Accounts Payable

Purpose
Accounts payable accounting keeps and manages the account records of all vendors and is also an integral part of purchasing. This scenario describes the processes that are used in handling business transactions with vendors.

Process Flow
Document parking If you do not have all the necessary data to enter a complete document, you can begin processing a vendor invoice or credit memo by parking it. Once you receive all the information to complete the document, you can enter it in the parked document and then post the document. Invoices and credit memos If you receive a vendor document containing all the required information, you can directly enter and post a document in the system. Down payments You create a down payment request if you have made arrangements with your vendor to make down payments and plan to use the automatic payment program or the dunning program. However, you can also make a down payment manually, you do not necessarily require a down payment request. Once you have received the final invoice, you can clear the down payment with this. However, you also have the option of making a transfer posting of the down payment from the special G/L account to the payables account, without clearing it with an invoice. Payment request You create a payment request if you want the payment program to pay a parked invoice/credit memo or make a partial payment. Payment You can make manual payments in cases where you do not want to use the automatic payment program. In addition, you can: Process partial payments Create residual items Enter reason codes Charge off differences to special accounts Trigger correspondence via reason codes

Account clearing

You can use this function manually or via the clearing program to clear debit and credit amounts that balance to zero (such as invoices and payments that you have already entered). Release for payment You can use workflow functions to release invoices that are blocked for payment. Account analysis Vendor account analysis includes: Line item analysis Balance analysis Evaluations

Bill of exchange payable You post your own bill of exchange payments to clear the payables owed to vendors. Interest calculation You can calculate interest either on the account balance or on the arrears when calculating interest for a vendor account.

CCOUNTS PAYABLE NOTES

What are Golden Rules of Account? In Personal Account In Real Account In Nominal Account What is Account Payable? Accounts payable is a file or account sub-ledger that records amounts that a person or company owes to suppliers, but has not paid yet (a form of debt), sometimes referred as trade payables. When an invoice is received, it is added to the file, and then removed when it is paid. Thus, the A/P is a form of credit that suppliers offer to their customers by allowing them to pay for a product or service after it has already been received. Debit the Receiver Credit the Giver Debit what comes in Credit What goes out Debit the Expenses /Losses Credit the income/gain

Example: Company Purchase some materials on credit basis, the Credit period is span of one month. So until made payment to Vendor, it is treated as dues in Accounts Payable in balance sheet. What are the teams in Accounts Payable? Indexing/ sorting Sorting team will sort the invoice according MM vendor invoice, finance vendor invoice, Service vendor invoice, and Employee vendor invoice, date of invoice, vendor Name. Invoice posting team invoice posting team Posting the vendor invoices, if they found any wrong (quantity mismatch, amount mismatch, or both , any require field is missing or not visible proper like invoice no., vendor name etc then they post the invoice as park document. Query handling Team Query handling team release the Parking invoice by solving the query & post that Invoice. Payment Team This team is responsible for all types Vendor payment Normal Payment, Advance payment, payment request. Vendor Reconciliation team: The team is responsible for confirmation the vendor dues by reconcile vendor payment history in system & Vendor Statement. If they found any dues still to be paid, they raised supplementary payment or if they found any overpayment or duplicate payment against duplicate invoice posting by user they raised credit memo to recovery of over payment or they adjusted the over payment in next payment once confirmed for superior/manager. & another responsible to handle the TDS transactions from top to bottom like Submitting the tds amount in the bank on line, Bank challan receipt number update & TDS raised to vendor What is Purchase Order? Purchase order is a commercial document which is issued by the purchaser to the seller for ordering goods or serves. Purchase order creates legal agreement between purchaser and the seller. It contains Name of the supplier Description * specification of material

Quantity ordered Date & place of delivery What are Types of Purchase Order? Standard Purchase order: This PO is created for one-time purchase of material. Blanket Purchase Order: In this PO delivery schedule are not known clearly. Contract Purchase Order: In this PO material required are not specified. Planned Purchase Order: It is a long term agreement purchase Order. In this PO it specifies materials, estimated costs, and tentative delivery schedules What do you mean by four way matching, three Way Matching, and two way matching? 2-ways- we will compare 2 documents - match Purchase order with Invoice Whatever you have ordered for the PO we will make the payment for the suppliers in 2-way (we will compare two documents PO and Invoice). Example: Suppose we had given PO for 100 items, for that we will receive invoice for 100 items. So that we will make payment for that 100 items. 3-Way matching - we will compare 3 documents - Purchase Order + Goods receipt +Invoice Example: Suppose we have ordered 100 items in Purchase Order. But we had received only 80 items, but we had received invoice for 100 items. So, we will make payment for only 80 items 4-Way we will compare 4 documents Purchase Order + Inspection + Goods Receipt + Invoice+ Example: Suppose we have 100 items in Purchase Order .Suppers send us 80 items we will do inspection on those items whatever we have received, IF 10

items got damaged. Finally, we are going to make payment to the 70 items only. What is Down payment Process flow? This Fundamental is used to give advance payment to vendor to receive the goods. If it is declared that material receives against advance payment in purchase order, in this situation purchase department Notified that give down payment to vendor by create down payment request. The finance Department is converted down payment request to down payment made on respective due date. Sap process like : Down payment Request f-47 (it many times created by purchase department & infirm to finance department to pay the down payment on that due date) Down payment Made f-48 (if down payment request is exit first release that or if not make down payment directly) Down Payment Cleared f-54 (Cleared the Down payment Against Invoice number, once vendor invoice posted in the system) What kind of error can be occurred during Document Posting? Error of commission this is happened when in invoice quoted amount is 560 and user entered 650 so it is an error of commission. Error of omission you totally omitted that invoice in system. Duplicate invoice posting if double time invoice posted in the system by give different invoice/reference number. To avoid this kind of an error you have to create doubt, if you posted same vendors invoice recently. Who is indenter? Indenter is a person who raised the Requirement to procure material. Example: A manager in finance department needs 2 Printers to purchase. He will infirm to Purchase Department regarding printer. In this case indenter is manager.

What is Procurement to pay or accounts payable or purchase Process flow with Journal entry? Material Requisition Planning T.CODE Material Requisition ME51N Purchaser raised Shortlisted vendors ME21N Goods Receipts - Raw Material A/c Dr. 500 MIGO To GR/IR Clearing A/c Cr. 500 Invoice Receipt - GR/IR Clearing A/c Dr. 500 MIRO To Vendor A/c Cr. 500 Vendor Payment - Vendor A/c Dr. 500 F-53/F-58/F110 To Outgoing Bank Clearing A/c Cr. 500 What are the Sub parts in Accounts Payable in sap? Vendor invoice Posting Release Park invoice Vendor Payment Reporting Vendor Reconciliation

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1. 2. 3. 4. 5. 6. SAP Accounts Payable (AP) overview Accounts Payable (AP) Master data Invoice Processing Payment / Disbursements Account Analysis Account Reconciliation

7. 8.

Periodic processing Reporting