As Virtual Trader was specifically designed to resolve intercompany problems, all of the functionality it provides for tangible goods, are equally available for use on service related transactions.
Finished Product & Spares
Virtual Trader handles intercompany on standard finished product and accommodates Intercompany activity based on various inventory-costing methods, including estimated costs potentially external to the host Oracle system.
It also handles spares items, which may carry the same item number but be charged at a different cost than finished goods.
Spare parts can also be a challenge where separate transfer prices may be needed even where the item number is the same. The use of client-defined qualifiers within transfer pricing allows Virtual Trader to recognize such distinctions and apply discrete pricing for each business scenario.
Virtual Trader handles the intercompany activity on ‘intangibles’ such as services. It accommodates the intercompany activity that arises where the service provider is different to the selling entity.
All the normal trading models such as Buy/Sell, commissionaire and commission agent etc. can equally be applied to service items as they can to product items.
Warranty, Support Contracts & Deferment
Warranty and support activities can often prove a challenge in traditional ERP systems. As these are non-shippable items, this alone can raise difficulties in creating the intercompany that should result from a sales of a service or warranty, where the billing entity is not the entity supporting the service or warranty.
Organizations are also moving towards accounting for the intercompany in line with the recognition of the trade revenue, which in most cases is on a period basis.
Virtual Trader can accommodate this by driving the intercompany accounting off the trade revenue recognition accounting.
The ownership and application of intellectual property rights has become a key feature of international trade. This devise promotes control over the distribution of revenue recognition across different tax jurisdictions.
Virtual Trader supports the automation of intellectual property charges arising from the provision of either products or services.
Virtual Trader can determine Intellectual property ownership based on business scenario, rather than fixed by the goods or service owner.
Projects & Labor Pooling
Within project-oriented organizations, specialized manufacturing and labor pooling are becoming more common. The efficiency gained by staffing projects from shared labor pools increases the intercompany activity within the organization.
Virtual Trader can automate such intercompany requirements within project based activities, and can accommodate the multi-tier requirements that can often arise on large-scale ventures.
Software & Subscription
The sale of software and subscriptions provides a number of challenges. Usually classed as a non-shippable item, subscription can be billed on a period basis, and evaluating an effective Cost-Of-Goods sold value can be problematic.
Virtual Trader is not tied to the shipping event, and thus can create intercompany for non-shippable items, and create it on a schedule that is suitable to the business application.
As the intercompany accounting and transfer pricing is configurable, Virtual Trader can be deployed to evaluate an appropriate value for Cost-Of-Goods sold where standard cost is inappropriate, based on business scenario.
Evaluating the intercompany requirements on internet sales creates a number of challenges. Firstly, the need to evaluate the legal owner of the sale and the intercompany activity associated with the point of supply. Secondly, there could also be separate transactions associated with intellectual property. Finally evaluating the transfer price on each tier of the intercompany activity.
Virtual Trader uses business rules to evaluate each of the components of the intercompany activity. This starts with evaluating the legal ownership of the sale and the number and trading partners of any intercompany steps. This can include associated intellectual property recharges.
Defining the transfer price on each intercompany tier allows full control over the distribution of revenue across tax jurisdictions.