Business Process Document

Enterprise Area : Manage Financials

Scenario : Manage Vendor Invoices and Payments
Process Group : Bill Passing

1
 Document Sign-off sheet

________________ ________________
Mr. Anand Bagrecha Mr. Bipin Shah
Major, SUZLON Major, SUZLON
Manage FI/CO Manage FI/CO

________________ ________________
Mr. V.K.R Kutty Mr. P. Palsule
Major, SUZLON Captain, SUZLON
Manage FI/CO Manage FI/CO

________________ ________________
Mr. Vikas Maheshwari Mr. Devang Trivedi
Captain, SUZLON Major, SUZLON
Manage FI/CO Manage FI/CO

________________ ________________
Mr. Mitesh Thakkar Mr. Tarang Bhatt
Captain, SUZLON Captain, SUZLON
Manage FI/CO Manage FI/CO

________________ ________________
Mr. Vinayak Namjoshi Mr. Lakshman Iyer
Captain, SUZLON Captain, IBM
Manage FI/CO Manage FI/CO

________________ ________________
Mr. Sandeep More Mr. Sai Prasad
Captain, SUZLON Captain, IBM
Manage FI/CO Manage FI/CO

________________ ________________
Mr. Vinay Thakre Mr. Jitu Shetty
Captain, SUZLON Captain, IBM
Manage FI/CO Manage FI/CO

2
 Document Control:

Author Sai Prasad

File Name and D:\SAP\Staging\BPD's\MFC0102_Bill_Passing
Path
Created 5th July 2004
Last Edited
Number of Pages 10 (Ten)

Version Revision Revision Author/ Sign-Off

Date Description Process Owner
V1.0 Author:
Sai Prasad
Process Owner:
Bipin Shah
Anand Bagrecha

Target Readership
Core Team Members
Process Owners

3
 Table of Contents

1. Scenario: Vendor Invoices and Payments (Accounts Payable) ............................ 5

1.1 Process Group: Bill Passing................................................................................ 5
1.1.1 Process: Logistics Invoice Verification (Materials) ................................... 5
1.1.2 Process: Logistics Invoice Verification (Services) .................................... 7
1.1.3 Process: Invoice Verification (Finance)..................................................... 8
1.1.4 Process: Subsequent Debit/Credit Notes ................................................... 9
A. Integration Points .................................................................................................... 9
B. Performance Measures.......................................................................................... 10
C. Interfaces............................................................................................................... 10
D. Gaps and Solutions ............................................................................................... 10
E. Configuration ........................................................................................................ 10
F. Reporting Requirement......................................................................................... 10
G. Authorization ........................................................................................................ 11

4
1. Scenario: Vendor Invoices and Payments (Accounts
Payable)

1.1 Process Group: Bill Passing

1.1.1 Process: Logistics Invoice Verification (Materials)

Business Process:

Invoice Parked by Parked Vendor

Purchase Invoice document posted
by Finance

This Process Involves posting of Purchase Order (PO) based Vendor

Invoice (Logistics) – Materials / Services and is relevant for all the
Locations.

In SAP the process will be managed as follows:

• Invoice Verification will be performed in the System by

Purchase Accounting Cell using transaction code MIR7.
• The above Invoice is in a parked condition and can be against
the reference of PO or Delivery Note or against the Vendor.
• The purchase department will submit all the related
documents to the Accounts Department for final posting of
the parked Invoice by transaction code MIR7/MIRO.
• This process will cover Invoice Verification for all purchases of
materials, stores & spares, consumables, capital items,
services etc.
• This process will also cover Invoice verification for planned
delivery costs such as Custom Duty, Freight, CHA charges,
etc.

In case of planned delivery costs where the same is payable to a

different vendor e.g. transportation vendor, customs authority, CHA

5
Agent etc. such costs can also be booked through this process as the
relevant vendor will be defined in the PO.

This process will also cover Invoice Verification for various shipment
costs that will be built in the Sales Invoice or the Stock Transfer Order
and that will accrue on posting of the Invoice or the STO.

Input document for this process can be PO based Vendor Invoice or for
planned delivery costs from one or several PO’s.

The Process of Invoice Verification is as follows:

• Enter Vendor Invoice Date in “Invoice Date”, Posting Date,

Vendor Invoice No. in “Reference”, Invoice Amount,
appropriate tax code (if different from default Tax Code from
PO) etc.

• In case of materials of any type, select the option “Purchase

Order / Scheduling Agreement” and enter the relevant P.O.
Number. Option “Goods & Services” is selected.

• In case planned delivery costs are payable to the same

vendor, option “Goods & Services and Planned Delivery Costs”
may be selected.

• In case of planned delivery costs payable to different vendor,

select the option “Vendor” or “Transportation Service Agent”
(in case of shipment costing Invoice Verification), as the case
may be. Select the option “Planned Delivery Costs”, select
appropriate “Plant” and select “Adopt”.

• System will bring in all the individual GRN wise details as line
items. Select the appropriate line items based on the
acknowledged LRs attached to the vendor invoice.

• In case of service invoices select the option “Service Entry

Sheet” and select the service entry sheet by entering the
relevant PO number.

• Due Date will be calculated based on Baseline Date. Invoice

Date will be defaulted in the Base line Date.

6
 • If Vendor is also liable for TDS, the system issues message to
the effect ‘Vendor is liable for Withholding Tax’. Check the
withholding tax codes and the base amounts in the
withholding tax tab.

• If the Vendor is also liable for WCT, all withholding tax codes
defaulted in the withholding tax tab other than one for WCT,
need to be removed if no Income Tax is to be deducted on
materials. Adjust the base for WCT as per requirement.

• All items due for Invoice Verification will be picked up by the

system. Check and Select the items for which Invoice
Verification is to be carried out.

• ‘Calculate Tax’ check box is ticked.

• Simulation may be done to verify the accounting impact, if

required or on a random basis.

• Document Header Text may be used to capture any useful

information.

• The document will be posted and liability is booked.

1.1.2 Process: Logistics Invoice Verification (Services)

Business Process:
Invoice verification would be with respect to Service Entry Sheet.
There is a three way linking between the Service Receipt, PO & the
Invoice through the service entry sheet (mentioned in the Invoice) and
the purchase order no. (mentioned in the SR & the PO).

The rest of the process is same as elaborated for the Process ‘Logistics
Invoice Verification (Materials)’ above.

7
1.1.3 Process: Invoice Verification (Finance)
Business Process:

This process involves posting of Vendor Invoices (other than materials

and services invoices covered in the Process - 1.1.2) and thereby
recording the expense and liability in the books.
This process is to be used to recognize liability for non-procurement
cycle invoices received from the vendors like legal fees invoices,
consultancy services and other miscellaneous FI vendor invoices.
This route can also be used to book liability for items procured where
there are no implications like GR/Service Entry/Excise or other events
in the procurement cycle.
The process of Invoice Verification is as follows:

• Inputs for the process are duly certified bills received from
the departments. Vendors of all types i.e. for materials and
services will furnish their bills periodically. These bills will be
checked and certified by the receiver of the goods/services
and submitted to the accounts department.

• In SAP the process will be managed using Transaction code

FV60 for Parking and FB60 for Direct Posting for FI-AP.

• Vendor number, amount, the GL Account Code for the

expense, cost center and other particulars are entered.

• Withholding Tax Code for TDS is verified and changed if

required.

• The document will be posted and the liability is booked.

• The TDS posting will be carried out.

8
1.1.4 Process: Subsequent Debit/Credit Notes/Credit Memo
Business Process:

Transaction Code: MIRO/MIR7

In SAP the process followed will be similar to the process 1.1.1

Logistics invoice verification (Materials) – Parking by Purchase
Department and Posting by Accounts Department.
Subsequent adjustments can be in the form of Debit notes or credit
notes from the Vendor. A Credit Memo will reduce the invoiced
quantity against the purchase order whereas the subsequent
debit/credit note will not affect the quantity.
Debit notes against a vendor can be raised under many circumstances
viz. in cases of rejections where the invoices have been paid.
• In cases of subsequent escalations or de-escalations, the
vendor raises further invoices or credit notes for which there
are no Good Receipts. These types of invoices will be
processed through Subsequent Debits or Subsequent Credits
in the SAP system.
• In case there is any quantity related rejections, Credit Memos
will be raised against the vendor.
The transaction is same as described above for Vendor Invoice
Verification for Materials/Services.

Special Check: The field checks double invoices (Check for duplicate
invoices) must be flagged on the Accounting view in the vendor master
record.

A. Integration Points

• Preceding Process : MFC0102 – Vendor Master Data

Inventory Accounting in MM (in
case of Materials)

• Succeeding Process : MFC0103 – Vendor Payments

9
B. Performance Measures

• Production Cost (including Material)

C. Interfaces

• None

D. Gaps and Solutions

Gaps Workaround Enhancements Solution

E. Configuration

• Document Types
• Document Number ranges
• Invoice Verification Tolerances
• MM Account Assignment
• CO Account Assignment
• Payment Terms

F. Reporting Requirement

Existing Company Description Equivalent SAP

Report Name Report
Liability SWSPL Total payable as FBL1N
Statement on a given date
towards various
transactions –
statewise
Vendor Ageing SWSPL Age wise Analysis S_ALR_87012078
analysis of vendors over
various ageing
period

10
Details of SEL Covers the FBL1N
Various consultancy
Consultancy charges paid for
Expenses various services
with the nature of
services availed
Foreign Suzlon Purchases
currency wise analysed in terms
purchases of the foreign
currencies
transacted

G. Authorization

Purchase Accounts Accounts

Clerk Clerk Manager
MM Invoice Parking Yes No Yes
MM Invoice Posting No No Yes
MM Blocked Invoice No No Yes
Release
FI Invoice Parking No Yes Yes
FI Invoice Posting No No Yes

11