Procure-to-Pay
Showcase
Presented by:
Cindi Stinebaugh, Purchasing
Gayle Stetler, Accounts Payable & Travel
Agenda
 Purchase to Pay Overview
 Importance of an Accurate Purchase Order (PO)
 Form 26 (Request to Change Order)
 ‘C...
Procure-to-Pay Overview
SRM
Shopping
Cart
Purchase
Order
Confirmation
(Goods Receipt) Invoice Payment
1 2 3 4 5
 Step 1 –...
Importance of an Accurate PO
 Price
 To expedite the processing of PO’s in Purchasing,
indicate how pricing was determin...
Importance of an Accurate PO
 The end user may have already checked the price, we
just need to close the circle and list ...
Importance of an Accurate PO- cont
 Quantity
 Accurate quantities help avoid blocked
invoices, out of balance situations...
Goods Receipt (GR)/Confirmation
Overview (when required)
 Important to Confirm the actual line items that
are received.
...
Goods Receipt (GR)/Confirmation
Overview - (when required)
 Confirm the actual number of items received,
if you only rece...
Current Process (3-Way Match)
3 Requirements:
 PO
 Confirmation
 Invoice
GR/IR (Goods Receipt/Invoice
Receipt)
 GR/IR Account is only out of balance
when the quantities between goods
receipt and...
Three scenarios affect GR/IR
 Goods receipt without invoice receipt
 Invoice receipt without goods receipt
 Goods recei...
Scenario 1 - Goods Receipt without invoice
Scenario 2 - Invoice without goods receipt
Scenario 3 - Goods receipt AND invoice
receipt, difference in quantity
Ordered
15 at
$34.43
each
Receive
d 11 at
$34.43
ea...
Scenario 3 - Goods receipt AND invoice
receipt, difference in quantity – cont
 If the receiver confirmed (in SRM) a quant...
To Be Process (2-Way Match)
2 Requirements:
 PO
 Invoice
Blocked Invoices
 Invoices will be blocked for payment for one (or more) of three
reasons on a line item basis:
 Price i...
Tolerance
 Tolerance for price has been set for 15%
above the line item price, up to $100.
 Tolerance for quantity has b...
Blocked Invoices – Price out of tolerance
Ordered 3 at
$18 each for a
total of $54
Invoiced for 3
at $46 each
for a total ...
Blocked Invoices – Quantity out of tolerance
Ordered 12
at $6.50
each
Received
12 at $6.50
each
This invoice is out of
tol...
Blocked Invoices – Not Received
Ordered 2
at
$1,415.99
Invoiced 2
at
$1,415.99
No Goods Receipt!!
Payment blocked
Blocked Invoice Process
 Report created for departments to identify their
own blocked invoices
 ZFI_Blocked_Invoice
 Se...
F26 Process Updates
 Additional process for the F26 – authorize the release of
a blocked payment
 Headings renamed inclu...
Example of Blocked Invoice F26
Why is this important?
 Account balances are not accurate, if there
are blocked invoices, or situations where the
GR/IR i...
Procure to pay showcase
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  • RR Break ?’s
  • Steps 4 may happen before step 3 as of 11/07 upgrade. Invoice may be entered without a confirmation. Step 3 Change - PO’s totaling < $2,500, no confirmation required. This will be explained in more detail further along.
  • This will result in blocked invoices, as many times a F26 does not arrive in Purchasing for processing before a confirmation or an invoice has posted.
  • (i.e. you confirm an item that was discontinued, we will not receive an invoice because nothing was shipped) If processed Confirmation in error, follow delete confirmation process. If a Confirmation/GR is completed and an invoice will not be received the GR/IR account will be out of balance
  • When we went live with SAP, ALL PO’s required a 3-way match. That means that there were three pieces that had to go together before purchases would be paid for. Those three things were the PO, the confirmation, and the invoice. If any of those items were missing, nothing was paid. This set up caused a lot of the issues that will be explained in the next few slides. Particularly GRIR. You may or may not have heard that term, but it has been a big issue since go-live. It has also caused a huge amount of blocked invoices because any PO that has had an invoice post, but no confirmation shows up on the ‘blocked invoice report’, which we will also discuss in the next several slides.
  • The GR/IR account is basically a clearing account. When you do the confirmation, your expense account is debited (charged) and the GRIR is credited. Then the transactions sits in this account and waits for the invoice to post. When the invoice posts, the GRIR is debited and the vendor payable account is credited where it ages to its’ due date. When both the goods receipt and the invoice post for the same quantity, the GRIR account is balanced. If there is a difference in quantity between the goods receipt and the invoice, we have to research the item. Confirmation in SRM translates to goods receipt in R/3, which is where invoices are paid.
  • Goods receipt without invoice receipt – We have confirmed the goods in SRM, but the vendor has not sent an invoice yet. We do not investigate until these items are over 90 days old. Purchasing will be following up with departments and vendors for solution. **Note: items paid by direct invoice voucher or credit card will remain unbalanced in GRIR until action is taken. (Delete confirmation to correct.) Invoice receipt without goods receipt – These items have been invoiced, but no goods have been confirmed in SRM. These items will be blocked for payment until the goods are confirmed. Will follow up on items on list more than 30 days. Goods receipt AND invoice receipt, difference in quantity – We have both pieces of the GRIR, they just don’t match. It could be that the goods confirmation is more than the invoice; or the invoice is more than the goods confirmation, which would also result in the invoice being blocked for quantity tolerance. GO TO MR11 TO SHOW EXAMPLES
  • Goods receipt without invoice receipt – We have confirmed the goods in SRM, but the vendor has not sent an invoice yet. We do not investigate until these items are over 90 days old. Purchasing will be following up with departments and vendors for solution
  • Invoice receipt without goods receipt – These items have been invoiced, but no goods have been confirmed in SRM. These items will be blocked for payment until the goods are confirmed. Will follow up on items on list longer than 30 days.
  • The 2-way match process has been postponed, undetermined date. A project is underway to create the business process. More to come. There will be no more confirmation required on Purchase Orders less than $2,500. There is a new report under construction that will help you identify invoices that have posted to PO in a given period of time. If an invoice has posted to a PO that you do not want paid, notify the Accounts Payable department to manually block the invoice. The invoice will remain blocked until further notice from the department. A B@P process is under construction on how to manually block invoices.
  • Goods are not confirmed is an easy one, but what does ‘tolerance’ mean? When items are OT for quantity, there could be a residual amount left in GRIR. This will be taken care of when you approve the additional quantities on your Form 26. The Central Accounts Payable office will clear the GRIR, when necessary at the time the invoice is released. Tolerance will be applied to ALL PO’s, regardless of dollar amount. You can see everything that has posted to a PO using tcode ME23N. Look at the PO history tab to view invoice documents and goods confirmations.
  • The SAP Accounts Payable system will automatically release an invoice if the difference between the invoice amount and the order amount is < 15% up to an invoice overage of $100. If an item is out-of-tolerance > 15% but < $25, the item will be manually unblocked by Accounts Payable and paid with no action required by department. If an item is out-of-tolerance > 15% and the amount is > $25, but < $100, negative approval guidelines will be applied as follows: The item will be put on the Out-of-Tolerance spreadsheet on Friday of each week. Business Offices will have 5 business days to respond to ap@purdue.edu If there is no action by the department the payment will be released in 5 business days. If not okay to pay, notification required. If an item is out-of-tolerance > $100, positive approval is required by the department. The item will remain on list until action is taken by the Business Office. The vendor will remain unpaid until action is taken by Business Office. If an item is out-of-tolerance due to quantity, positive approval is required by the department.
  • GO TO ZFI_BLOCKED_INVOICE Explain how to read new report Go over new process
  • Example link – go to Purchasing website
  • Authorize release of blocked invoice increase side need details
  • Procure to pay showcase

    1. 1. Procure-to-Pay Showcase Presented by: Cindi Stinebaugh, Purchasing Gayle Stetler, Accounts Payable & Travel
    2. 2. Agenda  Purchase to Pay Overview  Importance of an Accurate Purchase Order (PO)  Form 26 (Request to Change Order)  ‘Confirmation/Goods Receipt’ Overview  Current Process (3-Way Match)  GR/IR Overview  To Be Process (2-way Match) Update  How an Invoice gets Blocked/Tolerance  New Blocked Invoice Report  New Blocked Invoice Process
    3. 3. Procure-to-Pay Overview SRM Shopping Cart Purchase Order Confirmation (Goods Receipt) Invoice Payment 1 2 3 4 5  Step 1 –A Shopping Cart is created through SRM  Step 2 – Once a Shopping Cart is fiscally approved and sourced it is converted into a Purchase Order (PO) and places the order with the selected Vendor  Step 3 – When the vendor delivers the items ordered, a Confirmation is processed in SRM and posted in R3 as a Goods Receipt (GR) Step 4 - The Invoice is received from the vendor and posted in R3  Step 5 – Payment is made once the invoice is matched to the PO and the goods receipt.
    4. 4. Importance of an Accurate PO  Price  To expedite the processing of PO’s in Purchasing, indicate how pricing was determined (i.e. website - give the date, phone or email pricing – give contact name and phone number). List in internal note field.  Quoted prices - List Quote number on the Purchase Order in vendor text and attach quote to shopping cart– the vendor should invoice at the quoted price. This helps avoid the blocked invoice list and the business office of preparing a F26.
    5. 5. Importance of an Accurate PO  The end user may have already checked the price, we just need to close the circle and list it on the PO. If pricing is current and details listed on PO, Purchasing does not need to recheck pricing, expediting the PO to the vendor.  If there is no price information listed, Purchasing is required to verify pricing. This may delay the PO in being released to the vendor.  If a vendor list vendor is used, Purchasing will not see the PO. If prices were not checked, a F26 may be required. This may be to either change the PO or release a blocked invoice.
    6. 6. Importance of an Accurate PO- cont  Quantity  Accurate quantities help avoid blocked invoices, out of balance situations in the GR/IR account and preparing a F26.  Changes to a PO (i.e. qty, price descriptions, account assignment) in SRM can only be made prior to any confirmations or invoices posting. No changes may be made when an asset is assigned to PO.  Best practice – do not call vendor to add additional items or quantities to a PO.
    7. 7. Goods Receipt (GR)/Confirmation Overview (when required)  Important to Confirm the actual line items that are received.  Confirm in a timely manner, invoices posted without a Confirmation/GR will block the invoice for payment and create an out of balance situation in the GR/IR account.
    8. 8. Goods Receipt (GR)/Confirmation Overview - (when required)  Confirm the actual number of items received, if you only receive 5 of the 10 you ordered only confirm 5.  All of these situations create an incorrect account balance on the departmental account.
    9. 9. Current Process (3-Way Match) 3 Requirements:  PO  Confirmation  Invoice
    10. 10. GR/IR (Goods Receipt/Invoice Receipt)  GR/IR Account is only out of balance when the quantities between goods receipt and invoice receipt DO NOT MATCH on a line item basis. GR/IR (Acc. A/P)Expense Acct Goods Receipt = DR CR GR/IR (Acc. A/P) Invoice Receipt = DR Vendor Payable CR
    11. 11. Three scenarios affect GR/IR  Goods receipt without invoice receipt  Invoice receipt without goods receipt  Goods receipt AND invoice receipt, difference in quantity  NOTE: New report ZFI_GR_IR_CLEARING is searchable so you can see what is in GR/IR for your area.
    12. 12. Scenario 1 - Goods Receipt without invoice
    13. 13. Scenario 2 - Invoice without goods receipt
    14. 14. Scenario 3 - Goods receipt AND invoice receipt, difference in quantity Ordered 15 at $34.43 each Receive d 11 at $34.43 each Invoice d 7 at $34.43 each Did you really receive 11? Why only invoiced for 7? Are we going to get anymore?
    15. 15. Scenario 3 - Goods receipt AND invoice receipt, difference in quantity – cont  If the receiver confirmed (in SRM) a quantity more than what was physically received, have the receiver do a return delivery http://www.purdue.edu/purchasing/doc/How_to_Retur n_an_item_in_SRM_or_delete_a_confirmation.doc. If the receiver knows there will NOT be additional items physically received the receiver may check the last delivery box. This will relieve the commitment and will not allow additional confirmations. Do NOT check the last delivery box if you expect to receive additional items.
    16. 16. To Be Process (2-Way Match) 2 Requirements:  PO  Invoice
    17. 17. Blocked Invoices  Invoices will be blocked for payment for one (or more) of three reasons on a line item basis:  Price is out of tolerance  Quantity is out of tolerance  Goods are not confirmed  Review the PO History with tcode ME23N for details
    18. 18. Tolerance  Tolerance for price has been set for 15% above the line item price, up to $100.  Tolerance for quantity has been set for 0%, meaning that quantity must match exactly on a line item basis or payment will be blocked.  Find Out of Tolerance guidelines here:  http://www.purdue.edu/acctpay/doc/OutofToler anceguidelines.doc
    19. 19. Blocked Invoices – Price out of tolerance Ordered 3 at $18 each for a total of $54 Invoiced for 3 at $46 each for a total of $138 Line 1 This invoice is greater than 15% more than this line item, therefore, out of tolerance and payment is blocked.
    20. 20. Blocked Invoices – Quantity out of tolerance Ordered 12 at $6.50 each Received 12 at $6.50 each This invoice is out of tolerance for quantity, but not price – payment blocked Invoiced for 15 at $6.50 each
    21. 21. Blocked Invoices – Not Received Ordered 2 at $1,415.99 Invoiced 2 at $1,415.99 No Goods Receipt!! Payment blocked
    22. 22. Blocked Invoice Process  Report created for departments to identify their own blocked invoices  ZFI_Blocked_Invoice  Searchable by many data elements  Fund Center  Vendor  View PO using tcode ME23N to determine blocking reason (Drill down from report)  New process outlined at B@P  Form 26 replaces email to ap@purdue.edu to release OT invoices
    23. 23. F26 Process Updates  Additional process for the F26 – authorize the release of a blocked payment  Headings renamed include Relieve Partial Remaining Commitment, and Authorize Release of Blocked Payment  Explanation needs to be very specific  Give part number or describe item  Indicate line item(s)  Give dollar amounts and quantities  Indicate if the vendor needs a copy of the change  Answer the question, why is the F26 needed?  Example, http://www.purdue.edu/purchasing/xls/F26_Blocked_Invoic e.XLS
    24. 24. Example of Blocked Invoice F26
    25. 25. Why is this important?  Account balances are not accurate, if there are blocked invoices, or situations where the GR/IR is out of balance.  Avoid blocked invoices  Avoid preparing F26’s  Promotes work time efficiency  Unpaid vendors might delay delivery of other open POs  GR/IR issues could remain unresolved

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