Internal Order in SAP – An important part of SAP CO

What is Internal Order in SAP?

Internal Order in SAP is used to represent projects in Controlling. If we compare with cost centers, we use Internal Orders temporarily. Internal Orders don’t reflect the organizational structure instead they represent for example research and development projects, exhibition events or SAP implementation projects.

Noteworthy, that you can’t create complex structures with Internal Orders, so if you need to create project hierarchies. It’s worth checking out the project system module in SAP ERP. However, you can post both revenues and expenses to an internal order, which enables you to check the profitability of a project at first glance. You can control spending with the help of availability control.

Before you can use Internal Order in SAP, you need to activate the Order Management component in the controlling area.

Internal Order Transaction Code

The Tcode for Internal order in SAP is OKKP. (Remember it for your SAP CO interview purpose).

Master Data is what enables you to create Internal Orders. Here we will see how to configure it so that you can create and use internal orders.

Learn: popular Tcodes in SAP FICO

Types of Internal Order in SAP

The type of Internal order in SAP Controlling determines not only the screen layout and the number ranges but also the functionality of the internal order. There are different types of orders.

Real internal orders or internal orders with revenue postings

Unlike the Cost Centers in SAP, internal orders can receive revenue postings. For instance, we use Internal orders with revenue postings for specific customer projects or intercompany recharges. This helps us to have a control that determines whether the system have already recharged costs or not.

Statistical Internal Order

We assign statistical orders to a cost center. We post Costs both on the cost center and Statistical internal order. It is not possible to settle Statistical internal orders. We can create a Statistical internal order and assign it to the marketing cost center.

However, the real posting is on the cost center. For example, if we have a marketing cost center and want to see the media (flyers, billboards and flairs) costs. We then create one Statistical internal order each for these flyers, billboards and flairs and design those Statistical internal orders to the marketing cost center.

Internal Orders for Investment

We use Internal orders for investments to display Assets Under Construction (AUC). While we can settle costs directly to Asset Accounting. We still have to assign every internal order to an AUC, which the system creates automatically with the order. There are also many more possibilities for internal orders for investment, especially in the investment management module.

You can create an order type by using Transaction KOT22_OPA.

Different Status of Internal Order in SAP CO

in SAP Controlling, Internal Orders have a status that is driven by the status profile assigned to the internal order type. The internal order has a system status and a user status.

In general, the system status for internal orders has seven main statuses:-

1. CRTD– Ststem crerates order. Doesn’t all any actual postings. Allows Planning and budgeting.
2. BUDG– System allocates budget to the order. As soon as a budget for the order is maintained, the internal order gets the status BUDG
3. REL– System releases the Order. Also allows actual postings.
4. TECO– Order is technically complete. We cannot assign any purchase orders to internal order anymore. While we can still do Postings.
5. CLSD– Here Order is closed. System doesn’t allow to do any more business transactions. Only allows settlement of internal orders with status REL or TECO.
6. LKD– Order is locked. Cant do any more business transactions. Also the set of the deletion flag is not allowed when the order is locked.
7. DLFL– Order is marked for deletion. We can set the deletion indicator.

Internal Order Planning

Let’s discuss the planning functions of Internal Orders. The following section shows you the different ways to plan internal orders as well as the major planning aids.

Planning Integration

In the internal Order, you find a characteristic called plan-integrated order. This ensures that we can update the activity inputs in planning directly on the cost center. When we have these characteristics activated, we can also settle internal orders in the plan. For technical reasons, we cant set these characteristics for statistical internal orders.

Budgeting

You learned how to maintain planning data on internal orders. You can control the planning data with the help of plan/actual comparisons in different reports.

In addition to the planning, we can budget the internal orders. These can be year-independent budgets or year-based budgets.

Further, a budget is a commitment to not exceed the actual cost. Also, the budgeting is activated in assigning a budget profile to an internal order type.

Tcode to create a budget profile for Internal Order in SAP is – OKOB

Steps to create

IMG => Controlling => Internal Order => Budgeting and Availability Control => Maintain Budget Profile => Maintain Budget Profile- Click on the new entry to create a Budget profile.

After the creation of the budget profile, we have to assign it to the internal order type. Transaction Code- KOAB.

Maintain Budget

To maintain a budget on an internal order, you first need to create internal order. You don’t necessarily have to release an order to be able to maintain a budget for single internal order or an order group. T code – KO22.

Actual Postings

There are two types of internal orders:

• Real orders and
• Statistical internal orders.

While internal orders also allow revenue postings and can be settled, statistical internal orders can do neither. They only receive postings statistically the real postings go to a cost center.

However, Statistical orders enable you to differentiate costs on a cost element within a cost center. For example, if you have a cost center for marketing costs and you have different brands you can create a statistical internal order by brand and hence do reporting at the brand level.

T Code- KO01

If you select the Statistical Order checkbox, the internal order requires another account assignment in addition to the internal order assignment when posting. You can either enter a cost center in the Actual Posted Cost center field or leave the field empty.

If you enter a cost center, the system does not require an additional cost center when posting to the internal order. If you leave this field empty, you need to enter a cost center in addition to the internal order during posting.

Summary

Internal order in SAP is a short living cost object used in and part of Controlling.

In this blog, we discussed different functionalities for Internal Orders.  Internal Orders can have plan data and budget data. We learned the difference between planning and budgeting and how to use the availability controls across modules to make sure your budget won’t exceed. We also discussed the difference between real internal orders and statistical internal orders and their usage.

Understanding the internal order concept is important if you want to learn SAP CO perfectly as it is a very important component of SAP Controlling.

Internal Order is closely associated with another key component of CO i.e. Profit Center Accounting. As we can transfer the cost to Profit Center from internal order for profitability management. Thus, learning this also helps you in doing work upon other elements of SAP Controlling as well.

Watch the related video to this article