Figuring out Payables Management Posting Logic and Posting Invoices and Credit Memos

Objectives

After completing this lesson, you will be able to:

  • Outline payables process
  • Post supplier invoices and supplier credit memos

Payables Process

Source to Pay Process

Meet Jennifer. She just finished her business administration studies and started working in the accounting department of the Bike Company. Bike Company produces bicycles and e-scooters made of sustainable materials.

Jennifer will be working as a payables management accountant. Her focus will be processing and organizing incoming supplier invoices. Jennifer would like to learn how to perform her daily invoice processing tasks in SAP S/4HANA.

Jennifer is aware of the general procurement process, or source to pay, where her accounting department plays a vital role. When it comes to her main tasks, she discovers that they belong to the subprocess of the source to pay process, namely invoice to pay.

In terms of this subprocess, Jennifer’s tasks will be to:

  • Process supplier invoices

  • Process accounts payable

The figure illustrates the Source to Pay process, breaking it down into five subprocesses: Source to Contract, Procure to Receipt, Request to Resolution, Invoice to Pay, and Manage Supplier and Collaboration. Within the Invoice to Pay stage, there are two sub-processes: Supplier Invoice Management and Payables Management. Supplier Invoice Management includes the task of Processing Supplier Invoices, while Payables Management encompasses Processing Accounts Payable and Processing Payments.

Supplier Invoice Lifecycle

In her daily work, Jennifer will be receiving and processing lots of supplier invoices. In this learning, we will focus on the first steps of the supplier invoice lifecycle:

  • Invoice arrival and processing

  • Invoice correction

In other words, Jennifer will learn how to maintain different invoices in the financial accounting system and, if necessary, apply corrections.

The figure illustrates the Supplier Invoice Lifecycle, which includes six main stages: Arrival, Processing, Correction (if necessary), Payment Preparation, Payment, and Correspondence.

Supplier Invoice Items

When Jennifer receives a supplier invoice, she discovers that once this invoice gets entered in the system, it becomes a journal entry from the financial accounting perspective. It means that different pieces of data, listed on the invoice, become parts of a journal entry. Now let's take a closer look at that.

Select the play button to learn about the information from a supplier invoice that is mapped and transferred to fields of a journal entry.

Supplier Invoice - Journal Entry

So, the information that appears in a journal entry comes from the supplier invoice. However, there is also some information that comes from the supplier master record. Now let's take a little closer look at that.

Select the play button to learn about the information from the supplier master record that is mapped and transferred to fields of a journal entry.

Supplier Transaction Types

When working with SAP S/4HANA, Jennifer discovers that there are four supplier transaction types:

  • Invoice

  • Credit Memo

  • Subsequent Debit

  • Subsequent Credit

When the supplier invoice arrives, logically speaking, she will need to process it under the transaction type Invoice. In this case, the supplier account receives a credit posting.

A credit memo is a transaction type for a transaction where a supplier owes us money and is about to issue us a refund. In this case, the supplier account receives a debit posting.

A subsequent debit is being posted when, for example, there are some extra charges, in addition to the original invoice receipt. In this case, the supplier account receives a credit posting.

A subsequent credit is posted when, for example, there are some extra charges, in addition to the credit memo. In this case, the supplier account receives a debit posting.

Jennifer discovers that, as a payables accountant, most of the time she will be processing invoices and credit memos. Subsequent debits and credits are processed most of the time from the logistics department and relate to deliveries of goods.

The figure illustrates four types of transactions related to supplier accounts. The Invoice transaction represents the initial receipt of a supplier invoice, increasing the supplier account balance. The Credit Memo transaction indicates a supplier refund, decreasing the supplier account balance. The Subsequent Debit transaction shows extra charges from the supplier after the initial invoice, further increasing the supplier account balance. Lastly, the Subsequent Credit transaction represents additional credits to the supplier, reducing the supplier account balance beyond the initial credit memo or refund.

Supplier Invoice Creation / Incoming Invoice Creation

Now Jennifer has heard a lot about supplier invoices and is very excited about how you can make such a posting. Let's start with a first option to do such a posting using the app Create Supplier Invoice.

Select the play button to learn how to enter invoice information into the system using the Create Supplier Invoice app. Follow the step-by-step instructions to input general information, specify dates, select the correct supplier, and more.

Create Supplier Invoice

Practice yourself using the interactive simulation to create a supplier invoice for your supplier using the Fiori app Create Supplier Invoice.

ExerciseStart Exercise

Incoming Invoice Creation

Supplier invoices can also be posted in the system using another app. This is the app Create Incoming Invoices. See which apps are available in your company's system for your user and ask colleagues which entry is common in your company.

Learn more about this app and how to use it by following the interactive simulation.

Create Incoming Invoice

Practice yourself using the interactive simulation to create a supplier invoice for your supplier using the Fiori app Create Incoming Invoices.

ExerciseStart Exercise

Supplier Credit Memo Creation / Post Incoming Credit Memo

Jennifer is part of a conversation with her new colleagues. They talk about the fact that there have been problems with a supplier over and over recently due to delayed deliveries. They had even begun looking for another possible supplier. However, after a conversation with the existing supplier, the deliveries last week would have been on time and the supplier would have offered a credit memo to confirm the good business relationship. This credit memo has now actually arrived.

Now Jennifer has learned, to post a Supplier Credit Memo using the app Create Incoming Invoice. As with the vendor invoice posting, there is also a second option here. This is the app Create Incoming Invoices.

Jennifer now wants to know how to post such a credit memo in the system using the app Create Supplier Invoice.

Therefore select the play button and watch the following video.

Create Supplier Credit Memo (without reference)

Our Supplier sent us a credit memo because of the good collaboration. Practice creating a supplier credit memo using the Fiori app Create Supplier Invoice.

ExerciseStart Exercise

Incoming Supplier Credit Memo

Now Jennifer has learned, to post a Supplier Credit Memo using the app Create Incoming Invoice. As with the vendor invoice posting, there is also a second option here. This is the app Create Incoming Invoices.

Learn more about this app and how to use it by following the interactive simulation.

Create Incoming Supplier Credit Memo

Our Supplier sent us credit memos because of the good collaboration. Practice creating a supplier credit memo using the Fiori app Create Incoming Invoices.

ExerciseStart Exercise

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