Trading Partner: Definition
Trading Partner is a term used in trade and commerce and is generally defined as:

One of the two or more participants in an ongoing business relationship.

 Ashish

Trading Partner (Company) setup

Trading Partner has a similar meaning in the context of SAP Finance and Controlling, and speaks about the business relationship among company codes. Trading Partner (field VBUND) should be captured in relevant master data and transactional data – this can be a key requirement for intercompany design. You can then use this data to consolidate financial statements and in reporting. Some of the transactions include elimination of intercompany sales / purchases, intercompany accounts receivable / payable.

Trading Partner field is defined in the configuration for “Company” (field RASSC) and stored in Table T880.
- Transaction OX15 – Define Company (updates T880)
- Transaction OX16 – Assign Company Code to Company

Trading Partner maintenance in master data
Trading Partner is maintained in intercompany customer and vendor masters, as well as GL accounts that are used exclusively for intercompany postings. (Whereas there usually are dedicated vendor and customer masters for intercompany transactions, there may not always be dedicated GL accounts for intercompany transactions.)

The following transaction codes are used for maintenance of trading partner on master data elements:

Trading Partner information flows automatically to transactions, once trading partner is maintained at the master data level on relevant intercompany customers, vendors and GL accounts.

However, there may be instances where a GL account may have transactions for both intercompany as well as third-party scenarios (example: Interest on loans and advances – organization can receive interest on loans from external / third party entities or from intercompany entities). It may not always be possible to define separate GL accounts for each scenario, doing so may lead to proliferation of GL Accounts.

Since the trading partner is not maintained on GL account master data and does not automatically flow to transaction data, trading partner will need to be explicitly entered at the transaction processing level. As you can imagine, it's possible that trading partner may be missed on certain transactions, thereby leading to inconsistencies and downstream impact on consolidations. Trading partner may be missed due to lack of discipline among users, lack of system checks or simply due to the quality of data sent by interfacing systems – SAP or non-SAP.

Stay tuned for Part II.

References:

1 Trading Partner definition from BusinessDictionary.com. Read more: http://www.businessdictionary.com/definition/trading-partner.html.