Financials in Purchase To Pay Process 1

Financials in Purchase to Pay Process 1(41)
10.10.2015
FINANCIALS IN PURCHASE TO PAY PROCESS
1 FINANCIALS IN PURCHASE TO PAY PROCESS ................................................................................................2

2 CREATE PURCHASE ORDER FOR A STOCK MATERIAL...............................................................................2
2.1 PURCHASING INFO RECORD ....................................................................................................................................4
3 POST GOODS RECEIPT............................................................................................................................................6
4 DISPLAY MATERIAL DOCUMENT .......................................................................................................................8
4.1 OTHER OPTIONS TO DISPLAY THE MATERIAL DOCUMENT .....................................................................................11
4.1.1 Transaction MB03 Display material document - traditional view .................................................................11
4.1.2 Material document list - MIGO-view (MB59) ................................................................................................13
5 POST THE INVOICE ................................................................................................................................................15
5.1 TAX......................................................................................................................................................................16
5.2 REFERENCE ..........................................................................................................................................................19
6 DISPLAY THE INVOICE .........................................................................................................................................20
6.1 ACCOUNTING DOCUMENTS...................................................................................................................................21
7 PROCUREMENT TO A COST CENTER...............................................................................................................23
8 APPENDIX..................................................................................................................................................................25
8.1 POSTING PERIODS .................................................................................................................................................25
8.1.1 MM Periods ....................................................................................................................................................26
8.1.2 FI Periods.......................................................................................................................................................28
8.2 PURCHASE ORDER HISTORY ................................................................................................................................30
8.3 MM ACCOUNT DETERMINATION ..........................................................................................................................31
8.3.1 Account assignment category .........................................................................................................................31
8.3.2 Postings created .............................................................................................................................................32
8.3.3 Inventory Account BSX...................................................................................................................................34
8.3.4 GR/IR Account VRX .......................................................................................................................................37
8.3.5 AP Account, Tax Account ...............................................................................................................................38
8.3.6 Expence Account GBB - VBR .........................................................................................................................40
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1 Financials in Purchase to Pay Process

This presentation describes the main principles of the integration between Procurement and
Accounting. The aim is not to learn MM, but to gain some understanding of the process and
to locate the integration points. This is also a simplified version of real life. The picture gets
more complicated when freights, purchasing accounts or price differences are involved.
Goods can be procured to stock or cost objects, e.g cost centers. In MM the process is quite
the same, but in accounting there is a difference. A purchase to stock is posted to balance
sheet account, while a purchase to cost center is treated as cost and posted to profit and loss
account.
The purchase of stock materials is described here. If you have access to SAP's model
company IDES, you can repeat the examples there.
2 Create Purchase Order for a Stock Material

From SAP menu, choose Logistics / Materials Management / Purchasing / Purchase Order / Create
or
Choose Vendor/ Supplying Plant Known
Create a new purchase order:
1) Use Vendor: 1011
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2) Account assignment category: No account assignment is needed, when the the goods are
procured to stock.
3) Material: 400-432
4) Quantity: 10
5) Plant: 1000
Press enter to check whether the order is complete. You will get following error message.
This error message comes because the purchase organization data is not enterd yet. Expand
the Header
Enter Purchase organization 1000 and group 001
The system already knows the company code, because you entered the plant. A plant can
only be assigned to one company code
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Press enter. Note that now the system also knows the price. It finds it from the purchase info
record. Save the purchase order and note the number
Allthough the purchase order does not create postings, it has integration points to
accounting. The company code is determinated from the plant. The accounts
receivable account comes from the vendor master.The account determination
gategory effects the later account determination and used account objects to be used. If
commitment management is active a budget check is done at this stage.
2.1 Purchasing info record
Take a look at the purchasing info with transaction ME13.
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Enter the vendor number, material, purchasing organization and plant.
One info record is found with this combination. Choose ’Conditions’.
The condition records shows that the gross price is 1,02 per piece.
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3 Post Goods receipt

When the goods arrive, a goods receipt posting with reference to the purchase order is
created.
From SAP menu, choose Logistics / Materials Management / Goods Movement / Goods Receipt /
For Purchase Order (MIGO)
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1) Check that the selections are 'Goods Receipt' and 'Purchase Order'. If they something else,
change them.
2) Enter the number of your purchase order
3) Note the transaction type 101 Goods Receipt posting.
Press enter.
If the item detail screen is open, you can close it.
Post (save) the receipt.
You will get an error message: "Enter delivery note!"

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Return to the receipt and enter a delivery note number. There is no check, so any number
goes.
Post (save) the receipt.
A material document is now created.
At this point of the purchase process also accounting documents are created. The stock is
increased and the values and quantities changed. Also the periods are checked. Both MM
and FI periods must be open.
4 Display material document

You can display the material document from the same transaction you created it with (MIGO)
by changing the pull down default from 'Goods receipt' to 'Display' and press enter.
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From here you get to the accounting documents by choosing the 'Doc.Info' Tab and FI
Documents.
You can branch not only to accounting but also to purchase order and PO History. Just
double click the PO number, material number and they all serve as links. Several documents
are created.Double-click the accounting document.
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Now you are in the FI document and can see the header and the line items.
The inventory account (300000) is debited and the offsetting posting goes to GR/IR Account
(Goods Received / Invoice Received account 191100). Both accounts are balance sheet
accounts and can only be used in automatic postings. The 'Post automatically only' indicator
is checked in their master record. It the check is removed, the MM posting fails. The accounts
are determinated by the system using MM account determination rules.
You can also choose another layout. Here another layout showing the account assignments.
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The only assignment in this posting is the profit center, which comes defaulted from the
material master.
4.1 Other options to display the material document

4.1.1 Transaction MB03 Display material document - traditional view
Enter the material document number.
If you don't know the number, click at the end of the field and a selection screen opens.
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Enter your selection and choose execute (clock).You get a list of choices.
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Select a line and click one of the icons:
(1) - Display material document screen
(2) - Stock overview
(3) - Accounting documents
If you branch to the material document, it has a traditional look.
4.1.2 Material document list - MIGO-view (MB59)
Transaction MB59 opens the material document selection screen.
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You have the same choices here, but when you drill down from the MB59 list you, you get
the MIGO view.
5 Post the Invoice

From SAP menu, choose Logistics / Materials Management / Logistics Invoice Verification /
Document Entry
Choose Enter Invoice (MIRO)
If you are asked for a company code, enter 1000.
The invoice screen has two part - header and items. Start with the dates. Enter the document
date and check the posting date (current date is defaulted). At this point the system checks
the postings periods. Both MM and FI periods must be open.
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Enter the Purchase Order number to PO Reference. Press enter and the systems fills in the
data from the order (vendor information, amounts, quantities).
5.1 Tax
There are alternatives how to enter the amounts. You could calculate and enter both the
gross amount and tax, but the easiest way is to check the 'Calculate tax' tag. The system will
then automically calculate all the amounts based on the tax code used. In real life you will
have the invoice and get the amounts from there.
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Here the system calculates 16 percent of the net amount (1.020). In the right corner (Balance)
you can see the gross amount, the amount we must pay to the vendor.
Enter the gross amount to 'Amount' field. Now the balance is zero and the invoice can be
posted. Before saving you can also simulate the posting.
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Here you can see that the document is posted to Accounts Payable account 160000, Good
Receipt/Invoice Receipt account 191100 and tax account. Save (post) the document.
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5.2 Reference
If you enter the vendor's invoice number in the 'Reference' field, and have sort key '0009' in
vendor master data, the systems transfers the the number to allocation field in accounting
document.
The posting of the invoice completes the invoice verification process. PO history is updated
and Financial Department initiates payment for the open invoice item.
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6 Display the invoice

If you need to look at the completed invoices, choose from SAP menu Logistics Invoice
Verification / Further Processing / Display Invoice Document (MIR4). Note that you cannot
change the invoice. You can only cancel it and create a new one. If you need to change data
relevant for the payment like payment terms, you can change these in the accounting
document.
Enter the invoice number. From the invoice header you can drill down to accounting
documents or look at the vendor account. From the line items you can drill down to
Purchase Order history.
Click on 'Follow-on Documents. A list of related documents appears. Choose the accounting
document.
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6.1 Accounting documents
Note that the accounting document number and the invoice number are not the same. There
is a way to synchronize these in configuration. If you are interested in this see Note 452127 -
MIRO: Standard number assignment per company code.
Now you are in FI looking at an accounting document. How your screen looks, depends on
the layout selected. You can change the layout from the button 'Choose'.
Double click the line to see the details.
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Here you can see that the actual posting goes to G/L account 160000. You can also see that
this invoice has already been paid, because there is a clearing document.
The logistics invoice verification process checks the invoices and matches them with the
purchase orders. If there are discrepancies, payment block R is set. The Invoice clerk needs to
release these invoices before they can be paid. With tolerances you can allow small
differences, but then there must be accounts defined for these postings.
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7 Procurement to a cost center

How does the procurement to a cost center differ from procurement to stock? In logistics
there is not much difference, you just have to enter an account assignment in the purchase
order.
In accounting there is a bigger difference. When goods are in stock they are inventories and
the procurement is posted to balance sheet accounts (inventory account and GR/IR account).
Goods taken to cost objects e.g. cost centers are considered consumed and create postings in
profit and loss accounts. Here the offsetting posting to GR/IR account is an expence account
(here account 400000). This account must must be defined as a cost element in CO in order to
allow the posting to a cost center.
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When you post the purchase order, you enter the expence account and the cost center. It is
also possible to have the account defaulted.
The goods receipt is posted the same way as in procurement to stock to a Purchase Order.
The accounting document looks like this.
There is no difference in the invoice verification in logistics or accounting.
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8 Appendix
8.1 Posting periods
Both MM and FI have a posting period control. When you try to post to a period that is not
open, you will get an error message.
Click on the question mark to get further information.
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This message tells that the MM period is not open. MM has only two periods - current and
previous. Usually there is an automated routine that takes care of the MM periods. In test
system you must self open and close the periods.
8.1.1 MM Periods
You find the MM periods under Material Master.
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You can check which periods are open from 'Allow postings to previous period'
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To open the new periods, choose 'Close Period'.
8.1.2 FI Periods
FI Periods are maintained under General Ledger, Current Settings.
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FI has Posting Period variants that are assigned to company codes. Each company code can
thus define own posting periods. Here the company code 1000 uses posting period variant
1000. FI has no limitation to open posting periods. However, in real life the posting periods
are usually very tightly controlled by the accounting personnel and closed soon after the
period end. Here the postings periods are open from 01.2000-12.2008.
In FI it is possible to control the periods according to account types and even singe accounts.
With A you control the Asset postings, with D the Accounts Receivables, with K the
Accounts Payables, with M the Material postings and with S the General Ledger postings. +
is a technical variant, which covers all the periods open.
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Period 1 is the current accounting period. Period 2 is for the special periods used in year end
closing.
8.2 Purchase Order History
Every posting in the procurement process updates the purchase order history.
You find the history in the PO. Display the Purchase Order. Expan the item detail and choose
tab 'Purchase Order History'.
The abreviations tell you what has happened to the PO. WE means that a goods receipt has
been posted. RE means that an invoice has been posted. The document numbers function as
links and allow you to drill down to the material document and invoice and further to
accounting documents.
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8.3 MM account determination

8.3.1 Account assignment category
In the first example the goods are ordered to stock and the account assignment category was
not needed. From accounting point the transaction takes place in balance sheet. In case you
order the goods to a cost center, you must indicate this with an account assignment category.
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It is a code used to identify the type of cost object that will receive the cost of the line item.
For example, cost centers, internal orders, or grant numbers.
8.3.2 Postings created
Let's take a closer look at the postings created in the procurement process.
The purchase order did not create anything in accounting. However, at this point you had to
decide whether the posting goes to stock or a cost object. You indicated this with the account
assignment category.
The first FI posting was created at the goods receipt. This created a posting to inventory
account and GR/IR account (Goods Received / Invoice Received).
How did the system determine the accounts and the profit center? Let's first look at the
material master. If you don't remember the material number, choose from menu
Environment / Document Environment / Original Document.
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In this case the original document is the material document. Choose Material Tab. The
material number is 400-432. Move over to material master (use transaction MM03) or double
click the material number in material document.
Open the Accounting 1 view.
From integration point the most important fields are the valuation class (3000) and the price
control indicator (V), which means that the material is valuated with the moving average
price (1.02). The value for the 10 pieces received is calculated 10 pc x 1,02 = 1020,00.
The profit center can also be found in material master.
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8.3.3 Inventory Account BSX
The accounts are defined in MM Automatic Account Determination. Start transaction FBKP.
Choose Automatic Postings. Choose from the list Materials Management Postings (MM).
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Next you get a list of transaction codes. Choose the transaction BSX. The Chart of Account
here is INT. A table of accounts opens. In the first row you can see the combination of
valuation class 3000 and account 300000, which was the inventory account in our posting.
Now we have find out the GR/IR account.
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8.3.4 GR/IR Account VRX
The GR/IR account is determined by transaction WRX.
In Chart of Accounts INT there is only one GR/IR Account.
Now we have solved all the parts of the accounting document of the goods receipt posting to
stock.
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In cost center posting the expense both the cost center and the account were entered in the
posting.
8.3.5 AP Account, Tax Account
The invoice was posted to Accounts Payable account, GR/IR account and tax account. The
systems finds the AP account in the vendor master, defines the IR account the same way as
in the GR-account. The tax account can be found in the automatic account assignments (tr.
FTXP).
Tax codes are country specific. Enter here DE, because the IDES company 1000 is a german
company code.
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The tax account used was VN 16% domestic input tax. Choose it and look in tax accounts.
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8.3.6 Expence Account GBB - VBR
In cost center posting the expence account can be entered either manually or defaulted. The
default value is defined with transaction key GBB in MM automatic account determination.
GBB is a general definition and needs to have an additional key, an account modication. You
find the key in IMG.
Start from IMG. Use transaction SPRO - Material Management, Purchasing, Account
Assignment. Choose Category K Cost center.
The Account modification key you need is VBR.
Start the automatic account determination with transaction FBKP. Select MM postings. Then
choose transaction GBB Offsetting entry for inventory posting and chart of account INT. GBB
is a general definition and needs to have an account modication key, such as VBR. The
material used in the posting had valuation class 3000. The account defaulted is 400000
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If you are interested in MM account determinations, Manish Patel has written an excellen
book about the subject.

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FINANCIALS IN PURCHASE TO PAY PROCESS

1 FINANCIALS IN PURCHASE TO PAY PROCESS ................................................................................................2

1 Financials in Purchase to Pay Process

2 Create Purchase Order for a Stock Material

Choose Vendor/ Supplying Plant Known

Create a new purchase order:

1) Use Vendor: 1011

Enter Purchase organization 1000 and group 001

2.1 Purchasing info record

Take a look at the purchasing info with transaction ME13.

Enter the vendor number, material, purchasing organization and plant.

One info record is found with this combination. Choose ’Conditions’.

3 Post Goods receipt

2) Enter the number of your purchase order

3) Note the transaction type 101 Goods Receipt posting.

If the item detail screen is open, you can close it.

Post (save) the receipt.

You will get an error message: "Enter delivery note!"

Post (save) the receipt.

A material document is now created.

4 Display material document

4.1 Other options to display the material document

Enter the material document number.

Select a line and click one of the icons:

(1) - Display material document screen

(2) - Stock overview

(3) - Accounting documents

If you branch to the material document, it has a traditional look.

4.1.2 Material document list - MIGO-view (MB59)

Transaction MB59 opens the material document selection screen.

5 Post the Invoice

Choose Enter Invoice (MIRO)

If you are asked for a company code, enter 1000.

6 Display the invoice

6.1 Accounting documents

Double click the line to see the details.

7 Procurement to a cost center

There is no difference in the invoice verification in logistics or accounting.

Click on the question mark to get further information.

You find the MM periods under Material Master.

To open the new periods, choose 'Close Period'.

FI Periods are maintained under General Ledger, Current Settings.

8.2 Purchase Order History

8.3 MM account determination

8.3.2 Postings created

Open the Accounting 1 view.

The profit center can also be found in material master.

8.3.3 Inventory Account BSX

8.3.4 GR/IR Account VRX

The GR/IR account is determined by transaction WRX.

In Chart of Accounts INT there is only one GR/IR Account.

8.3.5 AP Account, Tax Account

8.3.6 Expence Account GBB - VBR

The Account modification key you need is VBR.

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