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E-Business Suite Customers Go Live with Optimized Transfer Pricing

As part of their drive toward global efficiencies, the first three Oracle E-Business Suite / Virtual Trader customers (Xerox, Tektronix, and a Times 100 global manufacturer) have moved to optimized transfer pricing and achieved the millions of dollars in savings as predicted.

“The Virtual Trader addition to Oracle applications has allowed us to achieve these savings without any customization and has been implemented in record time,” according to Lois Hughes, senior taxation manager at Tektronix.

Many organizations that operate internationally are transitioning to more efficient organizational structures and trading models by moving away from autonomous country operations.

Prior to this, organizations sometimes found savings through tax efficiencies by optimizing the distribution of revenue through appropriate inter-company activity. But the reverse is also true, as organizations face increasing taxation liabilities by failing to adequately control the transfer pricing within their organization—often because they lack the mechanism to achieve this control without extensive customization of their IT applications. Such customization is strongly and often rightly resisted on many grounds, but gives rise to the classic issue of the business and IT communities not being efficiently aligned.

Virtual Trader is a complementary module for Oracle E-Business Suite that provides improved control and granularity of transfer pricing without disruption to the existing operational environment or IT systems. See the Transfer Billing data sheet for more information..

For some organizations, the potential is so large that it is worth considering advanced multi-tier trading models that require the adoption of operational structures that are different from the traditional geographic structures. These more complex arrangements and the potential savings and implications are described in a companion Advanced Trading Models white paper.

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