Vendor Master Data & Records, and Purchasing Information Data EGN 5620 Enterprise Systems Configuration (Professional MSEM) Fall, 2012

Types of Buyer/Supplier Relationships ECC 6.0 Types of Buyer/Supplier Relationships January 2008 Antagonistic Parties view each other as the enemy (lose/lose) Adversarial Each party attempts to maximize their gain (win/lose) Cooperative Parties understand the benefits of working together (win/win) Collaborative Parties look for opportunities to create value (win/win) Antagonistic: The two parties do not trust each other and work to undermine each other. Trust and belief in the other is typically in short supply. Adversarial: Low price mentality. Customer tries to get the lowest price possible and the vendor tries to get the highest price. Each tries to cut corners wherever possible to save money Cooperative: Good relationship with each other. They view each other as important to their business and try to do good business together. Try to move to collaborative – This is when the vendor and customer view each other as extensions of themselves. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Trend in Buyer/Supplier Relationships ECC 6.0 Trend in Buyer/Supplier Relationships January 2008 Traditional purchasing process tends to Create an environment of mistrust and low bidder mentality, Leading to higher total purchasing costs Trend is Collaborative partnership To establish long term product/service supply contact agreements Via identifying, qualifying, and cultivating longer term suppliers/partners The objective is to build a strong relationship with one another. Evaluations and purchase transactions are costly, so the objective is to do it well at the beginning and build a long term relationship. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Benefits of Managing the Supply Base ECC 6.0 January 2008 Benefits of Managing the Supply Base Contract with only world-class suppliers The fewer suppliers, the lower the purchasing overhead Purchasing can pursue strategic sourcing issues, instead of clerical functions Streamline the supply chain Improve overall quality Improve delivery performance Less total costs Robust and accurate operations Streamline the supply chain will optimize the communication and accuracy of supply of goods January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Process for building a supply base ECC 6.0 Process for building a supply base January 2008 Identify need for long term supplier contract (agreement) Determine specific sourcing requirements Identify potential suppliers Determine method of evaluating suppliers Select supplier for contract (agreement) Negotiate and execute contract (agreement) The vendor evaluation standard analysis enables you to evaluate the data from the vendor evaluation in Purchasing. The analysis is based on data that is updated. This standard analysis allows you to find out whether a certain vendor delivers material on time and in the correct quantity required. The key figures that can be evaluated are the scores for the criteria: quantity reliability, on-time delivery performance, deviation from shipping notification (keeping the confirmation date), shipping instructions, quality audit (is currently not updated). Once the data is compiled it must be evaluated. Based upon the evaluation supplier are selected, negotiations take place, and the contracts are executed. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Supplier Evaluation and Selection ECC 6.0 January 2008 Supplier Evaluation and Selection A critical step is to identify and evaluate potential suppliers It usually involves supplier development aiming to Develop partnership with good (product quality) suppliers Improve total cost and delivery performance of purchased materials and services Qualification process includes Vendor’s qualification Vendor’s product/service qualification (vendor sub-range) Bottom line is we think we are going to save money with a relationship. Vendor evaluation and development The first step is partially outside the software. We must identify and evaluate potential suppliers. While some may be existing vendor, others may not. Existing suppliers will have transactions in the system which we can evaluate. Companies may also want to engage in vendor development. This is usually a continuous improvement program with the vendors. Often called a collaborative effort. The goals of developing a relationship is to weed out the poor suppliers and strengthen the relationship with good ones, and also reduce the cost of purchasing. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Outline Agreement Long-term purchase agreements ECC 6.0 January 2008 Outline Agreement Long-term purchase agreements Can be divided into the types below: Contracts Scheduling agreements Can be subject to a release (approval or clearance) procedure An outline purchase agreement is a longer-term agreement between a purchasing organization and a vendor regarding the supply of materials or the performance of services within a certain period according to predefined terms and conditions. (Outside SAP, such agreements may be referred to by a number of terms, including "blanket", "master", "framework" or "umbrella" agreements) In the SAP System, such agreements are subdivided into: Contracts Centrally agreed contracts Distributed contracts Scheduling agreements Scheduling agreement referencing a centrally agreed contract January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Contract Management Track supplier performance using metrics for ECC 6.0 Contract Management January 2008 Track supplier performance using metrics for On-time delivery Material and/or service quality Returned materials Expedite issues Pricing analysis Resolve problems Engage in continuous improvement process Terminate/renew contract agreement You can determine the type and number of main criteria yourself. The system supports a maximum of 99 main criteria. You can specify the number of main criteria for each purchasing organization and decide which main criteria are to be covered by the overall score. The following five main criteria are available in the standard system: Price Quality Delivery Gen. service/support These four main criteria serve as a basis for evaluating vendors from whom you procure materials. External service provision This main criterion serves as a basis for evaluating those vendors you employ as external service providers. Reports on the performance metrics give the information necessary to make informed decisions about vendors Corrective action plans Dissolution of contracts for non-performance January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Contracting Questions ECC 6.0 Contracting Questions January 2008 How will potential suppliers be evaluated and selected? What procedures will be required to manage the contracts (and suppliers)? How will performance be measured? How many are too many suppliers? Too many suppliers cost money Supplier integration Collaborative agreements Supplier development Without material production shuts down What is the risk? A program definition has to be defined before the evaluation begins. Result must be measurable. Some of the most common evaluation measures: On-time delivery Quality Price Variance The key figures that can be evaluated in the standard analysis vendor evaluation, are scores for the following criterion: On-time delivery performance Quality audit (currently cannot be updated) Quantity reliability Shipping instructions Shipping notification deviation (keeping the confirmation date)   Xerox – 80’s benchmarking Thousands of supplier Dozens for the same component Reduced and saved money Sole source is a risk because if they falter in their supply to the company there is not alternative. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Creating a Contract January 2008 Is a long-term agreement with a vendor to provide a material or service For an agreed upon period of time At a negotiated price or quantity Can be created manually or with reference to purchase requisition, Request for Quote (RFQ)/quotation etc. You can create a contract as follows: Manually You enter all data relating to the contract manually. Using the referencing technique As reference document (the document you copy from), you can use: Purchase requisitions RFQs/quotations Other contracts You can also combine the two options. For example, you can copy data from a reference document and then change or supplement this data as required. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Contract types Quantity contract Value contract ECC 6.0 Contract types January 2008 Quantity contract Agreement with a particular vendor to purchase a specific quantity of materials. Example: Target quantity of 50,000 meters of electrical wire at $2/meter. (MK) Value contract Similar to quantity contract except the agreement is to purchase an established monetary value of materials. Example: Target value of $100,000 for electrical wire. (WK) Quantity contracts Use this type of contract if the total quantity to be ordered during the validity period of the contract is known in advance. The contract is regarded as fulfilled when release orders totaling a given quantity have been issued. Value contracts Use this type of contract if the total value of all release orders issued against the contract is not to exceed a certain predefined value. The contract is regarded as fulfilled when release orders totaling a given value have been issued. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Vendor Master Data & Records, and Purchasing Information Data SAP Implementation EGN 5620 Enterprise Systems Configuration (Professional MSEM) Fall, 2012

Vendor Master Data Includes all data required for ECC 6.0 January 2008 01/26/98 Vendor Master Data Includes all data required for processing business transactions and corresponding with vendors Information is shared between the accounting and purchasing departments We need to have the address because we are going to send them a check. General data This is data that applies to every company code and every purchasing organization in your company. The general area includes, for example, the vendor’s name, address, language, and telephone number. Company code data This is data that is specific to an individual company code. Company code data includes, for example, the reconciliation account number and payment terms. Purchasing organization data This is data relevant to the purchasing organization of your company. For example, requests for quotations, purchase orders, and invoice verifications are stored in this section. language on vendor or customer – The language they communicate in. All communications will be in their language Data in vendor master records controls how transaction data is posted and processed for a vendor. The vendor master record also contains all the data you require to do business with your vendors. The master record is used not only in Accounting but also in Materials Management. By storing vendor master data centrally and sharing it throughout your organization, you only need to enter it once. You can prevent inconsistencies in master data by maintaining it centrally. If one of your vendors changes their address, you only have to enter this change once, and your accounting and purchasing departments will always have up-to-date information. A vendor master record contains: Vendor’s name, address, language, and phone numbers Tax numbers Bank details Account control data like the number of the G/L reconciliation account for the vendor account Payment methods and terms of payment set up with the vendor Purchasing data January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008 8 6 7 7 7

Vendor Master Data & Records, and Purchasing Information Data ECC 6.0 January 2008 Vendor Master Data & Records, and Purchasing Information Data Vendor master data and records are maintained by both accounts payable (A/P) and purchasing Purchasing information data are maintained primarily by All kinds of view – Different part of data. Vendors information is pertinent to both A/P and purchasing. Both departments have information that they need to maintain, though maintain primarily by purchasing and used by A/P Infor Records are records pertinent to the Vendor and the Material. We will be discussing them shortly January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Vendor Master Data A master record must be created for every vendor ECC 6.0 January 2008 Vendor Master Data A master record must be created for every vendor General data, Company Code data (Financial Accounting - FI), and Purchasing data (Material Management - MM) Purchasing data Condition Control data Partner functions Company code data Account management Payment transactions General data Address Payment transactions Vendor master has to be created for every vendor in the system Data in vendor master records controls how transaction data is posted and processed for a vendor. The vendor master record also contains all the data you require to do business with your vendors. The master record is used not only in Accounting but also in Materials Management. By storing vendor master data centrally and sharing it throughout your organization, you only need to enter it once. You can prevent inconsistencies in master data by maintaining it centrally. If one of your vendors changes their address, you only have to enter this change once, and your accounting and purchasing departments will always have up-to-date information. A vendor master record contains: Vendor’s name, address, language, and phone numbers Tax numbers Bank details Account control data like the number of the G/L reconciliation account for the vendor account Payment methods and terms of payment set up with the vendor Purchasing data January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Vendor Master Structures of the Data ECC 6.0 January 2008 Vendor Master Structures of the Data General Data: Address Purchasing Data Vendor 10001 General Data Company Code Data Financial Accounting (FI) Purchasing Data (MM) The customer master record is broken into three areas: General Data: demographic data Company Code Data: Financial Accounting – Accounting information Sales Data – Sales information General Data General data does not depend on the company code, the sales and distribution organization or the purchasing organization. General data applies to one business partner for all company codes, and in all sales areas and purchasing organizations. It includes: Company name Address Telephone number General data is not limited to information used by both Financial Accounting and Logistics. The unloading point, for example, is unique for a customer and is only relevant for Sales and Distribution. However, because it is not part of the sales and distribution organization of your company, it is not sales and distribution data. It is general data. If you edit a master record using the customer or vendor number without specifying a sales area, a purchasing organization, or a company code, the system displays only general data screens. The department that creates the master record for a business partner also enters general data. If Financial Accounting creates the master record, it must also enter general data, such as the address. When Logistics then enters data, the general data for the business partner exists. Logistics can display the general data. Company Code Data Company code data only applies to one company code. This data is only relevant to Financial Accounting, and includes: Account management data Insurance data If you edit a master record, you must specify the customer or vendor number and company code to access the screens containing company code data. You can only invoice a business transaction if the data on the payer partner function is entered in the Financial Accounting view. Sales and Distribution Data The data for one customer can differ for each sales area. The sales area is a combination of sales organization, distribution channel and division. This data is only relevant to Sales and Distribution, and includes: Pricing data Delivery priority Shipping conditions If you edit a customer master record, you must enter the customer number and the sales area in order to access screens containing sales and distribution data. You can only process sales and distribution transactions, for example, a sales order, after entering the sales and distribution data for a customer. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Vendor Master Data – Typical Screen ECC 6.0 January 2008 Vendor Master Data – Typical Screen Vendor attributes that sufficiently differentiate them by their: Address Control Payment Transactions Accounting Information Correspondence Purchasing Data Partner Functions Address has typical demographic information Control has tax and accounting information – Payment Payment Transactions – Who makes the payments (bank or alternative payor) Correspondence – Who and how to contact the people in the purchasing Org Purchasing Data – Who is the sales person, What conditions, terms, Inocterms (International Chamber of Commerce shipping) Dunning works on this side Partner functions – Defines who is responsible for what action. We order material They did not ship it Note letting them know that we did not receive it Escalation January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Vendor Master General Data – Address ECC 6.0 January 2008 Vendor Master General Data – Address General Data – Address Address Vendor Name Search Term Street address City, Region Postal code Country Communication Language Telephone, Fax, E-Mail Address Name: Name of the vendor. Search Term: A method to find your vendor by match-codes. Street: Optional entry. City: Mandatory entry. Postal Code: Mandatory entry. Country: Mandatory entry. Communication Language key Mandatory entry: This is the language the vendor uses. All communications to them will be in this language January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Vendor Master- General Data – Control Data ECC 6.0 January 2008 Vendor Master- General Data – Control Data Account Control Customer (if the vendor is both a vendor and a customer) Authorization Trading partner (if the vendor is a part of an independent company) Group key (combines vendors to enhance the search capacity) Account control Customer If the Customer is a Vendor as well, enter the Customer number here. Account Number of Vendor or Creditor Group key If the customer or the vendor belongs to a group, you can enter a group key here. The group key is freely assignable. If you create a matchcode using this group key, group evaluations are possible. Authorization Group The authorization group allows extended authorization protection for particular objects. The authorization groups are freely definable. The authorization groups usually occur in authorization objects together with an activity. Tax information Tax code 1 Number, with which the customer reports to the tax authorities. Tax code 2 Number, with which the customer reports to the tax authorities. Fiscal address Account number of the master record containing the fiscal address. County code Key for county taxes. City code Key is used for city taxes. Tax jurisdiction code This code is used in the US to determine tax rates. Reference data / area Industry Freely definable name for a group of companies (e.g.trade, manufacturing). Transport Zone Region, where the ship-to party is located. International location number  (part 1) Here you enter the first 7 digits of the international location number. The International Location Number (ILN) is assigned (in Germany by the Centrale for Coorganisation GmbH)) when a company is founded. It consists of 13 digits, the last digit being the check digit. There are two categories of location numbers: Participants who only need an ILN to cleary and unmistakably identify themselves for communication with the business partner are given a category 1 ILN. This cannot be used to identify articles by means of EAN. Participants who wish to assign the location numbers for their own enterprise areas are given a category 2 ILN. For a category 2 ILN, digits 1 to 7 are described as basis number. This is used as basis for the creation of article numbers (EAN). January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Vendor Master- General Data – Control Data ECC 6.0 January 2008 Vendor Master- General Data – Control Data Tax Information Tax codes used to enter ID number of the vendor Fiscal address Country code City code Reference Data / Area International locator number used to identify a legal, functional, or physical location within a business or organizational entity Industry key allows similar vendors to be grouped by industry Transport zone Account control Customer If the Customer is a Vendor as well, enter the Customer number here. Account Number of Vendor or Creditor Group key If the customer or the vendor belongs to a group, you can enter a group key here. The group key is freely assignable. If you create a matchcode using this group key, group evaluations are possible. Authorization Group The authorization group allows extended authorization protection for particular objects. The authorization groups are freely definable. The authorization groups usually occur in authorization objects together with an activity. Tax information Tax code 1 Number, with which the customer reports to the tax authorities. Tax code 2 Number, with which the customer reports to the tax authorities. Fiscal address Account number of the master record containing the fiscal address. County code Key for county taxes. City code Key is used for city taxes. Tax jurisdiction code This code is used in the US to determine tax rates. Reference data / area Industry Freely definable name for a group of companies (e.g.trade, manufacturing). Transport Zone Region, where the ship-to party is located. International location number  (part 1) Here you enter the first 7 digits of the international location number. The International Location Number (ILN) is assigned (in Germany by the Centrale for Coorganisation GmbH)) when a company is founded. It consists of 13 digits, the last digit being the check digit. There are two categories of location numbers: Participants who only need an ILN to cleary and unmistakably identify themselves for communication with the business partner are given a category 1 ILN. This cannot be used to identify articles by means of EAN. Participants who wish to assign the location numbers for their own enterprise areas are given a category 2 ILN. For a category 2 ILN, digits 1 to 7 are described as basis number. This is used as basis for the creation of article numbers (EAN). January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Vendor Master - General Data – Payment Transactions ECC 6.0 January 2008 Vendor Master - General Data – Payment Transactions Bank Details Bank Key selected from a match code with company code entered Bank Account Account Holder Partner Bank Type (if vendor has more than one bank account, then it allows to sequence those accounts) Payment Transactions Alternative Payee used to enter another vendor number Instruction Key To control which statements are given to the banks during the payment order Bank Key When you define the country key, you also specify the country-specific definition of the bank key. Normally, you manage banks using their bank number. The bank number in the control data for the bank is then displayed twice, that is, as the bank key too. In certain countries, the bank account number takes on this function; then there are no bank numbers and the bank data is managed using the account number. For data medium exchange, you may find it useful to be able to enter foreign business partners without a bank number, even if there are bank numbers in the country in question. In this case, the bank key can be assigned internally. Bank Account Number This field contains the number under which the account is managed at the bank. Account Holder Name Here you can enter another name that the payment program can use if the name of the account holder is not the same as the name of the customer or vendor. Partner bank type Key you enter in the line item to specify which business partner's bank the system should use. Procedure In the business partner's master record: If several bank accounts exist in a customer or vendor master record, you can assign different keys for these accounts. Account Number of the Alternative Payee The account number of the vendor with whom automatic payment transactions are carried out. Instruction key for data medium exchange For automatic payment transactions, this field (along with the house bank country and the payment method determined by the payment program) controls which statements are given to the participating banks when carrying out the payment order. This field is used in countries such as Germany, Austria, the Netherlands, Spain, Norway, Finland, and Japan as well as for the internnational SWIFT format, MT100. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Vendor Master – Accounting Information ECC 6.0 January 2008 Vendor Master – Accounting Information Accounting Information Reconciliation Account see next slide Sort Key used to select a sort for the allocation field Release Group the release-approval group can be defined and configured to allow only those in the group to be able to “release for payment Reconciliation Account in General Ledger The reconciliation account in G/L accounting is the account which is updated parallel to the subledger account for normal postings (for example, invoice or payment). For special postings (for example, down payment or bill of exchange), this account is replaced by another account (for example, 'down payments received' instead of 'receivables'). The replacement takes place due to the special G/L indicator which you must specify for these types of postings. Key for sorting according to assignment numbers Indicates the layout rule for the Allocation field in the document line item. Use The system uses a standard sort sequence for displaying line items. Among other things, it sorts the items according to the content of the Allocation field. This field can be filled either manually or automatically (by the system) when a document line item is entered. For this purpose, the system requires rules that determine which information is to be taken from the document header or from the document line item and placed in the field. The rules can be stored in the master record of an account which enables you to determine the standard sort sequence on an account-specific basis. Release Approval Group The release approval group can be freely assigned. You use it to classify vendors and customers, which means that the release approval group can be defined for vendors and customers. By using the release approval group, you can determine release approval paths and those people with release approval. Interest calculation indicator Enter an interest calculation indicator here if the account is to be included in automatic interest calculation. Interest calculation frequency in months An entry in this field determines the intervals (in months) at which interest is to be calculated automatically for this account (account balance interest calculation). The interest calculation frequency is added to the date of the last interest calculation. Withholding Tax Code The withholding tax code can be compared to a tax sub-category which must be taken into consideration when reporting tax to the tax authorities. The tax codes are unique per country. For each tax code, the tax rate, the portion of the invoices to be taxed and further properties are stored in a table. Certificate Number of the Withholding Tax Exemption Number of the certificate which is issued for temporary exemption from withholding tax. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Reconciliation Account ECC 6.0 January 2008 Reconciliation Account An individual G/L account recorded in line-item detail in the sub-ledger and summarized in the G/L The information entered into the reconciliation account is all line-item data from the vendor account. The reconciliation in the G/L is at the summary level and is used to reconcile against the vendor account at the total level, while the sub-ledger identifies line-item data. Sales to an individual customer You use this to indicate G/L accounts as being reconciliation accounts. For each subledger account , you must keep at least one reconciliation account in the general ledger. When you post to an account in the subledger, the system automatically posts to the corresponding reconciliation account. The "Receivables from goods and services" account is an example of a reconciliation account for customers. Enter Customer in the Reconciliation account for account type field. Enter a Vendor in this field for a vendor reconciliation account. Using the reconciliation account procedure, it is possible to create a balance sheet and a profit and loss statement at any time, since the amounts posted to subledger accounts are also posted automatically in the general ledger. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Reconciliation Account ECC 6.0 January 2008 Reconciliation Account Postings to sub-ledgers (such as accounts receivable or accounts payable) are automatically concurrently posted to the corresponding reconciliation account in the General Ledger Thus, the General Ledger is automatically updated and remains in balance with the customer and vendor individual account totals Sales to an individual customer You use this to indicate G/L accounts as being reconciliation accounts. For each subledger account , you must keep at least one reconciliation account in the general ledger. When you post to an account in the subledger, the system automatically posts to the corresponding reconciliation account. The "Receivables from goods and services" account is an example of a reconciliation account for customers. Enter Customer in the Reconciliation account for account type field. Enter a Vendor in this field for a vendor reconciliation account. Using the reconciliation account procedure, it is possible to create a balance sheet and a profit and loss statement at any time, since the amounts posted to subledger accounts are also posted automatically in the general ledger. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Vendor Master – Accounting Information ECC 6.0 January 2008 Vendor Master – Accounting Information Interest Calculation Interest Calculation Indication for automation interest calculation, and is configured by accounting department Interest Calculation Frequency used to select a period for calculation of interest Withholding Tax Withholding Tax Code Exemption Number Reconciliation Account in General Ledger The reconciliation account in G/L accounting is the account which is updated parallel to the subledger account for normal postings (for example, invoice or payment). For special postings (for example, down payment or bill of exchange), this account is replaced by another account (for example, 'down payments received' instead of 'receivables'). The replacement takes place due to the special G/L indicator which you must specify for these types of postings. Key for sorting according to assignment numbers Indicates the layout rule for the Allocation field in the document line item. Use The system uses a standard sort sequence for displaying line items. Among other things, it sorts the items according to the content of the Allocation field. This field can be filled either manually or automatically (by the system) when a document line item is entered. For this purpose, the system requires rules that determine which information is to be taken from the document header or from the document line item and placed in the field. The rules can be stored in the master record of an account which enables you to determine the standard sort sequence on an account-specific basis. Release Approval Group The release approval group can be freely assigned. You use it to classify vendors and customers, which means that the release approval group can be defined for vendors and customers. By using the release approval group, you can determine release approval paths and those people with release approval. Interest calculation indicator Enter an interest calculation indicator here if the account is to be included in automatic interest calculation. Interest calculation frequency in months An entry in this field determines the intervals (in months) at which interest is to be calculated automatically for this account (account balance interest calculation). The interest calculation frequency is added to the date of the last interest calculation. Withholding Tax Code The withholding tax code can be compared to a tax sub-category which must be taken into consideration when reporting tax to the tax authorities. The tax codes are unique per country. For each tax code, the tax rate, the portion of the invoices to be taxed and further properties are stored in a table. Certificate Number of the Withholding Tax Exemption Number of the certificate which is issued for temporary exemption from withholding tax. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Account Groups January 2008 Identifier that controls which fields must be entered when an account is created Determine a valid number interval for each of the groups (types) of General Ledger accounts that have common attributes Must be created before General Ledger Chart of Accounts master records can be created You must assign each account to an appropriate account group How do they control the credit control area, etc. Account groups BS accounts PL accounts Determines which fields needs to be filled in Have to create account groups before they create the master records You must assign each account to an account group. The account group ensures that only the relevant screens and fields are displayed and ready for input for each of the customer’s different partner functions. For example, the address, communication, and bank data fields are omitted for the account group for one-time accounts. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Account Groups Chrt/accts Acct group Description From To ECC 6.0 January 2008 Account Groups Chrt/accts Acct group Description From To CHRT BS Balance Sheet (BS) 100000 399999 CHRT PL Income Sheet 400000 999999 CHRT RA Reconciliation 110000 310000 Reconciliation fit inside the balance sheet accounts Sub-sets Have to create account groups before they create the master records You must assign each account to an account group. The account group ensures that only the relevant screens and fields are displayed and ready for input for each of the customer’s different partner functions. For example, the address, communication, and bank data fields are omitted for the account group for one-time accounts. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Account Groups Account Group BS Account control Account management ECC 6.0 January 2008 Account Groups Account Group BS Account control Account management Document entry Bank/financial details Interest calculation Joint venture Account control Suppress Req. entry Opt. entry Display Currency Tax category Reconciliation account … Here is an example of the definition of an account group for Account control Suppress: Does not display and also suppresses functionality Required Entry: Cannot continue until you enter the field – functionality is enabled. Optional entry: Optional – functionality is enabled Display: You cannot enter or change the field - Functionality is enabled January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Field Status January 2008 Field status controls how the data will be entered for a field when an accounting master record is being used in a transaction Determining whether a field is required, optional, suppressed, or display only Field status controls are also relevant to a specific activity — create, change, or display Under account group Tells what info Under that – Field status What information we have to have to use that account. Suppress: Does not display and also suppresses functionality Required Entry: Cannot continue until you enter the field – functionality is enabled. Optional entry: Optional – functionality is enabled Display: You cannot enter or change the field - Functionality is enabled January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Field Status Variant Fld status group Text ZALL All Accounts ECC 6.0 Field Status Variant January 2008 Fld status group Text ZALL All Accounts ZBSA Balance Sheet Accounts ZEXP Expense Accounts ZGRI Material Management (GR/IR) Accounts ZRCN Reconciliation Accounts ZREV Revenue Accounts A field status variant groups together several field status groups. You assign a field status variant to each company code. The field status group specifies which fields are ready for input, which fields must be filled or which fields are suppressed when entering documents. Specifying which fields are required, suppressed, optional, or display only when using the various general ledger accounts. A field status group is assigned to a general ledger account when it is created. Field status variant ZEXP When we create new things in SAP we have to use naming conventions to prevent things from being overwritten. If you name these things with an x,y,z it will migrate it with upgrade A way to group things together January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 Field Status Variant January 2008 Field status variant (V000) - Group ZBSA - Balance Sheet Acct. General data Additional account assignments Materials management Payment transactions Asset accounting Taxes ... General Data Suppress Req. entry Opt. entry Display Assignment number Text Invoice reference … A field status variant groups together several field status groups. You assign a field status variant to each company code. The field status group specifies which fields are ready for input, which fields must be filled or which fields are suppressed when entering documents. Specifying which fields are required, suppressed, optional, or display only when using the various general ledger accounts. A field status group is assigned to a general ledger account when it is created. We have a whole series of field data with it. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Vendor Master – Payment Transactions ECC 6.0 January 2008 Vendor Master – Payment Transactions Payment Data Payment Terms (cash discounts and favorable payment periods offered by vendor) Tolerance Group (the limit to which an event can deviate) Check Double Invoice (to check for double or duplicate invoices when they are entered) Check Cashing Time Automatic Payment Transactions Payment Methods Alternate Payee Payment Block(prevent any open items from being paid) Invoice Verification Tolerance Group Terms of payment key Key for defining payment terms composed of cash discount percentages and payment periods. It is used in sales orders, purchase orders, and invoices. Terms of payment provide information for: Cash management Dunning procedures Payment transactions Tolerance Group Each tolerance group contains settings that affect cash discount and payment difference processing. These settings become effective during payment entry. Check Flag for Double Invoices or Credit Memos Indicator which means that incoming invoices and credit memos are checked for double entries at the time of entry. Probable time until check is paid Number of days which usually pass until the vendor has cashed your check. Use During automatic payment transactions, the system calculates the value date for check payments using this information and stores the date in the line item. The date is calculated as follows: Value date = posting date + check cashing time In Cash Management, the value date is used as information about the expected cash outflow. List of the Payment Methods to be Considered List of payment methods which may be used in automatic payment transactions with this customer/vendor if you do not specify a payment method in the item to be paid. If you do specify a particular payment method in the item to be paid, this specification has priority over the specifications in the master record. You may also specify payment methods in the item which are not listed in the master record. Account number of the alternative payee The account number of the vendor with whom automatic payment transactions are to be carried out. Block key for payment Block key used to block an open item or an account for payment transactions. The block key can be used as follows: 1. During automatic payment transactions, the block key affects open items if it is: Stored in the master record or Entered in the document. If you enter the block in the master record, the exception list will include all the open items for this account. The block keys '*' and '+' are of special importance and function as follows: If the * block key is entered in the master record, none of the items in this account are included in the automatic payment process. If the + block key is entered in the master record, only those items for which a payment method is explicitly defined are included in the automatic payment process. The "A" block key also has a special function: It is generally set automatically when a down payment is entered. For this reason, you should neither delete the "A", nor use it for other purposes. A block key can be set or deleted during payment proposal processing if you select the option Change in payment proposal permitted. 2. The block key in the document will affect manual payments only if you have selected the Blocked for manual payments option for the block key. The block key you set in the master record has no effect on manual payments. However, it is possible to make system settings so that a warning is shown, explaining that this is the case. You do so by customizing message 671 in work area F5 in the message control . 3. You must select the Not changeable option for the block key that is relevant to payment release in financial accounting. Tolerance group; Invoice Verification Settings for vendor-specific parameters in Invoice Verification. Only one tolerance group can be assigned to a vendor in the one company code. For each tolerance group you can define: by how much the actual value of an invoice can differ from the expected value and still be accepted by the system; whether invoices can be automatically reduced. These settings are valid in Logistics Invoice Verification. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Vendor Master – Correspondence Accounting ECC 6.0 January 2008 Vendor Master – Correspondence Accounting Dunning Data Dunning Procedure To remind vendors to deliver the material from the purchase orders Dunning Block If selected, the vendor is not for dunning run Dunning Recipient Date of Legal Dunning Procedure Correspondence information Local Processing Accounting Clerk Account With Vendor used to identify the company Clerk at vendor the contact person at the vendor side Dunning procedure This field contains the key for the dunning procedure to be used. Dunning block Key which reflects the reason for a dunning block indicator. Account number of the dunning recipient Account number of the vendor who is to receive the dunning notice. Date of the legal dunning proceedings Date on which a legal dunning procedure was initiated. Use The printing of dunning notices in the legal dunning procedure generates an internal notice about any further account movements. A dunning notice is not created for the customer. If the Legal dunning procedure field in the master record contains a date, this means that the account is involved in a legal dunning procedure. The relationship between this date and the dunning date does not affect how the account is processed. The printing of account movements in the legal dunning procedure differs from the normal printing of dunning notices as follows: You must specify a separate form for your dunning procedure in Customizing. For more information, see Customizing (IMG) under Dunning Forms. The dunning program also displays text element 520 "Legal dunning procedure". This makes it possible to display the date of the legal dunning procedure from the master record. The program also displays the documents blocked for dunning and those with a payment method (automatic debit, bank direct debit). Although dunning notices are printed, the dunning level does not change in the master record or in the items. New dunning level = old dunning level. The program only updates the date of the last dunning run. Indicator: Local processing? Indicates that payment transactions and dunning notices are created for the branch. Normally automatic payment transactions and dunning notices are created for the head office. Accounting clerk Identification code for the accounting clerk. The name of the accounting clerk defined by this identification code can be used in the payment program for correspondence and reporting (for example, open item lists). Our account number with the vendor This field contains the account number the company is listed under at the vendor . January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Vendor Master –Purchasing Data ECC 6.0 January 2008 Vendor Master –Purchasing Data Conditions Order Currency Terms of Payment Incoterms (next slide) Minimum Order Value Sales Data Salesperson Telephone Account with vendor Purchase order currency Key for the currency on which an order placed with a vendor is based. Terms of payment key Key for defining payment terms composed of cash discount percentages and payment periods. Incoterms (part 1) Commonly-used trading terms that comply with the standards established by the International Chamber of Commerce (ICC). Use Incoterms specify certain internationally recognised procedures that the shipper and the receiving party must follow for the shipping transaction to be successfully completed. Example If goods are shipped through a port of departure, the appropriate Incoterm might be: FOB ("Free On Board"). You can provide further details (for example, the name of the port) in the secondary Incoterm field: FOB Boston, for example. Minimum order value Minimum value specified for purchase orders issued to the relevant vendor. Sales Person Responsible salesperson at vendor's office Order acknowledgment requirement Determines whether the purchasing document ( purchase order, outline purchase agreement , etc.) is to be acknowledged by the vendor. Indicates whether vendor is returns vendor Indicates that a vendor return is carried out using shipping processing. Automatic generation of purchase order allowed Allows you to automatically generate purchase orders from purchase requisitions if the requisition has been assigned to a vendor (source of supply). Purchasing Group Key for a buyer or a group of buyers, who is/are responsible for certain purchasing activities. Internally, the purchasing group is responsible for the procurement of a material or a class of materials. Externally, it is the medium through which contacts with the vendor are maintained. Planned delivery time in days Number of calendar days needed to obtain the material or service if it is procured externally. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Vendor Master –Purchasing Data ECC 6.0 January 2008 Vendor Master –Purchasing Data Incoterms are standard trade definitions used in international contracts. The International Chamber of Commerce based in Paris, devised these standard trade definitions. The 13 incoterms are divided into four groups (arrival, departure, carriage paid by seller, and carriage not paid by seller). Group Incoterm Long Name Location E-Departure EXW Ex work Named Place D - Arrival DAF Delivered at Frontier DES Delivered Ex Ship Port of Destination DEQ Delivered Ex Quay DDU Delivered Duty Unpaid Destination DDP Delivered Duty Paid C- Paid CFR Cost and Freight CIF Cost, Insurance, Freight CPT Carriage Paid to CIP Carriage, Insurance Paid F - Unpaid FCA Free Carrier FAS Free Alongside Ship FOB Free on Board Purchase order currency Key for the currency on which an order placed with a vendor is based. Terms of payment key Key for defining payment terms composed of cash discount percentages and payment periods. Incoterms (part 1) Commonly-used trading terms that comply with the standards established by the International Chamber of Commerce (ICC). Use Incoterms specify certain internationally recognised procedures that the shipper and the receiving party must follow for the shipping transaction to be successfully completed. Example If goods are shipped through a port of departure, the appropriate Incoterm might be: FOB ("Free On Board"). You can provide further details (for example, the name of the port) in the secondary Incoterm field: FOB Boston, for example. Minimum order value Minimum value specified for purchase orders issued to the relevant vendor. Sales Person Responsible salesperson at vendor's office Order acknowledgment requirement Determines whether the purchasing document ( purchase order, outline purchase agreement , etc.) is to be acknowledged by the vendor. Indicates whether vendor is returns vendor Indicates that a vendor return is carried out using shipping processing. Automatic generation of purchase order allowed Allows you to automatically generate purchase orders from purchase requisitions if the requisition has been assigned to a vendor (source of supply). Purchasing Group Key for a buyer or a group of buyers, who is/are responsible for certain purchasing activities. Internally, the purchasing group is responsible for the procurement of a material or a class of materials. Externally, it is the medium through which contacts with the vendor are maintained. Planned delivery time in days Number of calendar days needed to obtain the material or service if it is procured externally. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Vendor Master –Purchasing Data ECC 6.0 January 2008 Vendor Master –Purchasing Data Control Data Acknowledgement Required To indicate if acknowledgement is required upon receipt of the order Automatic Purchase Order To allow automatic issuance of purchase order Good receipt-based invoice verification To perform invoice verification based on the goods receipt amounts Subsequent settlement To allow a rebate Default Data Material Purchasing Group Planned Delivery Time Confirmation control (confirmation type and sequence) Purchase order currency Key for the currency on which an order placed with a vendor is based. Terms of payment key Key for defining payment terms composed of cash discount percentages and payment periods. Incoterms (part 1) Commonly-used trading terms that comply with the standards established by the International Chamber of Commerce (ICC). Use Incoterms specify certain internationally recognised procedures that the shipper and the receiving party must follow for the shipping transaction to be successfully completed. Example If goods are shipped through a port of departure, the appropriate Incoterm might be: FOB ("Free On Board"). You can provide further details (for example, the name of the port) in the secondary Incoterm field: FOB Boston, for example. Minimum order value Minimum value specified for purchase orders issued to the relevant vendor. Sales Person Responsible salesperson at vendor's office Order acknowledgment requirement Determines whether the purchasing document ( purchase order, outline purchase agreement , etc.) is to be acknowledged by the vendor. Indicates whether vendor is returns vendor Indicates that a vendor return is carried out using shipping processing. Automatic generation of purchase order allowed Allows you to automatically generate purchase orders from purchase requisitions if the requisition has been assigned to a vendor (source of supply). Purchasing Group Key for a buyer or a group of buyers, who is/are responsible for certain purchasing activities. Internally, the purchasing group is responsible for the procurement of a material or a class of materials. Externally, it is the medium through which contacts with the vendor are maintained. Planned delivery time in days Number of calendar days needed to obtain the material or service if it is procured externally. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Vendor Master – Purchasing Data – Partner Functions ECC 6.0 January 2008 Vendor Master – Purchasing Data – Partner Functions Partner Functions Used to define the relationships between the vendor (or customer) and the company. List of (Vendor) Partner Functions AZ alternative payment recipient CA contract address CP contact person ER employee responsible GS goods supplier OA ordering address PI invoice presented by VN vendor Partner function The abbreviated form of the name that identifies the partner function. Example The ship-to party in your system could be abbreviated, for example, to "SH". January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Vendor Master – Purchasing Data – Account Group ECC 6.0 January 2008 Vendor Master – Purchasing Data – Account Group Vendor masters are assigned to a vendor account group Through field status maintenance, vendor account groups can be set up for one-time vendors, regional vendors, and internal vendors The vendor account group controls both type and number range assignment for vendors Can be set up for type of vendors – Account groups determine: The type of number assignment, A number range for assigning account numbers, Which fields are displayed and whether their entry is optional or required (field status) when you enter or change vendor master data. Whether the account is for one-time vendors For vendors whom you only supply once or rarely, you can create a special vendor master record, the master record for "one-time accounts". In contrast to other master records, no data specific to a single customer is stored in the one-time master record, since this account is used for more than one customer. The customer-specific entries such as address and bank details are not entered until the document for the transaction is entered into the system. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Purchasing Info Record ECC 6.0 January 2008 Purchasing Info Record The purchasing info record provides continuously updated information about the relationship of a specific material with a specific vendor Order unit, price, price changes, tolerances, reminder information, historic data, statistics, texts Choice of automatic or manual updating Information about the relationship we have with that vendor. The purchasing info record is a source of information for Purchasing on a certain material and the supplier of this material. It contains data such as the vendor’s current prices and conditions for this material, the number of the last PO, or the time interval in which the vendor can supply the material. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

ECC 6.0 January 2008 Source List It stores information about where to acquire a given material for a given period of time It specifies whether this source should be used by Materials Requirement Planning (MRP) Who we buy material from. Who’s dependable You use the source list to determine the valid source of supply at a certain point in time. The source list contains all the sources of supply defined for a material and the periods during which procurement from these sources is possible. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Purchasing Tolerances ECC 6.0 Purchasing Tolerances January 2008 A tolerance limit set for allowed variance before a warning/error message is displayed Price variance Compares the price in the purchase order with the valuation price stored in the material master Maximum cash discount This tolerance limit is set to assure that cash discounts do not exceed allowable discounts Now earlier created tolerances in accounting for AR/AP Now we will have some material tolerances Tolerances can be set at the material level or the vendor info record level. This allows for the tailoring of tolerances as needed. In the Customizing system for Inventory Management, you can define two tolerances for variances in the order price quantity: Tolerance for an error message: if the variance is larger than this tolerance specified, the system issues an error message, and you cannot post the goods receipt. Tolerance for a warning message: if the variance reaches this tolerance specified, the system issues a warning message during entry of the goods receipt. However, you can still post the goods receipt. The buyer receives a message pointing out the discrepancy. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Goods Receipts Tolerances ECC 6.0 Goods Receipts Tolerances January 2008 Purchase order price quantity Two tolerance levels maintained per item The maximum percentage variance before a goods receipt postings is not allowed A percent variance that generates a warning message but allows posting Moving average price variance the maximum moving average price change allowed Goods Receiving personnel can confirm the receipt of goods simply by entering the Po number. By specifying permissible tolerances, buyers can limit over- and under deliveries of ordered goods. In this step, you set the tolerance limits for goods receipts. When processing a goods receipt, the system checks each item to determine whether the goods receipt varies from the purchase order or the material master data. The different types of variances are defined by tolerance keys. For each tolerance key, tolerance limits can be set per company code. The following variances are checked in Inventory Management: Variance in the purchase order price quantity For this variance, two tolerance keys are provided: Tolerance key B1 (error message) You use tolerance key B1 to define the maximum percentage variance. If the variance is greater than the maximum variance, the system creates an error message. The user cannot post the goods receipt. Tolerance key B2 (warning message) Tolerance key B2 defines the percentage variance from which a warning message is to be issued. It is possible to post the goods receipt. Variance for the moving average price of the material You use tolerance key VP to define the percentage variance from which a warning message is issued. This warning message indicates a price change. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Invoice Receipts Tolerances ECC 6.0 Invoice Receipts Tolerances January 2008 Tolerance limits configured for invoice receipts: price, quantity, and blanket purchase orders The tolerances include: Amount for item with or without order reference Percentage Over/Under Quantity Variance Exceed amount: quantity variance Blanket purchase order (value and time limit) Price variance When you enter an invoice, the system proposes certain values from the purchase order or goods receipt. If the invoice item differs from the default values, you must determine the reason for the variance by contacting the purchasing or goods receipt department or the vendor. It is too time-consuming to investigate very small variances. So tolerance limits can be defined in the system. If variances in an invoice item are within these limits, they are accepted by the system. If a tolerance limit is exceeded, you receive a system message. You can still post the invoice but it will be automatically blocked for payment if it exceeds the upper tolerance limit (see also Tolerances). If the invoice is blocked, all the items are blocked. Even if the invoice only displays variances in one item, the whole invoice is blocked for payment. If you post an invoice with a blocking reason, the system carries out two steps: The account postings resulting from the invoice are made. In the vendor item, the system enters an R in the field Payment block so that Financial Accounting cannot make payment for the invoice. The following blocking reasons exist for variances in invoice items (the relevant blocking indicator is specified in parentheses): Quantity variance (M) A quantity variance exists if the invoiced quantity is larger than the difference between the quantities delivered and those already invoiced. In the SAP System, a quantity variance is treated differently depending on the amount of the variance. The product of the order price and the variance quantity is used as the basis for determining whether the invoice is to be blocked. Lower priced items are permitted relatively large quantity differences, whereas more expensive items are allowed only very small differences. Price variance (P) A price variance exists if the invoiced price (invoiced amount divided by the invoiced quantity) is not the same as the net order price. Variance in order price quantity (G) A variance in order price quantity exists if the ratio between the order price quantity and the order quantity in the invoice differs from the ratio specified at goods receipt (or if it differs from the ratio in the purchase order, if no goods receipt has taken place). Schedule variance (T) A schedule variance exists if the date of invoice entry is before the delivery date specified in the purchase order. In the SAP system, schedule variances are treated differently depending on the value of the invoice items. The product of the invoice item value and the number of days variance is used as a basis for determining whether the invoice is to be blocked. In this way, relatively large schedule variances are allowed for lower value items, whereas only very small schedule variances are permitted for high value invoice items (When an invoice refers to a scheduling agreement, the system does not check for a schedule variance, since there is no clearly fixed delivery date in a scheduling agreement.). Quality inspection (I) If a material is defined as being relevant for quality management, goods receipts for this material are posted to stock in quality inspection. Invoices for the material are blocked until the inspection has been successfully completed. If more than one goods receipts is posted for an order item, an inspection is carried out for every goods receipt. A distinction is made between two different scenarios in Invoice Verification: Goods-receipt-based Invoice Verification has been defined in the purchase order: The invoice is blocked if the inspection has not been completed for the goods receipt. No goods-receipt-based Invoice Verification has been defined in the purchase order: The invoice is blocked if any goods receipts are still in quality inspection. If an invoice is posted before the goods are received, it cannot be blocked for quality inspection. When Quality Management is active, we recommend you work with goods-receipt-based Invoice Verification. In addition to the fact that invoices are only blocked that pertain to the exact goods receipt, this also ensures that an invoice cannot be posted before the goods receipt and subsequently before the quality inspection has taken place. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Automatic Account Assignment ECC 6.0 Automatic Account Assignment January 2008 Created to avoid manual postings of financial transactions which follow goods movements to reflect the values of transferred materials Used across all modules to keep track of the values of materials that are being consumed (e.g., production), or transferred into other valuation areas of the company Is a set of rules and master data which enable the financial tracking of logistics movement Track all transactions – Debits/Credits automatically through all transactions Receiving Movement Raw Materials Issue The stocks are managed not only on a quantity basis but also by value. The system automatically updates the following data each time there is a goods movement: Quantity and value for Inventory Management Account assignment for cost accounting G/L accounts for financial accounting via automatic account assignment The valuation area is the organizational level at which a material's stock value is managed. The valuation area can be plant level or company code level. In Inventory Management, work is basically done at plant and storage location levels. When you enter a goods movement, you only have to enter the plant and the storage location of the goods. The system derives the company code from the plant via the valuation area. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Automatic Account Assignment Valuation Grouping Code ECC 6.0 January 2008 Automatic Account Assignment Valuation Grouping Code Plant – P004 Plant – P001 Grouping Code G001 Plant – P003 Plant – P002 G002 Plant – P005 This is materials management, you want to bring in the accountants to set up the accounts Postings are made to G/L accounts automatically in the case of Invoice Verification and Inventory Management transactions relevant to Financial and Cost Accounting. Example: Posting lines are created in the following accounts in the case of a goods issue for a cost center: Stock account Consumption account How does the system find the relevant accounts? When entering the goods movement, the user does not have to enter a G/L account, since the R/3 System automatically finds the accounts to which postings are to be made using the following data: Chart of accounts of the company code If the user enters a company code or a plant when entering a transaction, the R/3 System determines the chart of accounts which is valid for the company code. You must define the automatic account determination individually for each chart of accounts. Valuation grouping code of the valuation area If the automatic account determination within a chart of accounts is to run differently for certain company codes or plants (valuation areas), assign different valuation grouping codes to these valuation areas. You must define the automatic account determination individually for every valuation grouping code within a chart of accounts. It applies to all valuation areas which are assigned to this valuation grouping code. If the user enters a company code or a plant when entering a transaction, the system determines the valuation area and the valuation grouping code. Transaction/event key (internal processing key) Posting transactions are predefined for those inventory management and invoice verification transactions relevant to accounting. Posting records, which are generalized in the value string, are assigned to each relevant movement type in inventory management and each transaction in invoice verification. These contain keys for the relevant posting transaction (for example, inventory posting and consumption posting) instead of actual G/L account numbers. You do not have to define these transaction keys, they are determined automatically from the transaction (invoice verification) or the movement type (inventory management). All you have to do is assign the relevant G/L account to each posting transaction. Account grouping (only for offsetting entries, consignment liabilities, and price differences) Since the posting transaction "Offsetting entry for inventory posting" is used for different transactions (for example, goods issue, scrapping, physical inventory), which are assigned to different accounts (for example, consumption account, scrapping, expense/income from inventory differences), it is necessary to divide the posting transaction according to a further key: account grouping code. An account grouping is assigned to each movement type in inventory management which uses the posting transaction "Offsetting entry for inventory posting". Under the posting transaction "Offsetting entry for inventory posting", you must assign G/L accounts for every account grouping, that is, assign G/L accounts. If you wish to post price differences to different price difference accounts in the case of goods receipts for purchase orders, goods receipts for orders, or other movements, you can define different account grouping codes for the transaction key. Using the account grouping, you can also have different accounts for consignment liabilities and pipeline liabilities. Valuation class of material or (in case of split valuation) the valuation type The valuation class allows you to define automatic account determination that is dependent on the material. for example: you post a goods receipt of a raw material to a different stock account than if the goods receipt were for trading goods, even though the user enters the same transaction for both materials. You can achieve this by assigning different valuation classes to the materials and by assigning different G/L accounts to the posting transaction for every valuation class. If you do not want to differentiate according to valuation classes you do not have to maintain a valuation class for a transaction. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Automatic Account Assignment Transaction Keys ECC 6.0 January 2008 Automatic Account Assignment Transaction Keys Transaction Keys The transaction keys are used to determine accounts or posting keys for line items which are created automatically by the system. The transaction keys are defined in the system. This is materials management, you want to bring in the accountants to set up the accounts Postings are made to G/L accounts automatically in the case of Invoice Verification and Inventory Management transactions relevant to Financial and Cost Accounting. Example: Posting lines are created in the following accounts in the case of a goods issue for a cost center: Stock account Consumption account How does the system find the relevant accounts? When entering the goods movement, the user does not have to enter a G/L account, since the R/3 System automatically finds the accounts to which postings are to be made using the following data: Chart of accounts of the company code If the user enters a company code or a plant when entering a transaction, the R/3 System determines the chart of accounts which is valid for the company code. You must define the automatic account determination individually for each chart of accounts. Valuation grouping code of the valuation area If the automatic account determination within a chart of accounts is to run differently for certain company codes or plants (valuation areas), assign different valuation grouping codes to these valuation areas. You must define the automatic account determination individually for every valuation grouping code within a chart of accounts. It applies to all valuation areas which are assigned to this valuation grouping code. If the user enters a company code or a plant when entering a transaction, the system determines the valuation area and the valuation grouping code. Transaction/event key (internal processing key) Posting transactions are predefined for those inventory management and invoice verification transactions relevant to accounting. Posting records, which are generalized in the value string, are assigned to each relevant movement type in inventory management and each transaction in invoice verification. These contain keys for the relevant posting transaction (for example, inventory posting and consumption posting) instead of actual G/L account numbers. You do not have to define these transaction keys, they are determined automatically from the transaction (invoice verification) or the movement type (inventory management). All you have to do is assign the relevant G/L account to each posting transaction. Account grouping (only for offsetting entries, consignment liabilities, and price differences) Since the posting transaction "Offsetting entry for inventory posting" is used for different transactions (for example, goods issue, scrapping, physical inventory), which are assigned to different accounts (for example, consumption account, scrapping, expense/income from inventory differences), it is necessary to divide the posting transaction according to a further key: account grouping code. An account grouping is assigned to each movement type in inventory management which uses the posting transaction "Offsetting entry for inventory posting". Under the posting transaction "Offsetting entry for inventory posting", you must assign G/L accounts for every account grouping, that is, assign G/L accounts. If you wish to post price differences to different price difference accounts in the case of goods receipts for purchase orders, goods receipts for orders, or other movements, you can define different account grouping codes for the transaction key. Using the account grouping, you can also have different accounts for consignment liabilities and pipeline liabilities. Valuation class of material or (in case of split valuation) the valuation type The valuation class allows you to define automatic account determination that is dependent on the material. for example: you post a goods receipt of a raw material to a different stock account than if the goods receipt were for trading goods, even though the user enters the same transaction for both materials. You can achieve this by assigning different valuation classes to the materials and by assigning different G/L accounts to the posting transaction for every valuation class. If you do not want to differentiate according to valuation classes you do not have to maintain a valuation class for a transaction. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Automatic Account Assignment Transaction Keys ECC 6.0 January 2008 Automatic Account Assignment Transaction Keys Transaction Keys Inventory Postings BSX Offsetting Entry for Inventory Postings GBB Materials Management Small Differences DIF Cost (price) differences (PPV) PRD Goods receipt / inv. receipt clearing acct WRX This is materials management, you want to bring in the accountants to set up the accounts Postings are made to G/L accounts automatically in the case of Invoice Verification and Inventory Management transactions relevant to Financial and Cost Accounting. Example: Posting lines are created in the following accounts in the case of a goods issue for a cost center: Stock account Consumption account How does the system find the relevant accounts? When entering the goods movement, the user does not have to enter a G/L account, since the R/3 System automatically finds the accounts to which postings are to be made using the following data: Chart of accounts of the company code If the user enters a company code or a plant when entering a transaction, the R/3 System determines the chart of accounts which is valid for the company code. You must define the automatic account determination individually for each chart of accounts. Valuation grouping code of the valuation area If the automatic account determination within a chart of accounts is to run differently for certain company codes or plants (valuation areas), assign different valuation grouping codes to these valuation areas. You must define the automatic account determination individually for every valuation grouping code within a chart of accounts. It applies to all valuation areas which are assigned to this valuation grouping code. If the user enters a company code or a plant when entering a transaction, the system determines the valuation area and the valuation grouping code. Transaction/event key (internal processing key) Posting transactions are predefined for those inventory management and invoice verification transactions relevant to accounting. Posting records, which are generalized in the value string, are assigned to each relevant movement type in inventory management and each transaction in invoice verification. These contain keys for the relevant posting transaction (for example, inventory posting and consumption posting) instead of actual G/L account numbers. You do not have to define these transaction keys, they are determined automatically from the transaction (invoice verification) or the movement type (inventory management). All you have to do is assign the relevant G/L account to each posting transaction. Account grouping (only for offsetting entries, consignment liabilities, and price differences) Since the posting transaction "Offsetting entry for inventory posting" is used for different transactions (for example, goods issue, scrapping, physical inventory), which are assigned to different accounts (for example, consumption account, scrapping, expense/income from inventory differences), it is necessary to divide the posting transaction according to a further key: account grouping code. An account grouping is assigned to each movement type in inventory management which uses the posting transaction "Offsetting entry for inventory posting". Under the posting transaction "Offsetting entry for inventory posting", you must assign G/L accounts for every account grouping, that is, assign G/L accounts. If you wish to post price differences to different price difference accounts in the case of goods receipts for purchase orders, goods receipts for orders, or other movements, you can define different account grouping codes for the transaction key. Using the account grouping, you can also have different accounts for consignment liabilities and pipeline liabilities. Valuation class of material or (in case of split valuation) the valuation type The valuation class allows you to define automatic account determination that is dependent on the material. for example: you post a goods receipt of a raw material to a different stock account than if the goods receipt were for trading goods, even though the user enters the same transaction for both materials. You can achieve this by assigning different valuation classes to the materials and by assigning different G/L accounts to the posting transaction for every valuation class. If you do not want to differentiate according to valuation classes you do not have to maintain a valuation class for a transaction. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Automatic Account Assignment Modifier ECC 6.0 January 2008 Automatic Account Assignment Modifier Modifier – modifies the transaction key for various movement types Blank – Goods receipt from purchase order with account assignment VBR – Goods issue to consumption VAX – Goods issue to sales – post to cost of goods sold AUF – Goods receipt from a production order – post to production settlement Etc. – Many others You can break them apart. Valuation class Break them out This is materials management, you want to bring in the accountants to set up the accounts What are automatic postings? Postings are made to G/L accounts automatically in the case of Invoice Verification and Inventory Management transactions relevant to Financial and Cost Accounting. Example: Posting lines are created in the following accounts in the case of a goods issue for a cost center: Stock account Consumption account How does the system find the relevant accounts? When entering the goods movement, the user does not have to enter a G/L account, since the R/3 System automatically finds the accounts to which postings are to be made using the following data: Chart of accounts of the company code If the user enters a company code or a plant when entering a transaction, the R/3 System determines the chart of accounts which is valid for the company code. You must define the automatic account determination individually for each chart of accounts. Valuation grouping code of the valuation area If the automatic account determination within a chart of accounts is to run differently for certain company codes or plants (valuation areas), assign different valuation grouping codes to these valuation areas. You must define the automatic account determination individually for every valuation grouping code within a chart of accounts. It applies to all valuation areas which are assigned to this valuation grouping code. If the user enters a company code or a plant when entering a transaction, the system determines the valuation area and the valuation grouping code. Transaction/event key (internal processing key) Posting transactions are predefined for those inventory management and invoice verification transactions relevant to accounting. Posting records, which are generalized in the value string, are assigned to each relevant movement type in inventory management and each transaction in invoice verification. These contain keys for the relevant posting transaction (for example, inventory posting and consumption posting) instead of actual G/L account numbers. You do not have to define these transaction keys, they are determined automatically from the transaction (invoice verification) or the movement type (inventory management). All you have to do is assign the relevant G/L account to each posting transaction. Account grouping (only for offsetting entries, consignment liabilities, and price differences) Since the posting transaction "Offsetting entry for inventory posting" is used for different transactions (for example, goods issue, scrapping, physical inventory), which are assigned to different accounts (for example, consumption account, scrapping, expense/income from inventory differences), it is necessary to divide the posting transaction according to a further key: account grouping code. An account grouping is assigned to each movement type in inventory management which uses the posting transaction "Offsetting entry for inventory posting". Under the posting transaction "Offsetting entry for inventory posting", you must assign G/L accounts for every account grouping, that is, assign G/L accounts. If you wish to post price differences to different price difference accounts in the case of goods receipts for purchase orders, goods receipts for orders, or other movements, you can define different account grouping codes for the transaction key. Using the account grouping, you can also have different accounts for consignment liabilities and pipeline liabilities. Valuation class of material or (in case of split valuation) the valuation type The valuation class allows you to define automatic account determination that is dependent on the material. for example: you post a goods receipt of a raw material to a different stock account than if the goods receipt were for trading goods, even though the user enters the same transaction for both materials. You can achieve this by assigning different valuation classes to the materials and by assigning different G/L accounts to the posting transaction for every valuation class. If you do not want to differentiate according to valuation classes you do not have to maintain a valuation class for a transaction. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Types & Valuation Classes ECC 6.0 Material Types & Valuation Classes January 2008 Account category reference: Builds the link between material types and the valuation class(es) 0009 – Reference for Finished Products 0005 – Reference for Trading Goods 0002 – Reference for Operating Supplies 0001 – Reference for Raw Materials Account Category Reference FERT HAWA HIBE ROH Material Type 7920 3100 3030/3031 3000/3001/3002/3003 Valuation Class The valuation class has the following functions: Allows the stock values of materials of the same material type to be posted to different G/L accounts. Allows the stock values of materials of different material types to be posted to the same G/L account. Determines together with other factors the G/L accounts updated for a valuation-relevant transaction (such as a goods movement). Indicates a grouping of valuation areas to facilitate the administration of the table of standard accounts by minimizing the number of entries. Use Together with other factors, the valuation grouping code determines the G/L accounts to which a goods movement is posted ( automatic account determination). January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Material Types & Valuation Classes ECC 6.0 Material Types & Valuation Classes January 2008 Valuation Class 3030 (Supplies) Valuation Class 3100 (Trading Goods) Material Type ROH (Raw Material) Acct Cat. Ref 0001 – Raw Materials Valuation Class 3000 (Raw) Valuation Class 7920 (Finished goods) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Automatic Account Assignment ECC 6.0 Automatic Account Assignment January 2008 Plant P_ _ _ Valuation Class 3100 (Trading Good) Grouping Code G_ _ _ Goods Movement GBB (Goods issue) Account Modifier Blank (Goods receipt) Valuation Class 3030 (Supplies Good) Grouping Code G_ _ _ Goods Movement GBB (Goods issue) Account Modifier Blank (Goods receipt.) Account 7210_ _ Account 7400_ _ January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. © SAP AG and The Rushmore Group, LLC 2008

Vendor Master Data & Records, & Purchase Information Records PEN, Inc. EGN 5620 Enterprise Systems Configuration (Professional MSEM) Fall, 2012

Pen Inc. : Supplies Vendor Name Vendor Code City State Zip code Promotions Ltd _ _ _ Chico CA 95929 Slick Pens _ _ _ Milwaukee WI 53201 Premier Pens _ _ _ Baton Rouge LA 70803 Boxes inc _ _ _ Sioux Falls SD 57101 Tanager Vermillion 57069

Pen Inc. : Vendor Master

Pen Inc. : Purchase Information Records

Pen Inc. : Source List

Exercises: (Due date 8/25/2012) 89. Set default values for inventory management reservations 90. Maintain purchasing tolerance limits 91. Maintain goods receipt tolerance limits 92. Maintain invoice receipt tolerance limits 94. Assign valuation area grouping 208. Create labor expense account 209. Create production order settlement account 210. Create production variance account 96. Configure automatic postings for goods movement 97. Configure automatic posting for taxes 98. Set parameters for invoice verification 99. Create default values for invoice verification 173. Create purchasing information records 173a.Create source list