Tuesday 21 April 2015

Internal Order Overview

Internal Order


“Internal orders” are normally used to plan, collect, and settle the costs of internal jobs and tasks.

The SAP system enables you to monitor your internal orders throughout their entire life-cycle; from initial creation, through the planning and posting of all the actual costs, to the final settlement and archiving. 

SAP has provided following tools of analysis in the SAP Controlling:

  • Cost centers: Where cost is incurred 
  • Cost elements: Which cost is incurred 
  • Internal Order: Purpose of spending 
The combination of these 3 axes provides the financial data with the needed level of details.


Internal orders can be used to
  • Monitor the costs of short-term measures 
  • Monitor the costs and revenues related to a specific service/activity 
  • Monitor ongoing costs 

Internal Order Types


Order types provide the principle functionalities and codification rules for the individual orders. Given below is the further information on the two types of internal orders available in SAP:


Statistical Internal Orders: 

Statistical internal orders are used to collect cost for reporting purposes. Cost collected in a statistical internal cannot be allocated to other cost objects. Object used to monitor costs and, in some instances, revenues for an organization. You use the statistical order to evaluate costs which cannot be itemized in detail in cost element or cost center accounting.



Real Internal Orders: 

Every posting on a cost element is posted into only one “real” CO analytical object. This means that the charge could be re-allocated / transferred to another CO object afterwards.


Transaction Code: KO01


Settlement

An internal order is usually used as an interim collector of costs and an aid to the planning, monitoring, and controlling processes needed. When the job has been completed, you settle the costs to one or more receivers (cost center, fixed asset, profitability segment, and so on).

Only Real Internal Order can be settled and there is no need to settle Statistical Internal Order.

To be able to settle an order, you must have saved a settlement rule in each of the senders. This settlement rule determines where the costs are to be settled to. You can achieve this in two ways:

Settlement to One Receiver
You use this basic form of order settlement to completely settle the costs collected on the internal order. This is either to a cost center, or a G/L account under a settlement cost element. The system generates the appropriate settlement rule from the information contained in the internal order master data.

Comprehensive Settlement
Definition of a comprehensive settlement rule gives you more settlement possibilities, for example, you can: 
o   Settle costs to a wide range of receivers (project, SO, profitability segment, and so on).
o   Specify how the costs are to be distributed between receivers.


Tags#
Internal Order Settlement, Real Internal Order, SAP Internal Order, Statistical Internal Order, 

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I am SAP FICO Consultant with 7+ years of SAP experience having done 4 Projects.