R12 = AP THEORY

R12 = AP THEORY

Accounts Payables Theory

We maintain the following things at Accounts Payables Module.

1. Maintaining purchase invoice2. Making payments to Suppliers3. Payments reconciliation with bank for cash management

To maintain the purchase invoice the following things are needed.

1. Name and address of the supplier2. Date of purchase3. Quantity of purchase4. Invoice amount5. Payment method6. Payment terms

We contact with the suppliers at different levels: Request for Quotation (RFQ) Purchase Order Payments

We create Supplier definition in two levels:1. Header2. Site

Header information of Supplier can be accessed by global level; it means all other operating unit people can access Supplier Header information.

Whereas Site information is local level; only specific operating unit people can access. One supplier can have multiple sites (Addresses)

Sites are 3 types based on the purpose: RFQ, P.O and Payment site.

If you want to record invoice we should have minimum one pay site.

Accounts Payables Theory

Payment methods:

We have 4 payment methods in OF.

1. Check2. Electronic (EFT)3. Wire4. Clearing

At the time of creating invoice we have to opt for payment method and Currency. Check:Payment through the regular bank check

Electronic:System will create one instruction file with all The Details of invoice and payment. This file will send to bank for payment.

Wire:It is manual process of sending instructions to bank. System will not generate any instruction file.

Clearing:In this process we will not make Payment physically. This is used as adjustment for inter company transfers and transfer between the branches.

Payment Terms:

Making payment to supplier (due date) immediate or in how many days referred to Payment terms.

We can set due dates and discount dates through payment terms.

Accounts Payables Theory

Distribution Set:

Distribution Set is used to automatically enter distributions for an invoice when you are not matching it to a purchase order.

For example:

Total invoice amount:Rs. 100000Plant cost:Rs. 9000090%Tax:Rs. 50005%Freight:Rs. 50005%

If we receive the invoices in future with the same arrangements we can use the distribution set.

You can assign a default Distribution Set to a supplier site so Payables will use it for every invoice you enter for that supplier site.

If you do not assign a default Distribution Set to a supplier site, you can always assign a Distribution Set to an invoice when you enter it.

We have 2 types of distribution sets.

1. Full2. Skeleton

We use Full Distribution Sets to create distributions with set percentage amounts.

Skeleton Distribution Sets to create distributions with no set distribution amounts.

We can enter distribution sets in 2 ways:

1. Manual2. Automatic (by creation of distribution sets)

Accounts Payables Theory

Types of invoices in Accounts Payables

1. Standard invoice2. Debit Memo3. Credit Memo4. Mixed invoice5. Recurring invoice6. Pre payment invoice7. Expenses invoice8. Interest invoice9. Withholding tax invoice10. Retain age Release11. Transportation

System automatically generated invoices:1. Recurring invoice2. Expenses invoice3. interest invoice4. Withholding Tax invoice

Remaining all other invoices we have to create manually.

1. Standard invoice:

We can enter only Positive amounts thru standard invoice. We can assign Distribution set to update the lines automatically by system or we can enter the distributions manually.

2. Debit Memo

Debit Memo is used by Customers only. This is used for purchase returns. To reduce the balance payable to supplier we create Debit Memo.Only negative amounts can be entered through Debit Memo.

Accounts Payables Theory

3. Credit Memo

To reduce the supplier balance Credit Memo will be used.

Credit Memo will rise by Supplier and sent to us.

Generally credit memos used, when we get discount on payables or on any price differences.

We can enter only negative balances through Credit Memos.

4. Mixed Invoice

We can enter Positive and Negative balances also thru Mixed Invoices.

5. Recurring Invoice.

We require a calendar to create recurring invoice, called Special Calendar.

6. Pre payment invoice.

Pre payment invoice are used when there is advance payment made to Suppliers against purchases or Employees for Travel expenses (Imprest amount).

Pre payments are two types:Temporary pre payment & Permanent pre payment.

Temporary pre payments are adjusted against the future purchase invoice.

Whereas we cannot adjust Permanent pre payments against future purchases. This payment we can receive when the contract cancelled with the supplier.

We can convert Permanent pre payment into Temporary pre payment. After conversion we can use that to adjust against future invoices.Accounts Payables Theory

7. Expenses invoice

When employees spent the amount and submit the bills for reimbursement, that information we have to maintain as expenditure report in the system.With the help of this expenses report information we can create Expenses Invoice.

8. Interest invoice

When we make payments after the due date crossed, if interest penalty is applicable, system will create one invoice for only the interest portion amount apart from the standard invoice.

9. Withholding tax invoice

If customer want to with hold the tax amount charged by supplier in the invoice, and he want to pay the tax amount directly to tax authorities instead of paying to supplier.System will automatically create a withholding tax invoice.In this case tax authority would be a supplier.

Accounts Payables Theory

Batch Invoice:

We can enter invoices individual one by one or through batch invoices at a time many.By default we can enter individual invoices only.

In GL batch journal only control total is there.But in AP, batch invoices have 2 controls: 1. Control total 2. Control count.Control total is grand total of all invoices & Control count is total number of invoices.

In GL if control total does not match system will not allow user to save the journal until we change the control total to match with entered total.

In AP if control total and control count does not match also system allows us to post the invoice and allows for further processing. It shows only variance.

Unlike batch journal, we can enter invoices either individual or batch invoices.If you want to enter batch journals we have to create profile option. In that case we cannot enter invoices individually.

Accounts Payables Theory

Types of Bank accounts:

We have 3 types of bank accounts:

1. Internal Bank Account2. Supplier Bank Account3. Customer Bank Account.

Internal Bank account is maintained by our company to make payments or receive payments in any mode. (Check, Electronic, Wire and Clearing).

In electronic and wire payments our company has to maintain Supplier bank account and Customer bank account.

Accounts Payables Theory

Payment types:

When we are making payment to supplier we need to have bank account, Check book.As per OF we called check leaves as Documents.

We have 3 types of payment:

1. Manual2. Quick3. Refund

Manual:We have to write the check manually and then enter the same details into system and hand over the same check to Supplier.

Quick:System will print payment details on the check. In OF once you save the payment, automatically check will be printed on pre printed stationary. Then check can be hand over to Supplier.

Refund:When we received funds return from the suppliers we record them as refund.

Work Bench:

We maintain Recording invoices and Payments in AP.

We have two work benches in AP:1. Invoice work bench2. Payment work bench

In invoice work bench we can enter and maintain invoices.

Payment work bench is to maintain 3 types of payments 1. Manual 2. Quick 3. Refund.

Accounts Payables Theory

Payment Batch:

Payments also can be processed as individual payments or through batch.Batch payments are automation. Automation means if we give instruction to system, system will make payment automatically.

There are various stages in payment batch:

1. Selection2. Building3. Rebuilding4. Formatting5. Confirm

Selection:We have to select the invoices for payment.

Building:We can view the invoices that selected for payment through building. We can make modifications also.

Rebuilding: If we make modifications system will show as Rebuilding.

Formatting:Formatting is nothing but for print purpose. If we format only we can get print the payments.

Confirm:Once we confirm only system considered the payment has been done and the balances will be updated. If we do not confirm system will not allow to create one more payment batch.

** We can cancel the payment batch before confirmation.

Accounts Payables Theory

OPTIONS:

We have 3 types of options.

1. Financial Options2. Payable Options3. Payables System Setup

Payable options are specific to Accounts payables module only.Financial options we can see across AP, PO and FA modules.

These options will work as heart to application. Using these options we can set some CONTROLS & DEFAULTS.

We use these options to manage application functionality. We can set some properties or to set behaviors of the application through these options.

** Invoice Structure is 2 parts: 1. Header information 2. Distribution

Accounts Payables Theory

Data flow into Application of Accounts Payables:

Financial OptionsPayables optionsSupplier headerSupplier SitesInvoice headerInvoice Distribution PaymentAccounts Payables Theory

** In payables also we can enter foreign currency invoices. There is some setup required. The exchange rate we setup in GL is applicable to all modules.

** If we record the invoice in one currency, we cannot make payment other than that invoice currency. Currency should be same in PO, invoice and payment.Cross currency payment is not possible in AP. But that is possible in AR.

** To cancel the invoice we have to enter Credit memo.

** Zero payments:If we cancel the invoice, there is no balance to pay, but system will show as zero balance. For elimination of zero balance payments we have to create dummy bank accounts and dummy checks.

Payables Integration:

1. Purchasing2. General Ledger3. Cash Management 4. Accounts Receivables5. Web Expenses

PERIOD CLOSING PROCEDURES 1 Accounts Payables 1.1 Before submitting the Payables Accounting Process 1. Run the following Standard reports. a) Invoice Register (with Unvalidated Invoices parameter as YES). This report gives the details of invoices entered into the system, but no action is taken i.e. the status of the invoice is Never Validated. b) Invoice on hold Report. This report gives details of all the invoices that are on hold in the system. Pass the Parameters as shown in the Screen Shot below, give the period end date in the To Entered Date field. Resolve the Holds in the period end so that no Invoices are carried forward to the next period during the Year End Close. In the Month End Closing you can also choose to Sweep the Invoices in the next period. . 2. Based on the information from above reports, take necessary action on invoices. Approve the Unvalidated Invoices, Account for the Unaccounted Invoices, Release Holds where ever the Invoices are placed on Hold. 3. If payment batches are used, confirm all the Payment Batches. 4. Submit the Payables Accounting Process Program to account for transactions. All the transactions needs to be accounted before transferred to General Ledger. 5. Run and Review the Standard report Unaccounted Transactions Report. Review any unaccounted transactions and correct data as necessary. Then resubmit the Payables Accounting Process to account for transactions corrected. 6. Unposted Payable Journal entries will be found in the GL and it will be posted into the General ledger. 7. This will be queried in the Journal Entry form with source as Payables and posting status as Unposted. These Journal entries will be reviewed and Posted into the GL. If Auto post is scheduled for Payables Invoices, query for any unposted journals that are remaining after the program runs. Review and post the remaining entries. 8. After running the Payables Accounting Process Program program, run Create Mass Additions program from Account Payables responsibility. This program transfers all the account lines that are marked as Track as Asset and have corresponding Clearing Account set up in Fixed Assets. (You cannot run this program before Payable Transfer to General Ledger program is run, as it considers all lines to be interfaced to the Fixed Assets must be transferred to the General Ledger). 9. Reconcile with the General Ledger .The following standard reports from payables module can be used for reconciliation. 1. Account Payables Trial Balance. 2. Posted Invoice Register. 3. Posted Payment register. 1.2 Opening/Closing of AP periods Module: AP Module. Navigation: Accounting > Control Payables Periods. 1. Complete the Transfer to General Ledger from the Payables for the period to be closed. 2. Select the period to close. Select Closed from list of values in the Period Status and save the record. I 3. If any invoice/s, debit/credit memo, prepayment, expenses reports are not approved, these will be swept into the next or decided open/future period. If sweep is required, future period should be opened before sweeping is done. 4. Select the Next period to open. Select Open from list of values in the period status and save the record.

PROCURE TO PAY CYCLE

Requisition RFQ Quotation Quotation Analysis Purchase Order Goods Receipt Note Invoice Payment Reconciliation

Requisition:Requisition is raised by employee and send to the buyer of the organization. Requisitions are 2 types: 1. Internal Requisition2. Purchase Requisition

RFQ:Buyer will send Request for Quotation to supplier.RFQs are 3 types:1. Catalog RFQ2. Standard RFQ3. Bid RFQ

Quotation:Upon receiving RFQ from Buyer, supplier will send Quotation to Buyer.Quotations are 3 types:1. Catalog 2. Standard 3. Bid

Purchase Order:After Quotation analysis buyer will raise Purchase Order to Supplier.Purchase orders are 4 types:1. Standard PO2. Planned PO3. Blanket PO Agreement4. Contract Purchase Agreement

Goods Receiving:There are 3 stages in goods receiving.1. Direct Delivery2. Standard Receipt3. Inspection

JOURNAL ENTRIES IN ACCOUNTS PAYABLES P2P CYCLE

1. Receiving item

Receiving inventory account DrToAP Accrual account

2. Move the items from receiving point to sub inventory

Inventory account DrToReceiving Inventory

3. Prepare purchase invoice

AP Accrual account DrToLiability account

4. At the time of payment if reconciliation is there

Liability AccountDrTo Cash Clearing account

5. At the time of reconciliation

Cash Clearing Account DrTo Cash Account

AP INVOICE STATUS

1. Standard invoice:

Before validation:Never validated After validation:Validated

Journal Entry:Item Expenses A/cDrFreight A/cDrTax Expenses A/cDrToLiability Account

If create accounting not run, Run a program Validate Application Accounting Definition program

2. Prepayment invoice

Before validation:Un validated After validation:Un paid After pay in full:Un paid After conversion to temporary pre payment(part amount):Available If applied full amount:Fully applied After apply to invoice:Validated

Journal Entry:Pre paid expenses A/c DrTo Liability A/c

MASS ADDITION OF ASSETS

Mass addition process is used to convert the AP invoice information as a fixed asset.

Step: 1Create Standard Invoice in Accounts PayablesNavigation:Invoices Entry Invoices

Enter all the information as it is for standard invoice Choose Account as Asset clearing Account in the distribution *** (Asset clearing Account in the Asset category & Invoice distribution account should be same)

Place the Cursor on Account fieldGo to Folder Show fieldTrack as assetSay OK Save your work. Validate, Create accounting from Actions button

Step: 2Transfer the data to GLNavigationView RequestProgram Name:Transfer Journal Entries to GL

Step: 3Run Journal Import program from GLNavigation:Journal Import RunSource:PayablesChoose your Ledger.Say ImportSystem will import AP data as un posted journalsReview un posted journals and post them

Step: 4Run mass Additions create in APMass additions create program will run to transfer AP data to FA.

Navigation:View Request

Program Name:Mass Additions Create Choose Asset BookEnsure program completed normal

Step: 5Prepare Mass additions in F.A.Navigation:Mass Additions Prepare mass Additions Choose your Book Say Find say Open Change Queue New to:Post Invoice number Choose Asset Category & Location Go to Asset details Enter DescriptionDoneStep: 6Run Post mass additions programNavigation: Mass Additions Post Mass additions

Program Name:Mass additions post Parameters:Choose your asset book and say Submit

Step: 7Query the Asset in the Asset work benchNavigation:Assets Asset work benchChoose your asset book and say Find.

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