Hi everyone,
In our current business model, we are using intercompany orders to exchange products between two legal entities: a subsidiary (which sells the products to the final customer) and headquarters (which buys the products from the original vendors). I reviewed the official documentation on this topic
here, and it seems that we are employing a "three-legged order chain":
"When Company A first creates a sales order for an external customer, a purchase order can be created automatically in Company A. This, in turn, prompts the automatic creation of an intercompany sales order in Company B. The three-legged order chain consists of a sales order and a purchase order in Company A and an intercompany sales order in Company B."
Additionally, we manually create an initial purchase order in Company B, which buys the products from the original vendors before making transactions with customers in Company A. Here's the sequence of our transactions:
- Vendor Purchase Order: Created in Company B (headquarters) to buy the product from the vendor (handling product master, variant, item creation, inventory, etc.).
- Customer Sales Order: Created in Company A (subsidiary) to sell the product.
- Intercompany Orders: Using the Direct Delivery feature (implementing a dropshipping type), a PO is created in Company A and a SO in Company B since the product is not owned by Company A.
- Invoicing: The customer is invoiced using the customer sales order created in step 2. No further procedure is done.
My confusion arises from whether we should be doing anything else with the intercompany orders. We invoice the customer using the initial sales order (status set to Invoiced), but the intercompany PO remains Received and the intercompany SO remains Delivered. From my understanding, it appears that we are not completing the inventory transactions or handling cost allocations between both companies, as these intercompany orders are not processed or reviewed by our team. At the end of the month, we manually create a sales order between the two companies using a dummy product to balance costs. This dummy product is linked to an internal account specifically for cost allocation between companies within the same branch, rather than the accounts used for normal business revenue. This approach feels redundant, as I don't believe this would be the standard process for every company using D365FO.
Additionally, our products are not physical items (they are services) but were set up as such during D365 implementation. If we change from physical inventory to services, would we still need to use intercompany orders to manage inventory shifts between companies, or would this simplify our entire process (I assume there would not exist any more product receipts, packing slips, etc.)?
