Financial Impact of Invoice Verification During Procurement Process
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Financial Impact of Invoice Verification During Procurement Process
Figure 4-28: Financial impact of invoice verification
The purchase order history is also updated, and a link to the invoice document is added. Finally, if the invoice price is different from the price
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in the purchase order, then the material master must be updated to refl ect this discrepancy, if the moving average price is used for price control. Recall that when a goods receipt is recorded, the quantity, value, and moving aver- age price are updated in the material master. When an invoice is received and the price is different from the one listed in the purchase order, the mate- rial value and moving average price must be adjusted to refl ect the new values.
Invoice verifi cation provides the linkage between materials management and accounting. It authorizes payment of the invoice to the vendor, which is the next—and fi nal—step in the procurement process.
Demo 4.10: Receive and verify an invoice
PAYMENT PROCESSING
Figure 4-29 diagrams the elements of the fi nal step in the procurement process—namely, paying the vendor. This step is triggered by the receipt and verifi cation of an invoice.
Payments can be made manually or automatically via a payment pro- gram. Typically, an organization will have a number of invoices to pay, and the most common method is to execute a payment program periodically, such as daily or weekly. The program will retrieve all authorized invoices over a speci- fi ed timeframe and automatically create payments.
Data
Figure 4-30 highlights the data needed to process vendor payments. Data from the invoice include the date, the vendor number, and the invoice amount. In addition, payment terms, method, and address are obtained from the vendor master. The dates of the invoices are compared with the payment terms and the date of the next scheduled run of the payment program in order to deter- mine which invoices are due for payment.
Figure 4-29: Elements of the payment step
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Tasks
Processing payment involves several steps: selecting a payment method and a bank, deciding which invoices are ready for payment, calculating payment amounts, posting the payment documents, and printing the payment
medium. When making payments manually, the user will select the payment method and the bank and will provide the vendor number and the amount of the payment. The system will then display a list of open invoices for
that vendor. The user will next select the invoices that are to be paid. Any applicable discounts based on payment terms are then applied. For example, if the payment term is 2%/10Net 303 and payment is being made
within the 10 days specified in the terms, the system will apply a 2% discount. Once the payment is posted in the general ledger, the actual payment can be sent. If payment is made electronically, the system will
automatically send the payment. If it is to be made via a printed check, the user will print and send the check to the vendor.
If the company has an automated payment program, then the program will retrieve and process all of the invoices that are due for payment using the parameters specified in the payment program. Users typically become involved only if there are exceptions that require special resolution.
Outcomes
One obvious outcome of this step is payment to the vendor, either electronically or via a check. Appropriate general ledger accounts are also updated, as shown in Figure 4-31, and a corresponding financial accounting
document is created. As the fi gure indicates, the bank account is credited by the amount of the payment, and the vendor account is debited, as is the associated accounts payable reconciliation account.
3The term 2%/10Net30 indicates that payment is due within 30 days of receipt of the invoice and that a 2% discount may be taken if payment is made within 10 days of receiving the invoice.
Figure 4-30: Data needed for vendor payment
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Demo 4.11: Make payment to vendor
INTEGRATION WITH OTHER PROCESSES
It should be clear from the preceding discussion that the procurement process is highly integrated with several other processes within an organization. Some of these integration points, such as with fi nancial accounting,
were explained in detail, while others were briefl y mentioned. We elaborate on these other inte- gration points in later chapters. Below we briefl y summarize how procurement is linked with the other processes. Figure 4-32
illustrates these linkages.
The vendor master record is jointly maintained by purchasing and accounting. In addition, several steps in the procurement process, such as goods receipt, invoice verifi cation, and payment processing, impact general
ledger accounts. Further, when a company purchases materials for consumption, it uses a controlling object such as a cost center — which is related to manage- ment accounting — to charge groups or departments for the
purchase.
Activities in materials planning, production, fulfi llment, enterprise asset management, and project management generate purchase requisitions that are processed by the procurement process. Objects in these processes,
such as sales orders and production orders, are then charged for the materials purchases. Finally, procurement involves materials movements and quality inspections that are the domain of inventory and warehouse
management.
REPORTING Standard reporting tools in the transactional system are used to generate both online lists based on selected master data and documents and work lists to identify pending work associated with various process steps.
Figure 4-31: Financial impact of vendor payment
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ONLINE LISTS
Online lists can be manipulated using the various functions of the list viewer or grid control that were explained in Chapter 2. An example of an online list is provided in Figure 4-33, which displays a series of invoices for a
specifi ed date range. Double-clicking on the document number will display the invoice document. Data in the list can be sorted, grouped, and summed, as explained in Chapter 2.
Figure 4-32: Integration with other processes
Figure 4-33: List of invoices. Copyright SAP AG 2011
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WORK LISTS
Recall that work lists display work that is to be completed. An example of a work list in purchasing is provided in Figure 4-34. This fi gure shows a list of purchase requisitions that are open. The task to be completed is to
assign a source of supply, that is, a vendor who will supply the needed materials.
Financial Impact of Invoice Verification During Procurement Process
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