For subledger accounts you differentiate between vendors (accounts payable) and customers (accounts receivable), where in general ledger (G/L) you only mange the total of payables for the financial statement, you use accounts payable for all details regarding business transactions, such as invoices, credit memos and outgoing payments. You have have to ensure correct documentation of goods receipt because it is used as the basis for release of payments of invoices. The FI-AP component keeps and manages account based data of all vendors, it is also an integral part of the purchasing system, purchase orders, deliveries and invoices are managed based on vendors and update vendor evaluations.
FI-AP ensures that all legal obligations are kept by keeping records that are fulfilled for reliable accounting but also serves as the information source for an optimal purchasing policy and supports the enterprise's liquidity planning owing to the direct integration with cash management and forecasting, account analyses, due date forecasting and further standard reports are available for the open item management. The payment program automatically pays due payables and closes the corresponding items. To document the processes in account payable you can use account balances, journals, balance audit trails and numerous standard reports. For key date valuations you revaluate foreign currency items, determine vendors on the debit side and scan the balances established this way for remaining terms.
I do have a whole section on payable accounting in my FI configuration and setup section, this covers the subject from a configuration point of view.
Master Data
We will now have a look at the vendor master record, which is used for business transactions in the accounting area and in the purchasing area. The master data is made up of three parts, general data, company code data and purchasing data, you can use transaction code XK03 (centrally) or FK03. The data
- General Data - is maintained at the client level, the data is available for all company codes. At this level you specify the name of the subledger account in subledger accounting, the tax number and the bank details
- Company Code - individual company code data ia maintained in this section, this includes the account number of the reconciliation account in the general ledger, the terms of payment and the settings for the dunning procedure.
- Purchasing Data - is used with the MM module (materials management), you can enter data on requests, on purchasing orders and for invoice verifications, the data can include conditions (for example purchase order currency, terms of payment or minimum purchase order value), sales data (sales person including telephone number) and control parameters, use transaction codeXK03.
Lets create a vendor account using transaction code FK01 (use transaction code XK03 if you need to enter purchasing data), I am not going to cover every option as we will be discussing some of them later, here I am filling the details just to get the vendor account created, The vendor account number is controlled by the account group and the account number assigned to it, the account number can have just numbers, characters or both, here the account number is vendor10, which is assigned to the account group 0001 (left-hand screenshot), you can use SPRO to configure account groups and account numbers (right-hand screenshot)
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In the initial screen you can create multiple reconciliation accounts, if you need more than one alternative reconciliation account linked to the same general ledger account then enter the general ledger account multiple times as you have alternative accounts. You can also use a short key to represent the alternative reconciliation account to ease document entry, you simply enter a two character alphanumeric key as per the below screenshot
You need to make sure that in the general ledger account (reconciliation account) you have the recon.acct ready for input checkbox ticked, if you do not see it in the section you can use transaction OBD4, select the document entry field and you should be able to see the reccil.acct ready for input entry. When you are posting to the vendor or customer account you can use either the general account or the ID
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You can block an account using transaction code XK05, you can block the vendor in all company codes or the selected company code, you can also block it in purchasing. A dunning or payment block can be set at the company code level, you can set or unblock the blocking indicator in the subledger at anytime.
SAP provides a special master record type for one-time or sporadic vendors, this master record does not contain specific data of the business partner such as address or bank details, this information is separately entered during document entry. When posting to a one time account the system automatically navigates to a master data screen where you can enter the specific data of the business partner. The master records for one-time accounts are stored separately in a specific account group. The system hides the specific fields of the business partner when the master data is entered. If you have lots of one-time accounts you should create multiple accounts and separate them for example first letter and industry, this will help otherwise it may get confusing when clearing and try to find accounts quickly. You can perform dunning on one-time accounts, open items can be dunned and processed using the payment program.
Overview of the Integrated Business Transaction
Accounts payable in the context of integrated business transactions usually concerns the individual steps from purchase orders to outgoing payments (purchase to pay). Integration also means that the information flow involves different departments. This examples includes the departments of purchasing, accounts payable accounting, controlling and treasury.
The ordering process starts with a purchase requisition, before you can generate a purchase order for the vendor this internal approval process ensures clarity and transparency, the purchase requisition defines exactly at which price goods or services may be ordered and an approval of the purchase requisition requires a dual-control or three-control principle. This early implementation facilitates later invoice verifications, additionally the purchase requisition enables the involved departments, controlling and treasury to obtain an overview of the expected expenses or cash outflows.
If the goods have been received for the purchase order the goods receipt is not only based on quantities but also documents the exact value of the goods for the purchase order. If no vendor invoice that corresponds to the goods receipt is available at the end of the month, this value serves as the basis for accrual and deferral posting (we will discuss the automatic maintenance of the GR/IR account in the closing operation section).
Processing of incoming invoices is one of the traditional areas in accounts payable accounting, services are normally documented in paper form and sent by post, the documents are normally scanned and then archived, which means that documents can be obtained quickly. In addition to having a central inbox and an early scanning scanning process, the optical recognition and interpretation of paper invoices is the next step on your way to an optimized process. OCR allows for default account assignment of the accounting document. Provided that the system finds the corresponding purchase order for the invoice and provided that there are no price differences or quantity variance the system can automatically post the document in the background.
If very large volumes are involved the transfer of invoice data via EDI (Electronic Data Interchange) including a subsequent printout of the collective invoice has become established as a process, these are one-to-one connections between customers and vendors. In some industries for example the automotive industry this procedure is already widely used. You can summarized between the following types of processing incoming invoices
- Manual processing with late scanning
- Manual processing with early scanning, so that an optical image is provided for the workflow in the enterprise
- Automatic processing and early scanning via OCR, which also creates default account assignments in additional to the optical image
- Automatic processing where large invoice volumes are transferred via EDI
Cashed checks enable specific evaluations, you can evaluate when and whether vendors cashed the receive checks and even indicate this as an average value in the master record.
Entering Incoming Invoices
The general FI-AP posting transaction code is FB01, this is similar to the G/L document entry, we first enter the header details and the first line item, remember the posting key determines the next screen layout,
The next screen we enter the full details for the first line item, and then we enter the details for the second line item
We lastly enter the full details of the second line item, at this point we can perform a simulate and a simulate G/L
The left-hand screenshot is the simulate and the right-hand screenshot is the simulate G/L, here you should be able to pickup any errors, you only have to perform a simulate when you are testing the system, once live you should have the confidence that you do not need to simulate every time.
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We can then have a look in the vendors account (left-hand screenshot) and we should be able to see our posting (in an open state), remember this is a subledger account and thus we have a reconciliation account (right-hand screenshot) where all documents will be posted as well, in this case account 160000 (trade payables), we should see the same document 2000000012
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Like the G/L document entry we have a single screen document entry for accounts payable, using transaction code FB60, we can enter a incoming invoice, the initial screen is the data entry (left-hand screenshot), notice in the left-hand screenshot the balance still has a yellow icon which means the document has not been checked, also notice that the line item does not have a green tick, again it means that the line item has not been checked, once checked you will notice that the balance icon turns green and that the line item has a green tick which indicates that the document should be ok to be posted (see right-hand screenshot)., if not then check for any errors in the document.
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Again we can check the vendor account the left-hand screenshot (and reconciliation account right-hand screenshot) and see that the document was posted
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Lastly we can take a look at the fast entry screen, this is a little different than the last to ways on entering a document, you use transaction code FB10, the initial screen has some basic document header information and allows you to select the input fields for the document header and vendor, depending on what you select here will determine the screen layout in the next screen
Now we will see the familiar screens we saw using FB01, again the system will provide you with confirmation that the document was posted successfully (right-hand screenshot)
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When entering invoices using the above methods (FB50, FB60 or FB70), you normall don't need to enter the document type or postings as the system supplies a default, you can change these using transaction OBZO, you can specify a particular company code and transaction type, as you can see in the screenshot below it is pretty self-explaining, as you can SAP already supply default document types.
Automated Payment Transactions
The payment transaction refers to the processing of the incoming and outgoing payments of an enterprise, this includes
- Incoming payments via debit memos
- Outgoing payments via bank transfers or checks
- Incoming checks with manual check preposting
- Incoming payments via bank transfers returned debit memos and returned checks
- Selection of the due date and open items
- Posting of payment documents (accounting documents)
- Generation of payment lists and logs
- Generation of payment media (check forms, payment advice notes)
You can also define specific checks as such
- Minimum and maximum amounts
- Allowed business partners abroad (country code in the master record)
- Allowed bank details abroad (country code in the bank master record)
- Allowed foreign currency
A payment block indicator can be used to block accounts or individual items for payment, if a payment block is set the system will display an error message "Account blocked for payment" or "Item blocked for payment" for the corresponding item. The payment block reasons can be accessed via transaction code OB27, you can block a item payment in the document header as seen in the right-hand screenshot, notice the payment block key matches the payment block reasons.
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The logging type information
- Due date check - define the due date check is logged for open items
- Payment method selection in all cases - ensures that the selection of all payment methods and all banks is documented in the log, you can then use the log to trace the procedure for payment method selection
- Payment method selection if not successful - defines that the attempted selection of the payment method and bank is only documented in the log if no allowed payment method or bank is found. The log enables you to identify whether corrections have to be implemented in the master record of the business partner or in the configuration program
- Line items of the payment documents - ensures that the log outputs all posted documents including the corresponding items.
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Depending on you systems performance and the number of transactions to check it may take a while to complete, keep clicking on the status button to refresh the screen, you can see that the proposal is being started (left-hand screenshot), eventually the proposal will finish (right-hand screenshot)
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You can see that it is made up of 3 transactions, from here you can obtain the document numbers, amounts, posting date, document date, etc
Now that we are happy with the proposal its time to perform the payment run, remember nothing has posted, it is possible to make changes to proposal or you can even delete the proposal, we select the payment run icon, again use the status icon to refresh the screen, you may first see the screen on the left-hand side notice that the posting orders generated is 1 and the completed is 0, after a short while both should be 1, which means that the postings are complete, lets take a look
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Let take a look at the account balance for the vendor, we can see the payment of 12,500 with a document ID of 70001 which is a vendor invoice but it is also a clearing document, notice the 3 line items we saw earlier, they all have been cleared using this document, basically what we are saying is that we have received the goods and the invoice, however we have yet to actually pay for the items, and this instructs the next phase of the payment process that is to actually pay the vendor, internally someone will now authorize the actual payment to take place.
We then check the citibank G/L account, you can see we have a new posted item of 12,500.00, which tells us that we need to pay for this item, once we have paid for this item the bank will issue a bank statement, this statement could be automatically or manually entered and then this document could be cleared confirming that the line items for vendor10 have been paid for, we will cover this in more detail the bank accounting section.
During the payment run lots of things are happening in the background, the account determination is all configured using transaction code FBZP, see outgoing payments and automatic outgoing payments sections for more details on how to configure the account determination and then you will have a better understanding on what happens during the payment run.
As mentioned above when you make a payment to a customer or vendor the system automatically selects all of the open items that are due and groups them together in one payment, if for example we have a credit memo with a specific invoice that it relates to during the automatica payament it will net it off with all the other open invoices in the account. This may be acceptable however sometimes you may need to group common open items together so that they are groups together in a single payment, we can setup grouping keys to group similar items for payment using transaction codeOBAP, in the below left-hand screenshot the fields for grouping payments you can group up to three fields which can be used to group the open items together. Once the grouping key has been created you can add it to the master data of the customer or vendor, for example using transaction code FK02 on the payment transaction accounting tab we can select the grouping key (right-hand screenshot).
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There will be times when you need to enter a vendors payment manually, perhaps you only run the automatic payment run at the end of the month, and then vendor wants his payment earlier, we can use transaction code F-53 (you can also use F-03 or F-51, (F-44 vendors, F-32 customers) which are very similar), here I enter a outgoing payment of 1000.00 specifying the bank account to be 113101 which we saw in the automatic payment run above, this time I use the vendor account pvalle, once the details have been entered I then select the process open items button
The system will now search of the open items of the vendor account pvalle, as you can see there are a few of then, now you have to look carefully as the USD GROSS column could have all items in black or all items in blue, what this means this if the item is in blue then it will be available for payment, if in black then its not available for payment, you can either select the item and use the itemsbutton (activate or deactivate) or you can just double-click the item to activate or deactivate the item. The important thing to remember is that not assigned box contains a zero balance. You also have the options to enter any cash discounts either as an amount or a percentage.
Again we can simulate left-hand screenshot) or simulate the G/L entry (right-hand screenshot) to confirm the posting
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There are a number of options available for open items
- Posting as a residual item - the systems closes the original open item and simultaneously generates a new open item with the remaining amount
- Posting as a partial payment - the original open item is not cleared, the system posts the payment with an invoice reference, for this purpose it enters the invoice number in the invoice reference field of the payment items.
Here you can see that I have selected the res.items tab and only selected the invoice of 1000.00, initially the residual items column will be blank double-click the column and it will automatically be filled with the residual, in our case 50.00
Again we can run a simulate or a simulate G/L account
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Lets have a look at the vendors account balance, as you can see the original invoice has not been cleared using the document above as the clearing document and a new document has been created with the remaining 50.00
Partial payments is the same as residual payment, again create the document header information
Then select the payments that you wish to make the partial payment against
The two items are indicated as open and are linked to each other with identical content in the assignment field.
Evaluations in AP Accounting
To make sure that payments are made on time and are not being held up due to security checks (where a payment requires two authorizations), you can use transaction code FK09, in the initial screen (left-hand screenshot) you can search vendors and or company codes and you have a number of options on what to look, when you have made your selection you a list will be generated detailing what payments need authorizing (confirming), in my case I do not have any.
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The vendor data information system is a kind of cube that is filled with up-to-date information at regular intervals, you can view, rotate and turn this cube from different perspectives, you can use transaction code F.46, you can configure and update the information use the below
The initial screen allows you to drilldown on a specific path, here you can see that I have drilled down to evaluate the open items in the group client 800.
Here you can see the interest that has been accumulated due to the open items, also notice the date in the right-hand corner, obviously this information is out of date and needs refreshing
You can also have quick access to the payable reports using transaction F.98, you can even turn on the technical name of the reports.
I have explained how to update this information in my account receivable section, using transaction code F.29.
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