SAP SD Intercompany Sales — Two Companies, Two Invoices
The flow · configuration · PI01 → IV01 transfer pricing · postings · troubleshooting · Last updated September 2026
Intercompany sales happens when a customer buys from one company in a group, but the goods ship from a plant that belongs to another. The customer sees an ordinary sale. Inside SAP, two company codes, one delivery and two invoices are quietly working together.
It is one of the most asked-about processes in SD interviews, because it cuts across company codes, plants, pricing and FI at once. This guide walks through the five-step flow, every configuration step, how the transfer price travels from the order to the intercompany invoice, what each company posts, and what to check when the intercompany invoice never appears.
On this page
What intercompany sales is
Large groups rarely keep stock in every legal entity. A sales company in one country may sell to local customers while a manufacturing company in the same group holds the stock. Rather than moving stock between the companies first, the order is simply fulfilled from the other company’s plant.
That creates a legal and accounting obligation: the supplying company has given up goods it owns, so it must be paid by the selling company. SAP handles this automatically with a second invoice between the two companies, priced at an agreed transfer price.
The one-line version: the order is intercompany when the delivering plant belongs to a different company code from the sales organisation. Everything else in this guide follows from that one fact.
The five-step flow
Scroll the diagram sideways to see all of it →
SAP SD intercompany sales: the order and customer invoice sit in the selling company; the delivery, goods issue and intercompany invoice sit in the supplying company.
Sales order
Company A (selling)The customer orders from company A’s sales organisation. The delivering plant on the item belongs to company B. That single fact — a plant from another company code — is what makes the order intercompany.
Delivery and goods issue
Company B (supplying)The delivery ships from company B’s plant. Because the plant belongs to B, goods issue posts in B’s books: inventory reduces and cost of goods sold is recorded in company B.
Customer invoice (F2)
Company A bills the customerCompany A invoices the end customer at the normal customer price. From the customer’s point of view this is an ordinary sale — they never see company B.
Intercompany invoice (IV)
Company B bills company AA second billing document is created from the same delivery, with billing type IV. The payer is an internal customer that represents company A, and the price is the agreed transfer price rather than the customer price.
Vendor invoice
Company A records the payableCompany A records B’s invoice as a supplier invoice, creating a payable to company B. This is posted manually in MM invoice verification, or automatically where EDI between the two companies has been set up.
Configuration step by step
Allow the plant to deliver for the selling sales area
Sales and distribution → Master data → Define delivering plant / assign plant to sales org + distribution channel
Company A’s sales organisation and distribution channel must be allowed to use company B’s plant. Without this assignment the plant cannot be proposed on the order at all.
Assign organisational units by plant
SD → Billing → Intercompany billing → Assign organizational units by plant
Tells SAP which sales organisation, distribution channel and division company B uses to bill from this plant. The intercompany invoice is created in that sales area.
Define the internal customer
SD → Billing → Intercompany billing → Define internal customer number by sales organization
Each ordering sales organisation is represented by a customer (a Business Partner in S/4HANA) in company B’s sales area. This customer is the payer on the IV invoice.
Assign the intercompany billing type to the order type
SD → Billing → Intercompany billing → Define order types for intercompany billing
Assigns billing type IV to the sales document type (for example OR), so that deliveries from these orders become relevant for intercompany billing.
Maintain copy control from delivery to IV
VTFL → delivery type LF → billing type IV
Just like F2, the intercompany invoice is created with reference to the delivery, so the delivery type to IV combination needs copy control at header and item level.
Set up transfer pricing
Pricing procedures + VK11 condition records for PI01
PI01 sits in the customer’s pricing procedure as a statistical condition; IV01 in the intercompany pricing procedure picks up that value. Maintain the PI01 condition records for the delivering plant and material. Details in the next section.
Where this goes wrong on projects: intercompany is usually configured once, early, for the first pair of companies. Months later a new company code or plant goes live and the internal customer and plant assignment are forgotten — orders deliver fine, and the missing intercompany invoices are only noticed at month-end reconciliation.
Transfer pricing: PI01 and IV01
There are two prices in every intercompany sale: what the customer pays company A, and what company A pays company B. They live in two different pricing procedures, and the transfer price is handed from one to the other.
PI01 / PI02 — statistical
PI01 is the transfer price as a fixed amount per unit, maintained in VK11 for the delivering plant and material. PI02 is the percentage-based alternative. Both are statistical in the customer’s pricing procedure — visible for margin analysis, never charged to the customer.
IV01 / IV02 — the real price
The IV invoice uses its own pricing procedure — standard ICAA01, often copied on projects. There, IV01 picks up the PI01 value and IV02 picks up PI02. On this invoice the transfer price is not statistical: it is what company B charges company A.
The chain to remember: PI01 on the order → IV01 on the intercompany invoice. If PI01 has no value on the order, IV01 has nothing to pick up and the intercompany invoice comes out at zero. When the IV price is wrong, always look at the order first.
Who posts what
Four accounting events, split across the two company codes. Being able to say which company posts each one is the clearest sign you understand the process end to end.
| Event | Company code | Posting |
|---|---|---|
| Goods issue | B — supplying | Debit cost of goods sold, credit inventory. Posts in B because the plant belongs to B. |
| Customer invoice (F2) | A — selling | Debit the end customer’s receivable, credit sales revenue at the customer price. |
| Intercompany invoice (IV) | B — supplying | Debit the receivable from the internal customer (company A), credit intercompany revenue at the transfer price. |
| Vendor invoice | A — selling | Debit the cost of the goods bought from B, credit the payable to company B. |
The IV posts through revenue account determination like any other billing document. That is why the internal customer is normally given its own account assignment group — so intercompany revenue lands in its own G/L account, separate from external sales, and can be eliminated cleanly at group level.
Intercompany vs third-party vs STO
All three move goods that did not come from the selling company’s own stock, which is exactly why they get confused — and why interviewers like to ask you to compare them.
| Intercompany sales | Third-party sales | Intercompany STO | |
|---|---|---|---|
| Who ships | A plant of another company code in the same group | An external vendor, directly to the customer | The supplying plant, to the receiving plant |
| Who is the customer | An external customer | An external customer | Internal — the receiving plant |
| Triggered by | A sales order | A sales order that creates a purchase requisition | A stock transport (purchase) order |
| Invoices | F2 to the customer and IV between the two companies | F2 to the customer; an invoice from the external vendor | IV between the companies when they are different company codes |
| Goods movement in your books | Goods issue in the supplying company | None — the goods never enter your plant | Goods issue in the supplying plant, goods receipt in the receiving plant |
| Key SD objects | Billing type IV, internal customer, PI01 / IV01 | Item category TAS, schedule line category CS | Delivery type NL / NLCC (cross-company) |
Third-party sales is driven entirely by the item and schedule line: item category TAS (see item category determination) and schedule line category CS, which creates the purchase requisition (see schedule line category determination). Intercompany sales, by contrast, uses a completely standard item — what changes is the plant.
Troubleshooting
The intercompany invoice never appears in the billing due list
- ·Billing type IV is not assigned to the sales document type
- ·No organisational units assigned to the delivering plant, so SAP has no sales area to bill IV from
- ·No internal customer defined for the ordering sales organisation
- ·Copy control from the delivery type to IV is missing
- ·Goods issue has not been posted yet — the IV is normally billed after goods issue, like F2
Fix: Work through the configuration list above in order. The internal customer and the plant assignment are the two most often forgotten on a new company code.
The IV is created but the transfer price is zero
- ·No PI01 condition record for the delivering plant and material
- ·PI01 is missing from the order’s pricing procedure, so there is no value for IV01 to pick up
- ·IV01 is missing from the intercompany pricing procedure
- ·The IV determined a different pricing procedure than intended
Fix: Check the order first: if PI01 has no value there, the IV will not have one either. Then analyse pricing on the IV itself.
The customer can see the transfer price
- ·PI01 is not flagged as statistical in the customer pricing procedure
- ·The order confirmation or invoice output prints statistical conditions
Fix: PI01 must be statistical on the customer side. It exists on the order for information and margin analysis only, never to be charged.
The IV will not post to accounting
- ·No revenue account determination entry for the internal customer’s account assignment group
- ·The posting period is closed in company B
- ·A missing profit centre or trading partner on the posting
Fix: Treat it exactly like any billing document that is not released to accounting: read the error in VF02, then check VKOA for the internal customer’s account assignment group.
The customer returns the goods
- ·A return in company A needs a matching reversal between the companies
Fix: The return order and credit memo are handled in company A; the intercompany side is reversed with an intercompany credit memo (billing type IG) from company B to company A, which A then records as a vendor credit.
What changed in S/4HANA
The core process and configuration carry over from ECC: the same flow, the same billing type IV, the same internal customer and the same PI01 → IV01 pricing chain.
What changed is around it. The internal customer is now a Business Partner. Postings land in the Universal Journal, table ACDOCA, where the trading partner and partner profit centre carried on intercompany postings are what allow group reporting to eliminate intercompany revenue and cost automatically. Get those wrong and the consolidated P&L double-counts sales.
Newer S/4HANA releases also offer additional intercompany process options beyond the classic flow described here, so it is worth checking what your specific release and deployment support before designing a new solution.
Interview questions
What makes a sales order intercompany?
The delivering plant on the item belongs to a different company code from the sales organisation that took the order. Nothing on the order is flagged “intercompany” manually — SAP recognises it from the plant’s company code versus the sales organisation’s company code.
How many billing documents are created in intercompany sales, and between whom?
Two, both with reference to the same delivery. The customer invoice (F2) from the selling company to the end customer at the customer price, and the intercompany invoice (IV) from the supplying company to the selling company at the transfer price.
Where does goods issue post, and why?
In the supplying company code, because the plant belongs to it. Inventory and cost of goods sold are in the supplying company’s books, even though the selling company owns the customer relationship and the customer revenue.
What is the difference between PI01 and PI02?
Both carry the intercompany transfer price. PI01 is a fixed amount per unit, maintained as condition records for the delivering plant and material. PI02 is a percentage. They sit in the customer’s pricing procedure as statistical conditions, and are picked up on the intercompany invoice by IV01 and IV02 respectively.
Why is PI01 statistical in the sales order?
Because the customer must not pay it. It is present on the order so the transfer price is known at order time — useful for margin analysis — and so the intercompany invoice has a value to pick up. The customer is charged the normal customer price.
What is the internal customer?
A customer master record (a Business Partner in S/4HANA) in the supplying company’s sales area that represents the ordering sales organisation. It is assigned per sales organisation in intercompany billing configuration and is the payer on the IV invoice.
How is intercompany sales different from third-party sales?
In intercompany sales a plant inside the group ships the goods and the two group companies invoice each other. In third-party sales an external vendor ships directly to the customer; it is driven by item category TAS and schedule line category CS, which create a purchase requisition, and there is no goods issue from your own plant.
How is intercompany sales different from an intercompany stock transport order?
Intercompany sales serves an external customer from a sales order. An intercompany STO moves stock between two plants of different company codes, is triggered by a purchase order, and has no external customer — though it can also produce an intercompany invoice between the companies.
The IV invoice is missing from the billing due list. What do you check?
That billing type IV is assigned to the order type, that organisational units are assigned to the delivering plant, that an internal customer exists for the ordering sales organisation, that copy control from the delivery type to IV exists, and that goods issue has been posted.
How are intercompany returns handled?
Company A creates the return order, return delivery and customer credit memo. On the intercompany side, company B issues an intercompany credit memo (billing type IG) to company A to reverse the IV, and A records it as a vendor credit. Walking through both sides is what interviewers are really testing.
Where this sits in the SD landscape
Intercompany sales is a variation of the standard Order-to-Cash process that reuses almost every building block: the delivery and copy control create both invoices, the pricing procedure carries the transfer price, and revenue account determination posts the intercompany revenue. If you understand those pages, intercompany is mostly about knowing which company code each step happens in.
Frequently Asked Questions
What is intercompany sales in SAP SD?
Intercompany sales is when a customer buys from one company code in a group but the goods are delivered from a plant belonging to another company code in the same group. SAP creates a customer invoice from the selling company and an intercompany invoice (billing type IV) from the supplying company to the selling company.
What is billing type IV?
IV is the standard intercompany invoice billing type. It is created with reference to the delivery, billed to the internal customer that represents the selling company, and priced at the intercompany transfer price. Its credit counterpart is IG.
What is PI01 in SAP SD?
PI01 is the intercompany price condition type — a fixed transfer price per unit, maintained for the delivering plant and material. It appears on the sales order as a statistical condition and its value is picked up on the intercompany invoice by condition type IV01. PI02 is the percentage-based equivalent.
What is the intercompany pricing procedure?
The standard intercompany billing pricing procedure is ICAA01, which contains IV01 and IV02. It is determined for the IV invoice through normal pricing procedure determination, using the document pricing procedure on billing type IV and the internal customer. Projects frequently copy it to a custom procedure.
What is the internal customer number by sales organisation?
It is the configuration that assigns, to each ordering sales organisation, the customer number that represents it in the supplying company. That customer becomes the payer on the intercompany invoice.
Which company code posts goods issue in intercompany sales?
The supplying company code, because the delivering plant belongs to it. Inventory reduction and cost of goods sold are recorded there.
How does the selling company record the intercompany invoice?
As a supplier invoice creating a payable to the supplying company. It can be posted manually in invoice verification, or automatically where EDI between the two companies is configured.
What is the difference between intercompany sales and third-party sales?
Intercompany sales uses a plant from another company in the same group, with invoices between the two companies. Third-party sales uses an external vendor that ships directly to the customer, driven by item category TAS and schedule line category CS, with no goods issue from your own plant.
Why is my intercompany invoice not being created?
The usual causes are billing type IV not assigned to the order type, no organisational units assigned to the delivering plant, no internal customer for the ordering sales organisation, missing copy control from the delivery type to IV, or goods issue not yet posted.
Did intercompany sales change in S/4HANA?
The core process and configuration are the same as in ECC. The practical differences are that the internal customer is a Business Partner, postings land in the Universal Journal (ACDOCA), and trading partner and partner profit centre data on the postings matter for intercompany elimination in group reporting. Newer S/4HANA releases also offer additional intercompany process options, so check what your release supports.
Written by
Rahul Narain Saxena
SAP SD Solution Architect with 17+ years of hands-on implementation experience across SAP ECC and S/4HANA. Every guide on The SD Vault is written from live project experience, not summarised from documentation.
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