The parties involved in this unit are the distribution center and the external supplier. The aim is to regularly fill up the stocks in the distribution center (DC) with merchandise ordered from the external supplier. Automatic requirements planning is used to determine the relevant order quantities.
The 4 solution processes shown in the figure, Process Overview: Requirements Planning for a Distribution Center, form this overall retail process with the intention of regularly filling up the stocks in a warehouse (distribution center). The process starts with the Replenishment Planning for Distribution Centers (solution process 3I8). As a result, purchase requisitions are created. Purchase requisitions are then used in the subsequent solution process, Procurement for Retail (5FM), as a basis for creating purchase orders for the external supplier. An inbound delivery (advanced shipping notification) from the supplier announces the delivery of the merchandise. Upon arrival, the goods receipt is posted (solution process 5FU). To complete the process, the Retailer posts the invoice received from the supplier (solution process 5FN).
Each solution process represents a lesson in this unit, and can be completed individually.
This lesson covers the solution process Invoice Verification for Retail (5FN).
Here, the terms invoice verification / supplier invoice verification / logistics invoice verification can be used interchangeably.
In the retail industry, specific terms differ from the standard terms used in other lines of business. The following terms are used synonymously in this document:
| Standard Terms in Lines of Business | SAP S/4HANA Cloud for Retail, Fashion, and Vertical Business |
|---|---|
| Material, Product | Article |
| Material group, Product group | Merchandise category |
| Plant, Location | Site |
Logistics Invoice Verification is required to initiate the payment for the goods received from the supplier, and is a process step in the Procure-to-Pay (P2P) scenario. As it’s verifying the supplier invoice against purchase order and goods receipt (logistics documents), it’s part of the procurement string, even if it’s often executed by the Finance department. As the content of the invoice sent from the supplier is compared with the content of the two preceding main documents (the purchase order and the goods receipt, the process is also called three-way matching.
The logistics invoice verification process consists of three steps.
The first step is to create the supplier invoice in the system. This can be done manually, or electronically via EDI, using SOAP services. Besides referencing purchase orders and goods receipts (delivery notes) with or without freight costs, it is also possible to perform logistics invoice verification with reference to outbound deliveries, for lean services, as well as for separately posting planned delivery costs (referencing a bill of lading).
In the second step, during logistics invoice verification, the system creates a target or expected invoice based on the quantities entered in the goods receipt, and the conditions in the relevant purchase orders. This target invoice amount is checked against the actual invoice amount received from the supplier. If there is no difference, or an acceptable difference (if a tolerance was maintained accordingly), the invoice is correctly checked and posted. The payment to the supplier can then be released. This process is referred to as goods-receipt based invoice verification. In customizing (system configuration), you can define on company code level, which (currency) amount is acceptable as a small difference. This amount is used if no further limits are maintained on supplier and company code level. There, percentage and absolute amount limits for positive and negative differences can be specified.
Another option for logistics invoice verification is based on evaluated receipt settlement (ERS). In this case, the retailer and supplier agreed that no invoice is provided by the supplier. The retail system creates a target invoice based on the quantities entered in the goods receipt and the conditions of the relevant purchase orders, and the determined amount is paid to the supplier. Whether or not a supplier uses ERS for all order items, or only for return items, is defined in the master record for the supplier (purchasing data). Further details can be found in solution process Automated Invoice Settlement (2LH).
In logistics invoice verification, the invoice amount is checked against the target or expected invoice amount. What happens in case of variances? An invoice can only be posted if the balance is zero. However, if there is only a slight difference between the total debit and credit amounts, it may be too laborious to investigate why the differences occurred and to change the individual items. Thus, it is possible to define tolerance limits for small differences. If the invoice amount is within the tolerance, the system automatically generates a posting line that posts the difference to a non-operating expense or revenue account. If a larger difference occurs, for example, because the conditions applied by the supplier are too high, you can adjust the conditions directly during manual invoice verification, or subsequently after background verification. In this case, a complaint message can be automatically generated by the system, to inform the supplier about the adjustment: in this example, an invoice reduction.
Note
Incorrect invoices must be processed by the user (for example, changing assignments, correcting conditions). The invoices are then submitted to invoice verification once again.In the third step, invoices that are found to be correct are transferred to Financial Accounting (FI) as a posting record and posted there. With that, the amount is ready for payment to the supplier.
As mentioned previously, when a supplier invoice is created in the system, it must be assigned to the relevant reference documents. In Retail, as a PO reference, you can enter the following:
- Purchase Order/Scheduling Agreement
- Delivery Note
- Bill of Lading
- Supplier (per site(s))
- Outbound Delivery
- Service Entry Sheet - Lean Services
The user can choose between two different ways of performing verification (invoice verification types):
Immediate verification online: The invoice that is created is directly verified online. This means that users access the item view of each invoice, whether corrections are necessary or not. Note that this may be unnecessarily time-consuming. If relevant, corrections to the invoice can be made directly. For that, you can use the app Create Supplier Invoice - Advanced (MIRO).
Scheduled job for invoice verification in the background: In this case, the app Enter Supplier Invoice for Background Verification (MIRA) is used to create invoices for subsequent background invoice verification. This means that the user enters the invoice header data. For example, including the total invoice amount, date, or tax code, and assigns the relevant reference documents. At this stage, the user does not know if the invoice is correct or not. Therefore, a job must be executed to perform the verification. To define the recurrence pattern of this job, use the app Schedule Supplier Invoice Jobs - Advanced (F1683). It allows you to perform a single run, or define the job to run at any specified frequency. The results are recorded in a list. To check the results for your invoice, you can use the Display Supplier Invoice - Advanced (MIR4) app, or the Supplier Invoices List (V2) (F1060A) app.
There are various reasons why an invoice is blocked, for example, due to variances in one or more items, because of a manual payment block, or due to a stochastical block. A blocked invoice must be released for payment, possibly after consultation with the purchasing department or the supplier. The Release Blocked Invoices (MRBR) app can be used to remove the block.
If there are differences, depending on the kind of error, incorrect invoices can be corrected in various ways. If the supplier bills you for a delivery quantity or price other than that specified in the goods receipt, you can adjust the quantities or prices. Any deviations in the relevant purchasing conditions are documented in detail for the relevant invoice items. However, this only takes place in the selected invoice: no changes are made to the master data (conditions). If the tax rate on which the expense invoice is based is too high, you can change the tax indicator. You can also exclude purchase orders, or purchase order items (articles).
If the error in an invoice is due to incorrect system data, for example, if supplier conditions or tax codes have been maintained incorrectly, a message can automatically be sent to the buyer when the error is corrected. However, this is only possible if the relevant settings have been made in customizing (system configuration).
