I - Other operating Gains & Losses: General principles 

2. Administrative and Commercial costs

Content

• R33200 - Shared service function costs invoiced
• R33400 - Shared service function expenses (function costs at the origin)
• R33310 - Administrative expenses (non-functions)
• R33210 - GBU dedicated costs cross-charged
• R33320 - Commercial expenses
• R33330 - Impairment on trade receivables
• R33800 - Administrative and Commercial expenses depreciation

Shared service function costs invoiced (R33200)

Is used for tracking function costs that are invoiced to the various legal entities.

Re-invoicing of costs for the purpose of centralizing costs for global services (in relation with the transfer price scheme).

Shared service function expenses (function costs at the origin) (R33400)

It regroups all administrative expenses within the Profit & Loss (P&L) statement of corporate functions (it includes the Corporate Guarantee between the GBUs and CBS).

The costs of the following business support activities (which includes the relevant MBU organization) are included in R33400 Shared service function expenses (function costs at the origin) when they are part of the corporate function. When these costs are reported in the P&L of the GBU, they must be reported in R33310 - Administrative expenses (non-functions)

• Finance 
• Procurement
• Human Resources
• Industrial 
• Communication
• Digital & IT
• General counsel
• Government Public Affairs
• Facilities
• General management
• Group Security
• Strategy
• Sustainability
• Transformation

Note: The organization between GBUs and functions depends on the current organization and may change over time. 

Administrative expenses (non-functions) (R33310)

It regroups all administrative expenses within the Profit & Loss (P&L) statement of a Global Business Unit (GBU). These expenses encompass the costs related to resources that may be located at the headquarters or in the plants, as long as their scope of activities extends beyond the site.

The costs of the following business support activities (which includes the relevant MBU organization) are included in R33310 - Administrative expenses (non-functions) when they are part of the P&L of the GBU. When these costs are reported in the corporate function, they must be reported in R33400 Shared service function expenses (function costs at the origin)

• Finance 
• Procurement
• Human Resources
• Industrial 
• Communication
• Digital & IT
• General counsel
• Government Public Affairs
• Facilities
• General management
• Group Security
• Strategy
• Sustainability
• Transformation

Note: The organization between GBUs and functions depends on the current organization and may change over time. 

It also includes the delta bonus

GBU dedicated costs cross-charged (R33210)

This heading is used for isolating the invoicing of GBU function costs. The total should be zero at period-end (at Group level).

Commercial expenses (R33320)

It includes the listed below support activities (which includes the relevant MBU organization):

Sales and Marketing Costs:

Sales Force:

• • Present and sell various product qualities
  • Determine and select contacts for optimal market coverage
  • Identify customer needs and provide solutions in line with commercial strategy
  • Implement commercial strategy to achieve market share and customer satisfaction goals
  • Collect and share market trends with GBU to inform action plans and product/market strategies

Commercial Management and Marketing:

• • Commercial management and secretarial staff
  • Customer segmentation and classification
  • Establishing base sales conditions and market prospecting methods
  • Analyzing, synthesizing, and distributing market and product sales information
  • Defining product strategies, commercial objectives, and product-mix development
  • Creating sales plans, advertising actions, and managing key account contacts

Commission Expenses on Sales:

• • Collecting expenses of commissions paid on sales

Technical Assistance to Customers (ATC) / Business Development Managers:

• • Providing technical support to optimize and diversify existing products
  • Coordinating technical aspects of products

Supply Chain Costs:

Forecasting, Planning & Scheduling GBU/Global Level:

• • Forecasting and demand sensing
  • Sales and Operations Planning (S&OP)
  • Supply Operation Execution (S&OE)
  • Stockholding strategy and implementation
  • Inventory spare parts reduction (MRO)
  • Planning integrated system (Dynasys modules)

Inbound, Outbound Logistics / Logistics Operations:

• • Warehousing (structure and operations)
  • Cost optimization
  • Packaging
  • Customs and Trade Excellence
  • Diagnostic
  • Operating Model design

Operating Model design

• • Customer segmentation
  • Complaint management
  • Special customer requests

Impairment on trade receivables (R33330)

= write-down and reversal on trade receivables, i.e. adjustments made by an entity to the amounts of its trade receivables that are judged doubtful or un-collectable. The accounting principles related to write-downs apply to undoubted losses (receivables definitely lost) or to potential losses (doubtful receivables).

• Write-downs, i.e.:
  • Customer receivables written off on an analytical basis, i.e. as a result of an individual assessment of the risk of non-collection.
  • Positive or negative adjustments to these write-offs, made when the final loss is known.
• Reversal of write-down, i.e. the total or partial cancellation of write-downs previously recorded but which no longer apply.

Examples of lost receivables (definite losses) and doubtful receivables (potential losses):

• Lost receivables:
  • Bankruptcy
  • Winding-up arrangement
  • Receivable given up following arrangement with the debtor
  • Doubtful receivables:
    • Protested draft
    • Repeated formal notices having no effect
    • Exhaustion of normal means of litigation (without interruptive effect of the prescription)
    • Transmission of the file to an attorney or to a recovery office of receivables

The existence of a credit insurance contract covering all or part of a receivable does not exempt from the company the obligation to account for a write-down when it appears that the receivable is definitively lost or is doubtful.

Should there be a surplus of write-down reserves compared to the real risk, in the case of a global calculation authorized by some tax legislations, this surplus ought to be accounted for in the local Books, not in Central Reporting.

See examples of postings

Administrative and Commercial expenses depreciation (R33800)

Depreciation of:

• tangible assets and intangible assets directly related to the administrative and sales activity
• software used in sales and administrative activities
• brands
• tangible assets used by the sales and administrative departments (premises, equipment…)
• lease rights for administrative premises