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Financial Impact of Goods Receipt
Figure 4-24: Financial impact of goods receipt
A material document and an accounting document are also created; they are illustrated in Figure 4-25. In the material document the header includes the material document number, the date, and the associated delivery document number. The items identify the materials received, the quantity received, the location (plant), and the movement type. In the accounting document the header section consists of the document number, date, currency, and a reference to the delivery document. The item details section shows the two general ledger accounts that are impacted by the goods receipt – a debit in the inventory (trading goods) account and a credit in the GR/IR account. The accounting document is a record of the postings made to the accounts in the general ledger.
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The goods receipt step also results in updates to the purchase order and the material master. The purchase order history is modifi ed to include the material document number. A user is able to retrieve the purchase order (or the purchase requisition, which, if you recall, includes a link to the purchase order) and display the purchase order history. The history will show the mate- rial document number, which the user can access to view details. In the material master, the quantity, value, and the moving average price are updated.
Several optional steps can follow the goods receipt step, including the creation of inspection lots, transfer requirements, notifications, and outputs. Significantly, SAP ERP includes certain optional capabilities that enable fi rms to implement these steps. One of these capabilities, quality management, creates an inspection lot from the goods received and triggers various steps in the quality management process. An inspection lot is a request for a quality inspection of the materials received. It includes details such as how many of the materials to inspect and which characteristics to inspect. In contrast, warehouse management, another optional capability, generates a transfer requirement. A transfer requirement documents the need for the warehouse to store or with- draw materials. It therefore serves as a trigger for warehouse management processes. We discuss warehouse management in Chapter 7. An example of a notification is when appropriate persons in the organization, such as the original requisitioner, are informed that the materials have been received. Finally, an example of an output is a goods receipt slip, which is a document that ware- house personnel use to make certain they store the materials in the correct locations.
Demo 4.9: Receive goods against a purchase order
INVOICE VERIFICATION
The next step in the process is invoice verification, which is summarized in Figure 4-26. When a company receives a vendor invoice, it verifi es that the
Figure 4-25: Material and accounting documents from a goods receipt
114 CHAPTER 4 The Procurement Process
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invoice is accurate before it makes payment. The most common method of invoice verification is a three-way match between the purchase order, the goods receipt or delivery document, and the invoice. The objective is to ensure that the quantities and price in all three documents are consistent. An alternative is a two-way match between a purchase order and the goods receipt document. This method is not very common, and it requires a high degree of trust and cooperation between partners. In our example, GBI placed a purchase order for 500 t-shirts from Spy Gear. The Miami plant received the Spy Gear shipment of 5 boxes of 100 t-shirts (500 total). Spy Gear sent GBI an invoice for 500 t-shirts. Further, the price in the purchase order and invoice are the same. Thus, GBI can make a three-way match between the 500 units it ordered for $15 each, the 500 units it received, and the 500 units it was invoiced for $15 each.
Data
Figure 4-27 identifies the data that are needed to complete the invoice verification step. The data obtained from the invoice include the vendor number, invoice date, invoice quantity, and invoice amount. The data from the pur- chase order include vendor number, materials, quantities, and price. Finally, the materials and quantities received are obtained from the material document created during the goods receipt step.
Figure 4-27: Data needed for invoice verification
Figure 4-26: Elements of the invoice verifi cation step
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Tasks
To complete this step, the user will provide the data from the invoice (ven- dor, date, and amount) and the purchase order number. The system will then retrieve all the needed data from the purchase order (vendor, materials, quantities, and price). It will also retrieve the goods receipt data for the purchase order. The user will verify that the data are correct and, if they are, will approve the invoice. Occasionally, there will be discrepancies among the three sets of data. For example, the quantity delivered or price may vary somewhat. Whether these discrepancies are acceptable will depend on the organization’s purchasing and accounting policies, which are specifi ed in the material master or other master data in the form of over- and under-tolerances. If the discrepancies are within tolerances, then the invoice is approved for payment. If not, then the invoice will be blocked, and further action from the accounting or purchasing department will be required before it can be released.
Outcomes
As you can see in Figure 4-28, invoice verifi cation has an impact on the gen- eral ledger. The fi gure illustrates the data for our example. Specifi cally, a debit of $7,500 is posted to the GR/IR account, and the vendor account is credited by the same amount. Because the vendor account is a subledger account, an automatic credit posting is also made to the corresponding rec- onciliation account in the general ledger—the accounts payable reconcilia- tion account. A corresponding fi nancial accounting document is created. In addition, an invoice document is created.
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