2.  TATA CONSULTANCY SERVICES MM - INVOICE VERIFICATION

3.  TATA CONSULTANCY SERVICES Target Group Purchase department Stores department Finance department

4.  TATA CONSULTANCY SERVICES Introduction Contents  Invoice entry and verification  Credit memo  Excise invoice  Material devaluation  Physical inventory  Inventory management information Exercises Solutions

5.  TATA CONSULTANCY SERVICES Course Goals To enter and verify vendors invoice To enter and verify vendor’s excise invoice Devaluate materials Carry out physical inventory At the conclusion of this course you will be able to:

6.  TATA CONSULTANCY SERVICES MM - invoice verification Invoice Verification in Materials Management serves the following purposes:  It completes the materials procurement process  It allows invoices that do not originate in materials procurement (for example, services, expenses, course costs, etc.) to be processed  It allows credit memos to be processed, either as invoice cancellations or discounts Invoice Verification does not handle the payment or the analysis of invoices. The information required for these processes is passed on to A/C department.

7.  TATA CONSULTANCY SERVICES Invoice verification Invoice Verification tasks include:  Entering invoices and credit memos that have been received  Checking the accuracy of invoices with respect to contents, prices, and arithmetic  Executing the account postings resulting from an invoice  Updating certain data in the SAP system, for example, open items and material prices  Checking invoices that were blocked because they varied too greatly from the purchase order

8.  TATA CONSULTANCY SERVICES Types of Invoice Verification As a rule, an invoice refers to a transaction for which the issuing party requests payment. Invoice Verification differs depending on the type of invoice involved: Invoices based on purchase orders  With purchase-order-based Invoice Verification, all the items of a purchase order can be settled together, Invoices based on goods receipt  With goods-receipt-based Invoice Verification, each individual goods receipt is invoiced separately.

9.  TATA CONSULTANCY SERVICES Types of Invoice Verification  Invoices without an order reference  When there is no reference to a purchase order, it is possible to post the transaction directly to  a material account  a G/L account  or an asset account.

10.  TATA CONSULTANCY SERVICES Data required for invoice verification The key data required for Invoice Verification is Master data Transaction data Material data Material data is information on the materials bought or produced in the company Vendor data Vendor data provides information on the suppliers a company deals with.

11.  TATA CONSULTANCY SERVICES Data required for invoice verification Accounting data Accounting data is used to define G/L accounts Transaction data Transaction data records transactions or events in the SAP system. Purchasing document Material document Accounting document

12.  TATA CONSULTANCY SERVICES Invoice data An invoice contains various information, such as:  Who issued the invoice?  Which transaction does the invoice refer to?  How much tax do you have to pay? If the invoice refers to a particular transaction, the system will automatically retrieve information pertaining to the transaction Terms of payment  Quantities to be invoiced  The amounts the system expects per item

13.  TATA CONSULTANCY SERVICES Screens for Invoice Verification The initial screen  This contains general data such as company code currency invoice reference. The vendor screen  This contains data on the vendor  The terms of payment  taxes.

14.  TATA CONSULTANCY SERVICES Screens for Invoice Verification  The selection screen  This lists the items of the transaction specified on the initial screen.  The layout of the selection screen depends on whether the invoice is based on a purchase order or a goods receipt.  Invoice Based on a Purchase Order  All the purchase order items are listed.  The quantity that is still to be billed (i.e. the difference between the quantity delivered and the quantity invoiced so far) appears as a default in the Quantity column.

15.  TATA CONSULTANCY SERVICES Screens for Invoice Verification  Invoice Based on a Goods Receipt Goods-receipt-based invoice verification must have been defined in the purchase order. If the GR-IV field on the item screen in the purchase order is not selected, the goods receipt cannot be settled in this way. There are two ways of finding the correct transaction in goods-receipt-based Invoice Verification: You can enter a delivery note number or a GR document number and the system will list the items for the goods receipts on the selection screen; you can enter a purchase order number and the system will list all the GR documents

16.  TATA CONSULTANCY SERVICES Parking the invoice Preliminary Posting You can enter an invoice (or a credit memo) without posting it and simply "park" it. If you park an invoice or a credit memo the system does not make any postings. A parked document can be changed as often as you like. When data is added or changed, the changes are noted by the system. When no further changes are required, you can then post the parked document.

17.  TATA CONSULTANCY SERVICES Parking the invoice The preliminary posting function can be of great advantage if:  You are interrupted when entering an invoice. You can park the document and continue processing it later on. This saves you time having to enter the data twice.  You wish to clear up some questions before you post an invoice. You can park the document and continue processing it later on.  You wish to split the Invoice Verification process. One employee can, for example, park an invoice without checking it, while another carries out the actual checks and posts the document after making any necessary corrections.

18.  TATA CONSULTANCY SERVICES Data Update When Posting an Invoice When you post an invoice, the system carries out the account movements and updates the following The system generates a Financial Accounting document that displays the accounts involved in the posting and the amounts posted to these accounts. The system creates a purchase order statistic for each item in the purchase order. The moving average price is updated in the material master record If the invoiced price differs from the price in the purchase order for a material with moving average price control

19.  TATA CONSULTANCY SERVICES Blocking the invoice When an invoice is blocked, Financial Accounting cannot pay the invoice. The invoice must first be released in a separate step before it can be processed. Variances in an Invoice Item Quantity variance (M) Price variance (P) Variance in order price quantity (G) Schedule variance (T) Quality inspection (I)

20.  TATA CONSULTANCY SERVICES Credit memos The term credit memo always refers to a credit memo from the vendor. Posting a credit memo always leads to a debit posting to the vendor account. Two types of credit memos are possible:  Credit memos that refer to a purchase order or goods receipt  Credit memos that do not refer to a transaction. Processing of credit memos is same as invoice verification

21.  TATA CONSULTANCY SERVICES Types of Delivery Costs In the SAP System, there are two types of delivery costs:  Planned delivery costs  They are entered in the purchase order. Provisions are set up for the relevant costs at goods receipt. The delivery costs posted at goods receipt can be referenced at invoice entry.  Unplanned delivery costs  They are only entered when the invoice is entered. No provision is made at goods receipt.

22.  TATA CONSULTANCY SERVICES Creating a excise invoice Transaction J1IA Required entries Purchase order number Excise group Vendor’s Excise invoice number Excise invoice date In the details screen you can change Description Quantity Excise duty

23.  TATA CONSULTANCY SERVICES Valuation - Lowest value determination The Lowest Value Principle The lowest value principle is a method of valuating material stocks for balance sheet purposes. The aim of this method is to valuate stocks as accurately as possible according to the recognition-of-loss principle. Profits that exist solely on the books as a result of changes in market prices are to be avoided. Expected losses are included in the balance sheet.

24.  TATA CONSULTANCY SERVICES Lowest value determination Methods In the SAP System there are various methods of determining tax or commercial prices:  lowest value determination based on current market prices system searches for the lowest price from among the various prices stored for each material.  lowest value determination based on rate of movement  lowest value determination based on range of coverage Range of coverage = average stock : average consumption

25.  TATA CONSULTANCY SERVICES Lowest value determination Calculating the Movement Rate Movement rate = Total quantity of receipts/issues : Material stock x 100 If the percentage of receipts/issues is smaller than Movement rate, the material is slow or non-moving Devaluation percentage Devaluation indicator Updating prices in the material master record

26.  TATA CONSULTANCY SERVICES Physical inventory Every company must carry out a physical inventory of its warehouse stocks at least once per fiscal year to balance its inventory Stocks that can be inventoried  unrestricted-use stock in the warehouse  quality inspection stock  Blocked stock

27.  TATA CONSULTANCY SERVICES Physical Inventory Process The process of physical inventory can be divided into three phases: Physical inventory preparation  Create a physical inventory document.  Block materials for posting.  Print and distribute the physical inventory document. Physical inventory count  counting stocks  entering the result of the count on the physical inventory document printout

28.  TATA CONSULTANCY SERVICES Physical inventory  Physical inventory analysis  entering the result of the count into the system  initiating a recount, if necessary  posting inventory differences Processing Steps  Creating a physical inventory document  Entering the Physical Inventory Count  Post inventory differences

29.  TATA CONSULTANCY SERVICES Physical inventory  posting the physical inventory count and inventory differences If a physical inventory document exists, the following are combined in this step:  The count is posted.  Any inventory differences are posted.  Posting inventory differences without reference to the physical inventory document  A physical inventory document is created.  The count is posted.  Any inventory differences are posted.

30.  TATA CONSULTANCY SERVICES Physical inventory Physical Inventory Status To monitor physical inventory processing, each physical inventory document records the inventory steps which have been carried out. This information can be found in an item or document header.  physical inventory history for an item In an inventory history you can determine which steps have been carried out for the item.  document header In the document header, the fields Count status, Adjustment status and Delete status provide information on whether some or all of the items have been counted, posted (inventory differences), or deleted.

31.  TATA CONSULTANCY SERVICES Inventory management information You can perform the following functions by selecting Environment from the Inventory Management menu. List display  The List display function offers reports for documents posted in Inventory Management.  Example: material documents for a material.  Stock display  Example: Stock overview  Information  The Information function allows you to display data (master data, transaction/movement data) from other applications.  Example: displaying a purchase order.

32.  TATA CONSULTANCY SERVICES Inventory management information  Balances display  The Balances display function offers analysis of the stock accounts and of the GR/IR clearing account.  Consignment  The Consignment option permits analysis of the consignment stocks from vendors as well as the consignment stocks and the returnable packaging stocks at the customer’s site.  Batch where-used list  Batch search strategy

33.  TATA CONSULTANCY SERVICES Inventory management information Material analysis Stock values Receipts and issues Inventory turnover  Inventory turnover of the value of valuated stock is calculated as follows:  Value of total consumption / Value of average valuated stock Range of coverage  The range of coverage of the value of valuated stock is calculated as follows:  Value of valuated stock / value of average total usage / day