Processing Vendor Invoices


After completing this lesson, you will be able to:

  • Process Supplier Invoice

Processing Supplier Invoices

Invoice verification completes the procurement process in Materials Management (MM). You use Logistics Invoice Verification (LIV) to enter vendor invoices as well as vendor credit memos that relate to a PO. Invoice verification excludes payment or invoice evaluation.

Posting the invoice completes the invoice verification process. The system updates the PO history. An open item is posted to the vendor's account in Financial Accounting.

Invoice Verification with Reference

You can also use the delivery note number or the bill of lading as reference documents when posting a vendor invoice.

If you enter an invoice for a PO, the system suggests the items from the PO that have not been fully invoiced. For example, if 100 pieces have been delivered and 60 pieces are invoiced, 40 pieces still have to be invoiced.

The system also suggests the expected value of the items. The expected value is the quantity that still needs to be invoiced multiplied by the order price.

If the discrepancy between the invoice value and the expected value exceeds tolerances, the system blocks the invoice for payment (for example, if the invoice price varies from the PO price).

Documents in Invoice Verification

The invoice document consists of a document header and at least one item. The header data includes the vendor (invoicing party), the posting date, and the user ID of the person who created the document. The line item data indicates the amount charged for a certain quantity of a material.

The accounting document displays the general ledger postings as a result of the invoice receipt. The document header contains the document date, the posting date, the posting period, and the document currency. The line items contain the general ledger (G/L) account numbers and amounts posted.

Posting an Invoice

The effects of posting an invoice are as follows:

  • An accounting document is created.

  • The provisions in the GR/IR clearing account are neutralized.

  • The invoice document is entered in the PO history.

  • If the invoice price is different from the PO price, the stock value and the current moving average price are recalculated and updated in the material master.

  • Open item created in Vendor reconciliation account.

  • The output tax account is updated.

Document Splitting

In the figure, Document Splitting, a vendor’s invoice is posted and the services are charged to two different cost centers. Each line item is assigned to a different cost center, profit center, and segment. The figure displays the journal entry.

SAP supports derivation of the segment from the profit center (among other options). In turn, the profit center can be derived, for example from the following (not inclusive of all derivations):

  • Cost Center

  • Controlling Internal Order

  • WBS Element

Corporate groups may have a requirement to create balance sheets at the segment level. As you can see in the figure, the vendor line is not assigned to a segment. The segments only receive the expense posting, and not the balance sheet posting, which prevents an accurate balance sheet by segment. This is why SAP uses document splitting.

General Ledger View

In Customizing, you can specify that the system needs to complete the missing entries automatically. The correct amount is shown in the figure.

You activate document splitting to ensure the segment characteristic splits uniformly. Systematic segmentation means that each document has a zero balance for the entity in question.

There are six lines in the document now. The vendor line item and the tax item are split across the two (segments A and B). The balance for each segment is zero. You can create the balance sheet and profit and loss (P&L) statement in full, and the system balances the balance sheet in the background. The figure also shows how the accounts payable and the tax items inherit the segment entity in the document.

Document splitting reduces the time and effort the user spends entering documents as entering six (6) different accounting assignment items would be time consuming.

Document splitting is only possible in the new General Ledger. There are two views of the posted documents - the Entry view and the General Ledger view. You can decide which view to use.

If you do not need document splitting or it is inactive (for example, the customer only needs to create balance sheets at the company code level), then both views are identical.

Customer invoices that distribute revenues among various entities are handled in the same way.

Post the Supplier Invoice

Query the Supplier Account

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