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Purchasing - A/P Contents: Introduction to the Procurement Process

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1 Purchasing - A/P Contents: Introduction to the Procurement Process
Purchasing Items Purchasing Service Troubleshooting Issues in Purchasing

2 Purchasing - A/P: Purpose
In this unit, you will: Master the basic steps of the procurement process for purchasing items or services Understand the consequences of each step on inventory and accounting Handle issues that arise with a vendor’s delivery and billing

3 Purchasing - A/P: Business Example
You purchase your warehouse goods from external vendors. Normally, you use the purchase order document to order goods. In some cases, however, you submit your order by phone and your vendor delivers the items immediately. In this case, the process modeled in the system must be as short and quick as possible. If the delivered goods do not meet your quality standards, you want to return them to your vendor. This can happen either before or after you have received the invoice. You purchase services such as web design and landscaping from vendors using purchase orders. Other services such as electricity or rent are purchased without purchase orders.

4 Purchasing Items: Unit Overview Diagram
Purchasing - A/P Topic 1: Purchasing Items Topic 2: Purchasing Services Topic 3: Troubleshooting Issues in Purchasing

5 Purchasing Items: Process Overview
System Configuration Master data Purchasing Inbound logistics Warehouse management Outbound logistics Marketing & Sales Service Production Financial controlling Purchasing is not just about ordering and paying for pencils and paper clips. Rather, purchasing is the process of ensuring a steady stream of required materials is on the way to your company when and where you need them. As a fully integrated, end-to-end business management application, SAP Business One helps you run the purchasing process, starting with the purchase order and continuing with the rest of the purchasing documents. SAP Business One automatically captures information at each step so you always know what’s on hand in inventory as well as the up-to-the-minute financial state of your business. The real-time view helps you identify potential shortages before they happen. Precise historical information keeps track of which vendors come through for you consistently. The graphic shows the basic four-part process of ordering, receiving, and paying for goods or services. The purchase order (PO) is the document you provide to the vendor specifying the items or services you want to purchase, including agreed-to quantities and prices. The goods receipt PO is the document that denotes the delivery of goods from a vendor to a company. It is used to update the inventory quantities and values. The A/P invoice (or A/P voucher) is the document into which accounts payable enters the vendor’s invoice information and sets up the payment. The outgoing payment is the document which tells the system to send a payment to the vendor. There are, generally speaking, four ways of sending outgoing payments: cash, checks, credit cards, and bank transfers. There are also some additional country-specific payment methods. In SAP Business One, the functionality and reporting associated with processing payments are accessed through the banking module. Purchase Order Goods Receipt PO A/P Invoice Outgoing Payment

6 Purchase Order 10 printers are currently in stock
We order 5 more from our vendor Five appear on the inventory reports as ordered 15 will be available to promise, Although only 10 are physically in stock Purchase Order Definition: A purchase order is a commercial document issued by a buyer to a seller specifying the items (goods or materials) or services—along with agreed-to quantities and price—that the seller will provide the buyer. Accounting and Inventory Effects: When a purchase order is added in SAP Business One, no value-based accounting changes occur. However, the order quantities are listed in inventory management. You can view items and quantities on order in various reports and windows, such as the inventory status report and the Item Master Data window. Obviously, having such real-time access to this information can play a key role in optimizing a company’s purchasing and inventory management business processes. How is the information stored in the purchase order used? Normally, when goods are received, purchase orders are matched with packing slips and vendor invoices before the invoices are paid. In SAP Business One, this process is automated: the purchase order can be linked to the goods receipt PO (information from packing slip), which then can be linked to the A/P invoice (information from vendor’s invoice), allowing information to be consistent and retained throughout the process. You never have to enter data twice.

7 Key Master Data in Purchasing: Vendor
One or more control accounts for vendors Possible transactions All purchasing transactions Vendors There are three types of business partner master records in SAP Business One: vendors, customers, and leads. Vendor data identifies who is supplying the goods and services. You use vendor master records in purchasing to handle all purchasing transactions. Accounting manages the relevant transactions in one or more control accounts. Vendor codes are alphanumeric and must not overlap with the G/L account numbers. The codes must not contain mathematical operators, since these would be misinterpreted by the SQL database. Underscores, however, are allowed. Before purchasing documents can be created, the vendor must be entered in the SAP Business One list of business partners. To locate existing vendor information, either click on the button to the right of the Vendor field in the document header or press the Tab key in the Vendor field. The List of Business Partners appears in a pop-up window. If you are authorized, you can enter new vendor information while creating a purchasing document. To do so, click on the New button on the bottom of the List of Business Partners pop-up window. If you plan to issue the vendor a check or bank transfer using the payment wizard, make sure you have defined the payment method in the vendor business partner master data record.

8 Addresses in the Purchase Order
Company / Warehouse Purchase Order Vendor Logistics Tab Ship to Address Pay to Address It is important to understand how the Ship to and Pay to addresses are used in the purchasing process. Ship-to address come from two places, depending on the setting chosen for the Service/Item Type field. The company ship-to address is displayed under the Logistics tab and is defined in the Administration module. This address is used for service-type purchasing documents. The warehouse ship-to address is used for purchasing documents with items. The address is taken from the warehouse associated with the first row in the document. This setting is found in Document Settings  Use Warehouse Address. Warehouse addresses can be set up and changed in Setup  Inventory  Warehouses. Pay to address: This information is displayed under the Logistics tab and is defined in the vendor business partner master data record. Make sure the Pay to address is the one you want for a given purchase since this information prints on the check when payment is issued. Addresses can be overwritten inside a purchasing document.

9 Key Master Data in Purchasing: Items
Item master fields useful In purchasing Preferred Vendor Manufacturer Catalog Number Purchasing Unit of Measure Customs group for imported items Tax information In the purchasing process, item master data identifies what is being purchased. Frequently the same items are purchased, inventoried, and sold. The information is the same; it is just used differently. This is the advantage of using an item master record which can be copied into any document in the purchasing, sales, production, MRP, inventory, and service modules. The header of the item master data record contains general information about the item, including a unique ID number assigned by the user, a description (including a description in a foreign language), and settings to determine the type of the item, the group it belongs to, the price, and the applicable price list. Checkboxes on the right indicate whether the item is kept in inventory and whether it is offered for sale or purchase (in many cases both apply). The item can be marked as a fixed asset with another checkbox. The General tab of the Item Master Data window has a mix of information about the manufacturer of the item, additional identifiers, shipping methods, and issue method. The Purchasing Data tab indicates the main vendor who sells the item, how to identify the item in a catalog, the units of measurement used for the item for purchasing purposes, and the actual size of the item. For items with a purchasing history, you can click on the chart icon on the lower left of the tab to display a graphical purchase analysis. In a purchasing document, you can locate the List of Items (goods and materials), by pressing the tab key from the Item No. field in the document’s Contents tab. From the resulting pop-up window, you can select from the list or enter new data by clicking on the New button.

10 Drafts of Sales or Purchasing Documents
Document - Drafts Document Vendor / Customer Y1000 Vendor / Customer Y1000 Vendor / Customer Y1000 Save as Draft Item Descr. Quantity Price Item Descr. Quantity Price Add Item Descr. Quantity Price A03 Printer ,90 A03 Printer ,90 A03 Printer ,90 B10 Cartridge ,50 B10 Cartridge ,50 B10 Cartridge ,50 You can save every document of sales or purchasing as a draft. When you enter a document you can choose File  Save as Draft. Drafts are often used when approval is needed to create a purchase order. The document is saved as a draft, then the draft document is forwarded to an approver. Once the document is approved, the purchase order is added and a copy is sent to the vendor. You can display a list of all the document drafts. Choose either Sales - A/R  Sales Reports  Document Drafts or Purchasing – A/P  Purchasing Reports Document Drafts. You can select all the documents that you have saved as drafts. By double-clicking a document in the list, you can display it and edit the data. If you choose Add you add the document. Draft documents remain in the system after they have been further processed. Important note: you specifically have to remove drafts that you no longer need.

11 Documents Output Document File  Send  E-mail File  Send  Fax
Vendor / Customer Document Y1000 A03 Printer ,90 B10 Cartridge ,50 File  Send  File  Send  Fax File  Preview File  Print File  Export File (PDF, Text, XML, MS Word, MS Excel, or Image) Print Preview Printout Y1000 A03 20pcs 49,90 B10 40pcs 4,50 Total ... Y1000 A03 20pcs 49,90 B10 40pcs 4,50 Total ... Y1000 A03 20pcs 49,90 B10 40pcs 4,50 Total ... When you create a purchase order, you can quickly a copy to your vendor to expedite the order. You also have the option to print, fax, or export any documents you create in purchasing or sales. The layout of a printed document can be viewed on the screen. When the business transaction is entered choose File  Print Preview or the print preview icon. There are two ways of printing out the documents of sales or purchasing The document can be printed immediately when the business transaction is entered. Choose File  Print or the print icon. Several documents can be printed simultaneously (all the invoices from one day, for example). Choose Purchasing – A/P  Document Printing or Sales – A/R  Document Printing. Documents that have already been printed can be printed again. This document printing function allows you to print many documents at once, by generating and displaying a list of documents according to the user’s specifications. The user can choose whether to print the whole list or certain documents. TB1200 Implementation and Support course covers how to design the print layout. The functionality Export to File allows you to export the documents in different types of file. When you enter the business transaction choose File  Export Notes: Install Outlook Integration to use output. Fax functionality requires specific add-on software.

12 Goods Receipt PO 10 printers are currently in stock
We ordered 5 more from our vendor The vendor delivers 5 After goods receipt, 15 are in stock Definition of a Goods Receipt PO: In SAP Business One, a goods receipt PO is created when you receive goods from a vendor. In most companies, the person in the warehouse or the office responsible for taking delivery of shipments executes the goods receipt PO. For services, the person for whom the services are rendered usually issues the document. How to create a goods receipt PO: A goods receipt PO can be created new by selecting the document name in the module menu, or it can be built from an existing purchase order. If you are basing your goods receipt PO on an existing PO, you may copy all the data contained in the PO or use the draw document wizard to select the data to copy from one or more existing Purchase orders. Even if you copy all data from an existing PO you can still adjust quantities and prices—as well as dates, vendor, and item information—before you post (add) the document. Regardless of how you create your goods receipt PO, there should be no differences between the data in the goods receipt PO and the vendor’s shipping document (packing slip) sent with the items, because the details in the vendor’s document are legally binding. If there are any discrepancies between the base PO data and the vendor’s shipping document, you should resolve them with the vendor before you post your goods receipt PO. Accounting and Inventory Impact of a Goods Receipt PO: It is essential that the quantities and prices in your goods receipt PO match the vendor’s shipping document. Unlike a purchase order, a goods receipt PO cannot be amended after it has been added to SAP Business One because it triggers both inventory and (when using perpetual inventory) accounting transactions.

13 Two options to create a follow-up document: Copy to/ Copy from
Open saved document to copy All items copied to new document No options available on how items are copied However, you can delete items and adjust quantities after copying Enter business partner in a new document Choose one or multiple documents from a list Draw document wizard allows you to: customize rows and quantities copied select the exchange rate to use Purchasing documents build on each other. Often, a purchase order becomes a goods receipt PO that records the vendor’s delivery and finally an A/P invoice when the vendor’s bill is received. You can quickly copy a document to the next document in the sequence using the Copy To button. The original document is called a base document; the document you create from it is called a target document. Building one document from another saves time and effort. It also reduces the possibility of errors. When you copy all of a base documents items and quantities, it will be closed and you will not be able to copy it again to another document. The other method for copying a document is Copy from. The Copy From button allows you to select a base document or documents from which to create a new document. Clicking Copy From starts the draw document wizard. Often the first step in building one document from another is locating the base document you want to use. For example, goods may be delivered to a warehouse and a goods receipt PO needs to be entered. How do you find the relevant purchase order? One tool for locating such documents quickly is the Open Items List. The report shows all open documents of the type you select in the drop-down list in the upper right. You can then select the relevant purchase order, for example, and create a goods receipt with a single click on the Copy To button. When one document is built from another in this fashion, all the relevant information is copied from the base document to the new document, reducing both data entry time and errors.

14 Effects of the Goods Receipt PO
1 4 3 2 Once the Goods Receipt PO is added to the system it has the following consequences: 1) The purchase order (base document) cannot be changed. 2) The goods receipt PO creates a journal entry to increase inventory value, and therefore cannot be changed. 3) The system updates the stock quantity in inventory. 4) Items that have been partially or completely delivered appear in light gray in the purchase order document. When all items are received, the purchase order status changes to Closed. Note: The journal entry is created only when you run perpetual inventory, however the quantity is increased regardless of type of inventory method.

15 A/P Invoice You receive an invoice from the vendor for the 5 printers
You enter an A/P invoice to reflect the vendor invoice The A/P invoice is the basis for payment to the vendor Definition of an A/P invoice: An A/P invoice is entered into SAP Business One when you a receive an invoice from the vendor. It will be used to trigger a payment to the vendor. How to enter an A/P invoice: You can create an A/P invoice new by selecting the document name in the module menu or by basing it on one or more POs or goods receipt POs. If you are basing your A/P invoice on one or more existing purchasing documents, you may copy all the data contained in the PO or use the draw document wizard (see Chapter 10) to select the data to copy from one or more existing POs or goods receipt POs. Even if you copy all data from existing purchasing document(s), you can still adjust quantities and prices—as well as dates, vendor, and item information—before you post the document. Data entry tip. Use the Document Date field in the A/P invoice header to enter the vendor’s invoice date. This is important for accounting and auditing reasons as the invoice date and the posting date may differ. You may also wish to change the name of the Vendor Ref. No. field in the document header to Vendor Invoice No. This field prints on the check and allows your vendor to tie the payment to their invoice. Accounting Impact of an A/P Invoice: The posted A/P invoice generates entries in the general ledger and updates the vendor account with the amount owed to the vendor. Inventory Impact when a Goods Receipt PO is not referenced: In those cases where a vendor’s invoice arrives at the time the items are received, the resulting A/P invoice also increases inventory quantities and values.

16 Effects of the A/P Invoice
4 3 Quantity increases only if no prior goods receipt is referenced. 1 2 Once the A/P Invoice is created in the system it can have the following consequences: 1) The Goods Receipt PO increased the stock value earlier. Only if there is no goods receipt PO are the stock values updated when an A/P invoice is entered. 2) The A/P invoice creates a journal entry to update the vendor’s balance to show the amount due. 3) You cannot change anything in the A/P invoice that would affect the journal entry once the invoice is added to the system. 4) On the goods receipt PO, items that have already been partially or completely invoiced display in light gray. If the invoice is for the full quantity on the goods receipt PO, then the goods receipt PO status changes to Closed.

17 Postings in Purchasing Process for Inventory Items
Item Category: Inventory Item Sales Item Purchased Item Fixed Assets Vendor 100 Allocation Acc. Allocation Acc. Stock Acc. 100 100 When you buy inventory items, the system creates the following journal entries: The goods receipt PO creates a journal entry that posts the value of the received goods to the debit side of the stock account and to the credit side of an allocation costs account. The stock account and the allocation costs account are retrieved from the Inventory Account field and the Allocation Account field on the Inventory Data tab of the item master record. The A/P invoice creates a journal entry that posts the invoiced amount to the debit side of the allocation costs account and to the credit side of the vendor account. The allocation costs account is retrieved from the Allocation Account field on the Inventory tab of the item master record. You need the allocation costs account to check if the goods receipts PO and the A/P invoices match. You need to reconcile this account on a regular basis. If you directly post the A/P invoice without first creating a goods receipt PO, the postings to the allocation costs account are omitted. To post a purchase order, choose Purchasing – A/P  Purchase Order. To post a goods receipt PO, choose Purchasing – A/P  Goods Receipt PO. To post an A/P invoice, choose Purchasing – A/P  A/P Invoice. This graphic does not cover tax postings or postings of additional revenues and expenses. The purchase order document is not relevant for accounting.

18 Document Flow in Purchasing
1 2 3 Warehouse (Quantity) General Ledger (Value) After a document has been added, you can navigate from a document to preceding and follow-up documents by using the Base Document and Target Document icons. Now that we have finished the first three steps in the procurement process for items, let’s review what happens when each document is added. 1) Purchase Order: When you enter a purchase order, no value-based changes are posted in Accounting. However, the order quantities are listed in inventory management. You can view the ordered quantities in various reports and windows such as the inventory status report and the item master data window. 2) Goods Receipt Purchase Order: When you enter a goods receipt PO, the goods are accepted into the warehouse and the quantities are updated. If your company runs a continuous stock system, SAP Business One creates the relevant postings to update the stock values as well. 3) Accounts Payable Invoice: When an incoming invoice is posted, the vendor account is updated in Accounting. If a goods receipt PO is not referenced by the A/P, the stocks also increase when the invoice is posted.

19 Payment Processing We owe the vendor for 5 printers
An A/P invoice has been entered for the amount owed You create an Outgoing Payment according to payment terms The journal entry: Reduces cash (credit) Decreases the amount owed to the vendor After you have entered an A/P invoice, the final step in the Purchasing-A/P process is to trigger the payment to the vendor. The outgoing payment document can be created for the following payment means: cash check credit card bank transfer bill of exchange Once the outgoing payment is added, an appropriate journal entry is created. The journal entry reduces the vendor’s balance. When creating an outgoing payment to clear (fully or partially) a specific document or transaction, an internal reconciliation automatically takes place. Multiple outgoing payments can be created together by the Payment Wizard. Payment wizard runs cover A/P and A/R documents and transactions that are not fully paid, credited, or reconciled, as well as unreconciled/allocated payments on account. When creating outgoing payments, either individually or with the Payment Wizard, you can also partially pay invoices. Payment processing is considered to be part of the Banking Module in SAP Business One.

20 Purchasing Reports Purchase Analysis Open Items List
Vendor Liabilities Aging Drag & Relate Purchase Analysis: To manage a business efficiently, you require detailed information about the purchasing volume made from your vendors. You must be able to determine which products you purchase the most, and which of your purchasing employees attains the best deals. This information is provided by the purchase analysis and is made clearer with a graphical display. Open Items List: This report allows the user to view open sales and purchasing documents. Using this report gives you an accurate picture regarding the status of documents in the system, only documents with Open status appear in this report. Documents that were partially copied to target document also appear in this report. You can also display the documents from the report. Vendor Liabilities Aging: When processing this report, you can also display the detailed information for each vendor in the row. In the detailed view, the documents are displayed together with the respective liabilities. The report provides the size of the vendor liability and the time that the debt has remained unpaid. Drag & Relate: The Drag & Relate menu is a tab page in the SAP Business One Main Menu. To switch from the Modules menu to the Drag & Relate menu, choose the Drag & Relate tab. Drag & Relate is an extensive information system that can be used to display information about the business processes quickly and easily. Drag & Relate is an interactive tool that can be used in parallel to regular working methods. The user-friendly interface offers optimum support for finding important information quickly. The Drag & Relate tool uses pre-defined queries in order to generate reports in the system, and searches both in reports and in the master data, such as G/L Accounts and Business Partners. Reports can be filtered using the Filter function.

21 Stock Changes in Purchasing A/P
Model Report: Inventory Status In Stock - Committed + Ordered = Available Transaction Purchase order Goods receipt PO Goods Receipt PO w/o reference to PO A/P invoice for goods receipt PO A/P invoice with reference to Purchase Order Goods returns A/P Credit memo Purchasing / AP A/P Reserve Invoice w/o reference to PO Goods Recept PO with reference to A/P Reserve Invoice - You can use the report Inventory Status to analyze the inventory situation for one or more selected items. Choose Inventory  Inventory Reports  Inventory Status. You can also see the inventory status in the item master on the Inventory Data tab page. In Stock: The current stock level of the item. Committed: The item stock that is reserved for customers and for internal use is displayed here. The stock that is reserved for internal use is the quantity of the item for that will be used for a finished product based on the BOMs for existing production orders. Ordered: This field shows the quantity of the item ordered from the vendor. This figure consists of the quantity ordered from external vendors plus the quantity that is being produced and that will enter the warehouse by a certain date. Available: The available quantity of an item displays. This figure comprises: In Stock - Committed + Ordered If the available stock for an item is negative, the value displays in red. To display the details for the inventory situation of an item regarding open orders, purchase orders, and production orders, select the row for that item in the report. The system opens the Stock Situation sub-window. + Indicates increase in quantity - Indicates decrease in quantity

22 Purchasing Items: Topic Summary
Key points from the Purchasing Items topic: The four main steps in the procurement process for items are: Purchase Order Goods Receipt PO A/P Invoice Outgoing Payment Key master data used in purchasing: vendor and items Each purchasing document has a different effect on inventory and/or accounting. The purchase order updates order quantities in inventory management. The goods receipt PO updates quantities and values in inventory and creates a journal entry when using perpetual inventory. The A/P invoice creates an accounting entry, and can create a change in inventory if there is no Goods Receipt PO. The outgoing payment creates the payment to the vendor.

23 Exercises for Purchasing Items

24 Purchasing Services: Unit Overview Diagram
Purchasing - A/P Topic 1: Purchasing Items Topic 2: Purchasing Services Topic 3: Troubleshooting Issues in Purchasing

25 Purchasing Services – Process Overview
Purchase Order A/P Invoice Outgoing Payment Let us say you need to buy landscaping, training or other non-physical purchases. In those cases, you can still use purchase orders and A/P invoices. You have two options for purchasing services: you can describe a service in the row or use a “service” item that you have created. If you purchase a service frequently and the price is pre-set with the vendor, an item can be very useful because it allows you track the quantities. When purchasing services, you may wish to begin with a purchase order which describes the service being purchased, the price agreed to, and the G/L account associated with the service. The purchase order is optional. The advantage of using a purchase order is that it gives you a document in which to set the conditions and price for the service. Generally you discuss the scope of the project and expected price with the vendor and at that point the purchase order is created with the details of the agreement. When the vendor receives the purchase order, they confirm the agreement and dates are set for them to perform the service. The goods receipt PO document is generally not used for purchasing services. Usually, this step occurs outside the system. After the service is received and the vendor sends an invoice, an A/P invoice is entered into the system. Finally, an outgoing payment is created to pay the vendor.

26 Item / Service Type Document In Purchasing (and sales) you can set your documents as either Item type or Service type. Service Customer C00001 Name Smith Description G/L Account Price Document Item Customer C00001 Name Smith Item No. Description Quantity Price A sales or purchasing document can include either pre-defined items from master data or descriptions of services which are directly entered in its rows. The document cannot include both. On the Contents tab of Sales and Purchasing documents, you can set the Item/Service Type to either Item or Service. This setting applies to the entire document, and you cannot change it once you have saved the document. The table view on the Content tab page is different for each option. Services as a service in the document: You only use the Service option in SAP Business One to buy or sell a service that does not have a master record. Services as an item in the document: Entering services as items has several advantages: You can enter items and services in the same document You can define master data for the service, such as prices, sales quantities, and so on You can use the usual sales analyses and evaluation reports for services Typically, creating a service as an item is done more frequently for selling services, than for purchasing services.

27 Create a Service Invoice
Vendor Invoice Vendor Master Data Vendor name Invoice number Invoice date Description Amount due Vendor number Vendor name Address Payment terms Payment method A /P Invoice Vendor number Invoice number Invoice date Description G/L Account Total due Enter data Default data Check for duplicate invoice numbers For services such as electricity or rent, there is usually no purchase order involved in the process. Use the following steps to create an A/P invoice without referencing a purchase order: Refer to the physical vendor invoice to create a service invoice. Enter the vendor number to bring in data from the vendor master record. Then enter the vendor invoice number and the vendor invoice date. Verify the correct setting exists in order to enter a description, the general ledger account, and of course the amount due. When you save the invoice, SAP Business One performs a duplicate invoice number check for the vendor. The system alerts you if the vendor invoice number is found so you can research the invoice. This function helps us to avoid duplicate payments. When the system saves the invoice, the value updates the amount due to the vendor, the related expense account, and the related general ledger control account at the same time.

28 Postings in Purchasing Process for Non-Inventory Items
Item Category: Purchased Item Fixed Assets Inventory Item Sales Item Expenses Account EU Expenses Acc. Foreign Expenses Acc. Vendor 100 100 As mentioned before, services can be set up as items to make it possible to track purchases. Another common type of non-inventory item is an item which represents an expense purchase, such as office supplies. When you buy items that are directly consumed and not stored in inventory, the system does not trigger a posting for the goods receipt PO even if you create one. The A/P invoice amount is posted on the debit side of an expense account because it goes directly into expenses. The credit side is posted on the vendor account. Although the item is not an inventory item, the Inventory data tab does not disappear from the item master record because the system needs it for the G/L account determination. The expenses account is retrieved from the default warehouse on the Inventory tab of the item master record. If the vendor is located in the same country, the account from the Expenses Account field is used. If the vendor is located in an EU country, the account from the EU Expenses Account field is used. If the vendor is located in a non-EU foreign country, the account from the Foreign Expenses Account field is used. This graphic does not cover tax postings or postings of additional revenues and expenses.

29 Exercises for Purchasing Services

30 Purchasing Services: Topic Summary
Key points from this topic: The main documents used in purchasing services are: Purchase order A/P invoice Outgoing payment Services can be represented by a description in a service type document or represented as an item in an item type document. For services such as rent or utilities, typically an A/P invoice is created without a purchase order.

31 Troubleshooting Issues in Purchasing: Unit Overview Diagram
Purchasing - A/P Topic 1: Purchasing Items Topic 2: Purchasing Services Topic 3: Troubleshooting Issues in Purchasing

32 Partial Deliveries and Overdeliveries
Goods Receipt PO Purchase Order Vendor Y1000 Vendor Y1000 3) 1st Partial Delivery # 1 6 2 3 # 1 10 2 15 3 2 4) 2nd Partial Delivery 1) Overdelivery 2) Add Items Goods Receipt PO Goods Receipt PO Goods Receipt PO Vendor Y1000 Vendor Y1000 Vendor Y1000 # 1 4 2 3 # 1 2 20 3 # 1 2 3 Sometimes vendors deliver too little or too great a quantity for an item. A vendor might send a different item than was originally ordered. In these circumstances you can adjust the goods receipt PO accordingly to reflect the actual amount received. 1) If you refer to a purchase order document when you enter a goods receipt, you can increase (over delivery) the copied quantity. 2) You can also add additional items in the goods receipt. 3) If you refer to a purchase order document when you enter a goods receipt, you can reduce the copied quantity. This is a partial delivery. 4) You can create a second partial delivery. If you do not expect to receive any additional deliveries after the partial delivery, you should close the purchase order so that the open purchase order quantity can be reduced (choose Data  Close or right mouse-click  Close). The Status of the purchase order will change to Closed. It is only possible to manually close a document with open status that has been partially received or not received. The purchase order is not deleted so you can still display or duplicate the document, but it is no longer available for copying to another document, such as a goods receipt, goods return or A/P invoice. If a purchase order will never be received, then you should cancel the purchase order. You can cancel a purchase order that has never been copied or one that has been partially copied. As with the status Closed, a Canceled purchase order is not deleted. You can still display or duplicate the document, but it cannot be copied to another document.

33 General Ledger (Value)
Goods Returns Stock Acc. 100 Allocation Acc. 20 scanners were ordered and delivered 2 scanners were damaged in transit Use the goods return to return the scanners to the vendor for credit Allocation Acc. Stock Acc. 100 100 Warehouse (Quantity) General Ledger (Value) The Goods Returns is the clearing document for a Goods Receipt PO. When you enter a goods returns, the goods are issued from the warehouse and the quantities are reduced. If your company runs a continuous stock system, SAP Business One creates the relevant postings to update the stock values as well. To reverse a specific Goods Receipt PO, create the goods returns based on it, provided that an A/P Invoice has not yet been created for that Goods Receipt. If you have already entered an A/P Invoice for the transaction, use the A/P Credit Memo function to carry out quantity and value-based corrections in the system. When you return goods to a vendor, goods cannot be received again with reference to the existing documents. When the goods are delivered again, you can either enter a delivery without a reference to a purchase order in the system, or duplicate one of the preceding documents. Beginning with release 8.8, when a Goods Return is created without being based on a previous document, the value of a moving average item is the current item cost calculated for the item and not the unit price entered in the goods return document.

34 Credit Memo for Purchasing
Allocation Costs Acc. Stock Acc. Alloc. Vendor 100 100 100 100 50 CD boxes were ordered, delivered and invoiced 5 boxes were defective Use the credit memo to return items for credit when an A/P invoice exists Stock Acc. Vendor 100 100 Warehouse (Quantity) You can use the credit memo document for goods returns that the vendor has already invoiced. The credit memo then updates the stock quantities and corrects the values in accounting. You can create a credit memo using services to correct amounts without affecting inventory. When you create the credit memo, the system finds the same accounts that were used to post the invoice and posts a negative value to them. It is a requirement in certain jurisdictions, e.g. Spain, that sales and purchase credit analysis is shown separately in the Profit & Loss account to the normal sales and purchase accounts. Account determination functionality is extended to determine which Profit & Loss accounts are updated on the posting of sales and purchase credit notes. This functionality allows a user to specify different posting accounts for sales revenue and sales credits. It also allows the user to specify different posting accounts for purchase expenditure and purchase credits. If not for any legal requirement this functionality is useful for analysis purposes when seen directly on the face of the chart of accounts. General Ledger (Value)

35 Creating a credit memo with or without reference
Copy from invoice Do not copy from invoice Credit related to specific, single invoice General credit related to multiple invoices Open Invoice Closed Invoice Credit related to specific invoice Full amount credit memo Partial amount credit memo Full amount credit memo Partial amount credit memo Reverse invoice amount & reduce amount due to vendor Reduce invoice amount and amount due to vendor Reduce total due to vendor Reduce total due to vendor The method you use to create a credit memo depends the status of the Invoice, Open or Closed, or if the credit memo is not related to a specific invoice. When you can identify the related invoice and the invoice is open, you create a credit memo by copying from the original invoice. A credit memo for the full invoice amount will reverse the original invoice. A credit memo for less than the original invoice amount will reduce the total invoice amount due. When you create a credit memo without copying from the original invoice, the credit memo reduces the total balance due to the vendor. Starting from release 8.8, the values in the journal entry created by an A/P credit memo that is not created from copying from another document are based on the current value calculated for the returned items.

36 Researching invoice payment status
Vendor Balance 2500 4000 2060 8560 How can you search for the invoice and determine if it has been paid? You display an invoice using the same task you use to create an A/P invoice. You can use part of the vendor name, vendor number, or the vendor’s invoice number as search criteria. When you display the invoice, a Closed status alone does not mean the invoice has been paid. If the payment has been made, you can navigate to the payment details. What is the fastest way to review the account details for a specific vendor? You can use the vendor aging report, but a more direct way is to display the vendor master data. From there, you link to the account balance to see the related details.

37 Troubleshooting Issues in Purchasing: Topic Summary
Key points from this topic: A goods receipt PO can handle over deliveries or under deliveries A goods return is used to return items not yet invoiced. A credit memo can be created with reference to an open invoice. If the invoice is paid, the credit memo must be created without reference.

38 Exercises for Troubleshooting Issues in Purchasing

39 Purchasing - A/P: Unit Summary
You should now be able to: Purchase items and services in SAP Business One State the consequences of each process step on inventory and accounting. Handle issues that arise from a vendor’s delivery or billing errors.

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