Processing Customer Invoices

Michael is comfortable with his learnings so far. Now he’s ready to explore the management of the line items on the customers’ accounts.

How can he display the open items and manage other processes such as changing invoices. What can he change on the invoice once its posted? If he makes a mistake with the posting, can he just delete it? Maybe that’s what a document reversal is all about. He has heard someone mention reversing or resetting documents. What is that all about? Is there an automated process to clear open items?

Select the play button to find out more about managing customer line items in SAP S/4HANA Cloud, public edition system.

Select the play button to understand more about the Manage Customer Line Items screen in SAP S/4HANA Cloud, public edition system.

Select the play button to learn about Settings on the Manage Customer Line Items app in SAP S/4HANA Cloud, public edition system.

When Michael views all the customer line items he notices that they either have a red status or are classified as open, while the others have green status and are classified as cleared.

Select the play button to learn about open and cleared items on the Manage Customer Line Items app in SAP S/4HANA Cloud, public edition system.

Now that Michael understands the concept of open and cleared line items, he has tried to see which fields can be changed once a document is posted. He realizes that not much can be changed once an invoice or credit memo is posted. Using the Manage Journal Entry app, he can only change the Reference and Header text area of the journal entry. He then tries Edit Line Items within the Manage Customer Line Items app and unsuccessfully tries to change the Profit Center in the line items. He soon realizes the only fields that can be changed are assignment, reference fields, and item text. However, he notices that one can change the payment terms, payment method, and even block the document.

He then tries to see if it's possible to select a number of open invoices, say for instance to change the payment terms. This is achieved by choosing Edit Line Items within the app, entering the new terms, and applying to the chosen invoices.

Select the play button to see how to retrieve and modify documents in SAP S/4HANA Cloud, public edition system.

Michael has successfully posted quite a few invoices but with the last one he got distracted and realizes that the posted invoice is incorrect. Unfortunately, there are every few fields that cannot be changed once a document is posted. Michael entered the incorrect amount on the invoice; thus, the only solution is to reverse the invoice. Now what happens if the document that Michael wants to reverse has been cleared?

Reversing and resetting documents are two essential functionalities within Receivables Management.

Reversing a document cancels the original accounting document’s impact on the financial statement. It generates a new document that is the exact opposite of the original document.

Reversals are often performed when an error has been made on a posted document – for instance, if the wrong account was used, the amount was wrong, the date was incorrect, and so on. Rather than modifying the original document, which can complicate the audit trail, users 'reverse' the document and create a new one with the correct details. An important aspect is that both the original and the reversed document remain in the system, keeping the financial records transparent and consistent.

You generally post the reversal document in the same posting period as the corresponding original document. If the posting period of the source document has already been closed, you have to enter a date that falls in an open posting period (for example, the current one) in the Posting date field.

Now Michael tries to reverse a document but he gets a message, Document includes already cleared items - reversal not possible.

What happened here? He can’t reverse the document as it's already been cleared.

Michael sees Karin walk into the office. This is a good time to ask her if she can assist him.

Karin explains that if one wants to reverse a document but it already has been cleared, you have to use the Reset Cleared Items app.

"Resetting" generally refers to the action taken to nullify a previously cleared item. This involves uncoupling, or resetting, the link between the invoice and the payment.

When a document or invoice is paid completely, it is marked as ‘Cleared’ in the system. A cleared document means the relative business transaction is complete. However, there could be instances where this cleared status may need to be reverted, often for rectifying errors or making adjustments.

That's where the "Reset" function comes into play.

In Michael’s scenario, he must reset the cleared item before he can reverse his document.

The good part is that with the Reset Cleared Items app you can reset the clearing of line items as well as reverse the clearing entry if required.

In Michael’s case, he wants to reverse the incorrect document so he can use the Reset and Reverse option which will restore the documents back to open items.

Select the play button to learn about reversing documents in SAP S/4HANA Cloud, public edition system.

If a customer payment has been incorrectly matched to invoices, then it can be reset. With the Reset Cleared Items app you can reset the clearing of line items as well as reverse the clearing entry if required. You can use this function for line items of customer accounts or supplier accounts as well as for line items of G/L accounts that are managed on an open item basis.

In Michael’s case, he manually cleared two documents and thereafter realized that they were incorrectly cleared. He can use Reset Cleared Items to restore the documents back to open items. He doesn’t need to reverse the documents so he will choose the option to reset only.

Select the play button to learn about resetting documents in SAP S/4HANA Cloud, public edition system.

Manual Clearing allows you to review open debits and credits and take charge of the clearing process. This is typically done when automatic clearing methods are not applicable or when more control is required over the clearing process. It allows for the precise allocation of payments, adjustments, or other transactions to specific open items.

Select the play button to learn about manual clearing in SAP S/4HANA Cloud, public edition system.

Automatic Clearing refers to the process of automatically matching and offsetting corresponding debit and credit items to reconcile open items in financial accounting. This simplifies the automated clearing of open items on rule-based clearing. The Automatic Clearing – Clearing Open Item app in SAP Fiori can be used for clearing open items in general ledger accounts, customers, and suppliers. For Receivables Management, most of the clearing processes occur due to incoming payment transactions, however, with the Automatic Clearing we can clear the remaining open items if these items can be grouped by specific criteria.

In the above example, open items have been posted to the customer’s account. The automatic clearing program will clear open items that have the same Assignment field and if the associated debits and credits balance to zero. In the above example, the program found a match for Assignment XA9 and YA11 and they are now cleared items. There was no match for Assignment XA18 and consequentially it remains open.

Thus, the clearing program summarizes open items from selected customers in groups and clears them if they have the same company code, account type, reconciliation account, and currency code. The program also uses a maximum of five additional user criteria from the document header or line items to create groups.

Michael has tried to see which fields can be changed once a document is posted. He realizes that not much can be changed once an invoice or credit memo is posted. The Header area of the journal entry allows changes to Reference and Header text. Michael unsuccessfully tries to change the Profit Center in the line items. He soon realizes the only fields that can be changed are assignment, reference fields, and Item Text. However, he notices that one can change the Payment Terms, Payment Method, and can even block the document.

He uses the Manage Customer Line items app to see what he can change for a customer. He notices that it's possible to select a number of open invoices, say for instance, to change the payment terms. This is achieved by choosing the Edit Line Items within the app and the new payment terms are applied to the invoices chosen.

He wonders if the system keeps track of all the changes made to the invoices or credit memos. He searches for an app and comes across the Display Item Change log. This app can report on all changes made to customer line items. There are filters to help narrow down the search criteria and that the report lists the before and after field change. He can also see which user made the change and the list can be exported to Excel for further analysis.

Select the play button to learn about document changes in SAP S/4HANA Cloud, public edition system.