This is the first part in the 3 part series of Cross Charge in Oracle Projects.
What is Cross Charge?
The act of charging costs directly to a project outside your own organization, operating unit, ledger, legal entity or
business group. Cross charge is the act of entering a transaction where the expenditure organization and project/task
owning organization are different.
For Example –
Employee – John Doe belongs to Services Organization
He is working for a Project – “Implementation Services in Japan” which belongs to a different organization “Tokyo Org”
If he enters a Time card/Expense Report against this project, this is a cross charge transaction.
Cross Charge Terminology
1. Borrowed and Lent – A method of processing cross charge transactions that generates accounting entries to pass
cost or share revenue between the provider and receiver organizations within a legal entity.
2. Cross charge transaction – An expenditure item whose provider operating unit is different from the receiver
operating unit, the provider organization is different from the receiver organization or both.
3. Cross charge type – There are three types of cross charge transactions
a. Intercompany (across legal entities)
b. Inter–operating unit(across operating units)
c. Intra–operating unit (within a single operating unit).
4. Intercompany billing – A method of internally billing work performed by a provider operating unit and charged
to a project owned by a receiver operating unit. The provider operating unit creates a Receivables invoice, which is
interfaced as a Payables invoice to the receiver operating unit.
5. Provider operating unit – The operating unit whose resources provide services to another project or
organization. (Expenditure operating unit)
6. Provider organization – For cross charge transactions, the organization that provides resources to another
organization. The default is the expenditure organization or the non–labor resource organization, which can be
overridden using the Provider and Receiver Organization Override client extension.
7. Receiver operating unit – An operating unit whose projects receive services from another project or
organization. (Project operating unit)
8. Receiver organization – The organization whose project (task) receives services from another project or
organization. (Task owing organization)
9. Transfer price – The price agreed upon by the provider and receiver organizations in a cross charged transaction
Cross Charge Processing Methods
Borrowed and Lent Accounting – This processing method can be used for cross charge transactions between
different Operating units within same legal entity (Inter-operating Unit) or between organizations within same
Operating unit (Intra-Operating Unit).
Project just creates accounting entries to pass costs and revenue across organizations without generating internal
Intercompany Billing Accounting – Using this method, Projects generates physical invoices and corresponding
accounting entries at agreed upon transfer prices between internal seller (provider) and buyer (receiver)
organizations when they belong to different legal entities or operating units.
No Cross Charge Process – This method will not result in any cross charge processing for transactions that cross organizations