ERS, Consignment, and Electronic Invoices Session 4204.
-
date post
18-Dec-2015 -
Category
Documents
-
view
218 -
download
0
Transcript of ERS, Consignment, and Electronic Invoices Session 4204.
ERS, Consignment, and Electronic Invoices
Session 4204
Al Major
Procter & Gamble
Global Accounts Payable
Welcome
Net Sales FY2002 - $40 billion
Over 300 consumer productssold in 160+ countries
100,000+ employees in 80+countries
Procter & Gamble
Billion $ Brands
Procter & Gamble
ERS, Consignment, and Electronic Invoices:
Overview
How it works
Benefits
Vendor Selection
Issues
Procter & Gamble
Agenda
Payment Processes
• Settlements– ERS– Consignment– Invoicing Plan
• Electronic invoices
• Paper invoices
• Legal requirements by country
“Automation clearly impacts the cost to process an invoice…. At a low level of automation in the A/P department the median cost to process an invoice is approximately $10. The cost then drops by roughly 40% to $5.81 when moving to a medium level of automation and then drops by another 20% when moving to high level of automation.”
Source: A/P Department Benchmarks and Analysis 2003 (IOMA)
Automation
ERS Overview
• Evaluated Receipt Settlement
• Pay upon receipt
• Eliminates vendor sending invoices
• Eliminates 3-way match of purchasing document, goods receipt, and invoice
ERS Overview
• Collaborative effort of Purchasing, Receiving, and Accounts Payable
• Focused on payment process improvement
ERS - How it Works
• Vendor stops sending invoices
• Vendor master ERS indicator, GR based IV indicator, and IP partner function set at purchasing organization level
ERS - How it Works
• Purchasing document ERS indicators set at line item (may include contracts)
• Goods receipts (GR’s) entered as normal creating entry in the EKRS table
ERS - How it Works
• The supplier does not send an invoice
• ERS settlement run periodically (MRRL) to select GR’s and automatically create LIV invoices. Invoices displayed in PO history.
• The goods receipt quantity and purchasing document line item pricing at time of GR is the basis for payment.
ERS - How it Works
• Payment terms from purchasing document. Will handle discount terms.
• Invoices processed for payment
• Reconciliation
ERS Settlement (MRRL)
ERS Settlement (MRRL)
Document selection:
1 – One invoice per vendor
2 – One invoice per PO
3 – One invoice per line item
4 – One invoice per GR.
ERS Settlement Test Screen
ERS Benefits
Eliminates:
• Handling, scanning, posting, and support
of paper invoices
• Processing and support of electronic invoices
• Blocked invoices
ERS Benefits
Reduces:
• Duplicate payments
• GR/IR reconciliation effort
Flexibility with who runs the settlements
ERS Supplier Benefits
• Eliminates cost of sending invoices
• Cash predictability – vendor knows when payment will be made
• Reduction of contact regarding incorrect, unpaid, and misdirected invoices
No Free Lunch!
• Incorrect goods receipts = pay the wrong amount
• Prices incorrect on purchasing documents = pay the wrong amount.
ERS Vendor Selection
• Long term supplier
• Significant number of invoices to eliminate
• Current invoicing process
ERS Vendor Selection
• Prices should be fixed or changes managed per goods receipts
• Pricing should be unitized (extra costs included in the price)
• High goods receipt accuracy
ERS Issues
• Vendor analysis tools
• Control of ERS indicatorsVendor by pur orgPre-existing line items default
offNew line items default on
• Reconciliation processOver-delivery controlsPrice changes coordinationSharing info with vendor
ERS Issues
• Credits Nets prior to settlementCredit memo at next settlement
• Non-valuated goods receiptsNo goods receipt accounting docPricing at time of settlement
Procter & Gamble
Customizations:
• Produce invoice on behalf of vendor in Europe (meet legal requirements)
• Download enhanced goods receipt information to spreadsheet
• Bill of lading from goods receipt to invoice reference to remittance
ERS at least half the cost of MM paper invoices
Overview
How it works
Benefits
Vendor Selection
Issues
Procter & Gamble
Consignment
Consignment Overview
• Also known as Supplier Owned Inventory
• Pay upon usage
• Eliminates vendor sending invoices
• Eliminates 3-way match of purchasing document, goods receipt, and invoice
Consignment Overview
• Vendor “stores” material at customer’s sites
• Material documents created upon issuing the goods to production are settled to post invoices
• Normally driven by Materials Management and Purchasing
• Focused on stabilizing supply and improving cash flow
Consignment - How it Works
• Vendor stops sending invoices
• Set-up material by plant
• Set-up purchasing info record by vendor, material, pur org, and plant (source of price and tax code)
• Set-up standard purchasing organization by plant (OMKI)
• Purchasing document – item category K and standard purchasing organization
Consignment - How it Works
• Goods receipts, goods movements
• Supplier does not send invoice
• Settlement run periodically (MRKO) to select material documents and post IV invoices
• Invoices not displayed in PO history
• Material document quantity and info record pricing are the basis for payment
Consignment - How it Works
• Payment terms from vendor master at company code level
• Invoices processed for payment
• Reconciliation
Consignment - MRKO
• Consignment - How it Works
Consignment Benefits
• Same as ERS
• Pay later after material is used
• Supplier - efficiencies of managing to a safety stock level
No Free Lunch!
• Incorrect goods movements = pay the wrong amount
• Prices incorrect on info records = pay the wrong amount.
Consignment Vendor Selection
• Any vendor doing supplier owned inventory
Consignment Issues
• Reconciliation processAccurate goods movementsPrice changes coordination
• CreditsAdjustmentsBack-out, re-enter
• DiscountsTerms from vendor masterNo net doc type (OSS 320272)
Procter & Gamble
• Enhanced MRKO reporting
• AP settlements integrated with imaging/workflow paper invoice solution
• Custom transaction to override reference and document date to match paper invoice
Settlements for:
Recurring charges (eg. property rental)
Progressive payments (eg. paying for stages of a capital project)
Invoicing Plan
Overview
How it works
Benefits
Vendor Selection
Issues
Procter & Gamble
Electronic Invoices
Electronic Invoices Overview
• Computer-to-computer receiving of invoices in a prescribed format
• 3-way match of purchasing document, goods receipt, and invoice
• FI invoices (no purchasing document)
Typically EDI or XML from vendor
Via value added network (VAN), market place, or direct to customer
Mapper from EDI or XML format to IDocs
Web-based invoicing
E-connectivity
IDocs
• IDocs are intermediate documents used to exchange data between SAP and an external system
• Managed via transactions WEDI and BD87
• A logical message type for invoices is INVOIC
• A basic type for invoices is INVOIC01
WEDI Transaction
• IDoc lists icon (WE05)
• Display IDoc icon (WE02)
• Partner Profiles (WE20) – vendor set-up
• Test Tool (WE19)
• IDoc types (WE60) – documentation for basic types
Displaying an IDOC – WE02
1
2
3
1) Control Record
• Unique IDoc numbers
• Current status
• Vendor
• IDoc (Basic) type – Invoic01
• Logical message type – Invoic
2) Data Records
Documentation – WE60
• Execute with basic type (eg. INVOIC01)
• Displays information on all available segments
• E1EDK segments are header
• E1EDP segments are line item
IDoc Test Tool – WE19
• Copy and change existing IDoc
• Build IDoc from scratch
• Execute IDocs selecting the function module
• Duplicate payment checks, etc. are active
3) Status Records
BD87 Transaction
Used to re-processIDocs previously in error status
IDoc Tables
• Control records EDIDC
• Data records EDID4One entry per segmentSDATA field holds actual data
• Status records EDIDS
Partner Profile – WE20
Program Parameters - OBCE
By vendor and legal entity (table T076S)
Conversion Tables
• OBCA (table T076B) – company codes
• OBCB (table T076I) – G/L accounts
• OBCC (table T076K) – cost centers
Tax Code - OBCD
• Table T076M
• For LIV and FI
• IV gets the tax code from the purchasing document
Program SAPLIEDI - post invoices from IDocs
Function module:
LIV IDOC_INPUT_INVOIC_MRM
IV IDOC_INPUT_INVOIC_MM
FI IDOC_INPUT_INVOIC
SAP enhancements MRMH0002 (LIV) and FEDI0001 (IV and FI)
Function Modules
Example
Electronic Invoices Benefits
• Eliminates handling, scanning, posting, and support of paper invoices
• 24 X 7 posting possible
• Human intervention only with errors
Vendor Selection
• Long term supplier
• Significant number of invoices to warrant investment
• Don’t meet ERS guidelines
• No supplier owned inventory
Electronic Invoices Issues
• Reconciliation processVendor sent = received = processed
• Error resolutionDelete idoc / correction from vendor Recycle idocsCorrect and re-process idoc
• Vendor qualification process
Electronic Invoices Issues
• Default bank details for EFT payments
• Extra charges – blocked invoices
• Taxes – calculation differences
Procter & Gamble
User exits:
• Company code from purchasing document
• Tax code from purchasing document
• Distribute extra charges
• LIV duplicate invoice check (OSS 394316)
• No blank bill of lading for GR based IV LIV
Procter & Gamble
• Mexico electronic invoicing pilot
• Co-development with SAP for FI invoices to call Vertex (no OSS note)
• Two FTE’s for a quarter million invoices per year
Summary
• ERSClick….Click….SettleIt’s the work process
• ConsignmentAlong for the Supplier Owned Inventory ride
• Electronic InvoicesLet the IDocs flow
Any questions?
??
Thank you for attending!Please remember to complete and return your evaluation form following this session.
Session Code: 4204