Intercompany Billing 
You use this function to generate invoices for billing between units within an organization. You need to do this if the unit that receives an order does not deliver the product, but the product is instead delivered by another unit that is within the same organization but in a different company code (usually in another country). In addition to the customer invoice, the system can generate an invoice for the supplier to bill the seller.
You can also generate intercompany (IC) invoices if there are multiple intermediaries within the same group that need to bill each other for their participation in processing a sales order.
Integration
Data from the customer invoice and IC invoice is transferred to accounting and controlling in SAP ERP.
Prerequisites
You have made the required settings in Customizing, by choosing
Customer Relationship Management
Billing Intercompany Billing.
Features
Single-Level Intercompany Billing
In this type of IC billing process, the supplier bills the seller. The system automatically performs IC billing if the vendor entered in the order is in a different company code than the sales organization in the order.
The following figure shows an example of the billing chain in single-level IC billing:
In the example shown above, a customer orders goods from a company in USA. These goods are delivered directly to the customer from a Malaysian plant, which is part of the same group as the US company, but in a different company code. The US company triggers delivery from the Malaysian plant and the following invoices are automatically generated:
A customer invoice from the US company
An intercompany invoice from the Malaysian plant, billing the US company
Multi-Level Intercompany Billing
In this type of IC billing process, the supplier does not directly bill the seller. Instead, it bills an intermediary within the group, which in turn bills the seller. This process can also function with more than one intermediate bill-to party, resulting in a chain of bill-to parties.
You define the billing chain in Customizing (see "Prerequisites" above).
The following figure shows an example of the billing chain in multi-level IC billing:
In the example shown above, two intermediaries are involved in processing the sales order. A customer orders goods from a company in USA, which sources its goods from a European company. These goods are delivered direct to the customer from a Malaysian plant.
The following invoices are generated:
A customer invoice the from company in USA
An intercompany invoice from the European company, billing the US company
An intercompany invoice from the Malaysian plant, billing the European company
Cancellation of Intercompany Invoices
When a sales order item or delivery item is canceled, IC invoices are automatically canceled. You can also cancel IC invoices in billing, for example, in order to make a correction. You can cancel IC invoices in billing independently of customer invoices for the same sales order.
If data from a canceled IC invoice has already been transferred to accounting, the system issues a credit memo to correct the accounting data.