GANESH SAP SCM

Dear All,

In this blog, I am providing the key differences between Inter company STO and Inter Company Sales Process with regular PO and SO. I hope this will give a good idea for you.

Inter Company Stock Transport Order:

• Purpose: Primarily used for transferring stock between plants or storage locations belonging to different company codes within the same enterprise.
• Process: A single document (STO) with PO document type NB handles both the goods issue from the supplying plant and the goods receipt at the receiving plant.
• Financial Impact: Generally, no financial postings are made at the time of the STO. Instead, a statistical posting may occur for internal tracking purposes. The actual financial settlement often happens periodically through intercompany billing.
• Pricing: Typically involves transfer prices determined by internal agreements or cost-based methods.
• Movement Types: 643 (Goods issue from supplying plant) and 101 (Goods receipt at receiving plant) for two step process. There is one step process with movement type 645. In this process, as soon as the supplying plant is posted the GI with 645, 101 documents will be posted immediately.
• Advantages:
  • Simplified process with a single document.
  • Less financial complexity during the transfer.
  • Suitable for frequent stock movements within the enterprise.
• Disadvantages:
  • Limited financial visibility during the transfer.
  • Not ideal for scenarios where legal requirements necessitate distinct sales and purchase transactions.

Inter Company Sales with Purchase Orders:

• Purpose:  Used for simulating a sales transaction between different company codes, even if they belong to the same enterprise.
• Process: Involves two separate documents:
  • A sales order is created in the selling company code, triggering a delivery and billing process.
  • A purchase order is created in the buying company code, leading to a goods receipt and invoice verification process.
• Financial Impact: Complete financial postings are made on both sides (revenue and cost) at the time of the transaction, resembling a normal sales process.
• Pricing: Often involves market-based or negotiated prices, like external sales.
• Movement Types: 601 (Goods issue for sales order), 101 (Goods receipt for purchase order)
• Advantages:
  • Detailed financial transparency with immediate postings.
  • Accurate reflection of revenue and cost for each company code.
  • Better alignment with legal and tax requirements for intercompany transactions.
• Disadvantages:
  • More complex process involving multiple documents and steps.
  • Increased administrative overhead.

Which One to Choose?

The decision depends on your specific business requirements and processes:

• Intercompany STO:  Preferable for frequent stock transfers within the same enterprise where detailed financial postings aren’t immediately necessary.
• Intercompany Sales with Purchase Orders: Ideal when you need clear financial visibility, want to mimic a regular sales process, or must comply with legal/tax regulations demanding separate sales and purchase transactions.

I hope you learn something today. You can share with your circle to help someone today.

Thanks and Best Regards,

Ganesh