Invoicing Plan: Making the Most of Material Management Below is a snippet from one of hundreds of articles available to ERPtips subscribers. If you would like a complimentary copy of the full article, please email
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Invoicing Plan: Making the Most of Material Management
We`ve all heard “work smarter, not harder”, and we admit that it makes a lot of sense. Yet sometimes we
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December/January 2005-06 Volume III Issue 6
Invoicing Plan: Making the Most of Material Management By Anurag Barua, Washington Post Editor’s Note: Let’s see a show of hands for all of you who’ve heard the phrase “work smarter, not harder”. Sure, we’ve all heard it, and we admit that it makes a lot of sense (even if it is a bit corny). Yet sometimes we overlook the obvious shortcuts and process simplifications. Anurag Barua provides the magic eyeglasses that will allow you to see how to eliminate unnecessary, repetitive tasks from your invoicing routine through the use of SAP®’s Implementation Plan feature. Anurag illustrates how to schedule automatic invoicing and payment for goods and services where payment is not tied to receipt of these (such as leases or installment payments). He finishes by explaining the Invoicing Plan framework and configuration, suggesting the type of Invoicing Plan that will best fit your particular need.
Introduction
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Have you ever felt the need to have invoices automatically generated and paid without having to wait for the receipt of the goods, or completion of a service from the relevant vendor? Since your transactions (such as leasing or renting) are repetitive in nature and you do not care about their delivery or completion, is it possible for you to schedule invoice generation and payment, instead of handling the invoices manually? Does the procurement of certain goods or services allow you to make installment payments? If the answer to all these questions is a “yes”, you should be using SAP’s Invoicing Plan functionality. You can use Invoicing Plans in standard R/3 if you are on release 4.0A or higher.
It is no surprise that this function is tightly integrated with the Financials module, the Cash Management function in particular. The Invoicing Plan feature in standard SAP enables you to schedule generation and payment of your open invoices for certain planned transactions, regardless of the receipt of goods or services. Think of it, in a loose sense, as your monthly mortgage payment, wherein you have agreed with your vendor that you will be “invoiced” monthly, and that your checking account will be directly debited by the mortgage company on the 15th of each month.
What is the Invoicing Plan Framework?
The Invoicing Plan is part of the purchasing and servicing submodules of Materials Management (MM). It is also tightly integrated with Logistics Invoice Verification (LIV). Since we are talking about invoice payments, it is no surprise that the function is tightly integrated with Financials (FI), and within this module, Cash Management (CM) in
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particular. Most of the configuration needed to invoke the Invoicing Plan is done in the purchase order (PO) customizing, as well as the PO entry. A portion of the customizing is also done in the vendor master.
What are the Different Kinds of Invoicing Plans?
Invoicing Plans come in two flavors: the periodic and the partial. The periodic Invoicing Plan enables you to set up a schedule for automatic invoice generation and payment. You would set up a periodic Invoicing Plan for repetitive transactions like leases and rentals. The dates on which you choose to be invoiced can be configured. You can either manually enter the dates or have the system propose dates, based on certain rules. In this method, the amount invoiced is equal to the gross amount in the corresponding P.O. (if it has a single line item), or the relevant P.O. line item (if it has multiple line items). The partial Invoicing Plan lets you split up the amount in your contract (or P.O.) across different due dates. This variant is typically used with projects that involve the procurement of external services, wherein you pay a certain percentage based on the completion of discrete phases in the project. The gross amount of the contract (or PO, or PO line item) is distributed across the due dates that you and your vendor (or service provider) have negotiated. Unlike the periodic Invoicing Plan, the only option you have with respect to due dates is to enter them manually. The only way to avoid manual entry is to create a new plan with reference to an existing plan or template.
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SAPtips4On Logistics What Configuration Must be Done Before the Invoicing Plan Can Be Used?
There are several initial steps that must be carried out before you will be able to use the Invoicing Plan feature. Some of these steps are pure IMG-related configuration activities. Others are directly at the P.O. level. Here are the prerequisites (not in any particular order): • The relevant configuration activities, such as maintaining date categories and proposals, need to be carried out in the IMG. (This will be covered in more detail later in the article.) • When creating the P.O., the “Framework Order” or “FO” type option must be selected (as shown in Figure 1). Selecting this option enables a P.O. to be created with a predetermined extended validity period and a reason for cancellation.
Figure 1: Creating a PO as “Framework Order” in Transaction ME21N
• The purchasing data screen on the vendor master of the vendor for whom you are setting up the Invoicing Plan needs to have the Evaluated Receipt Settlement (ERS) indicator on, if you want invoices to be settled automatically. This is depicted in Figure 2. Note: ERS is a mechanism that completely eliminates vendor invoices. It enables settlement of goods receipts (GR) by the automatic generation and posting of invoices. The invoice amount is calculated based on information in the P.O. and in the Goods Receipt (GR) document. • The P.O. line item that is to be subject to the Invoicing Plan should have the following indicators set as mentioned:
Figurre 2: Turning on the ERS Indicator in Vendor Master Maintenance (TX; XK02) – The “Invoice Receipt” flag should be turned on (see Figure 3). – The “GR-based IV” flag should be turned off (see Figure 3).
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– The “Goods Receipt” flag should be turned off (see Figure 4). • If you want a service entry sheet (SES), the “GR non-valuated” flag needs to be turned on (see Figure 4).
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