behavior for the intercompany receivable. • Copy control between delivery and intercompany billing type retaining customer pricing conditions instead of redetermining pricing with the internal condition type.
Best practices
• Maintain a configuration checklist covering plant-company code assignment, intercompany authorization, internal customer master, and pricing condition records for every new intercompany corridor before go-live. • Keep intercompany pricing procedures and condition types clearly named and separate from customer pricing procedures to avoid accidental cross-use. • Coordinate transfer price maintenance ownership between SD and controlling/finance teams since pricing conditions often originate from cost-based transfer pricing policies. • Use realistic end-to-end test orders per corridor (not just configuration review) to confirm both billing documents post with correct amounts before releasing to production. • Document the internal customer number mapping per company code pair for support teams to speed up root-cause analysis of billing failures.
Interview angle
Expect questions distinguishing the two pricing procedures involved and how the system decides which price condition to apply on which document; also expect scenario-based questions about diagnosing a missing intercompany billing document, where the expected answer walks through checking plant/company code assignment, intercompany authorization for the sales org/plant pair, the internal price condition record, and the internal customer master linkage in that order.