1. Purchasing – A/P Contents: Basic Procurement Process
Additional Documents and Functionalities of Purchasing

2. Purchasing – A/P: Unit Objectives
At the conclusion of this unit, you will be able to:
Model the purchasing process using SAP Business One
Post procurement documents
Post returns and credit memos
Use the reporting functions to analyze your procurement data

3. Purchasing – A/P: Business Scenario
You purchase your warehouse goods from external vendors. Normally, you use the purchase order document to order goods. In some cases, however, you might submit your order by phone and your vendor might deliver immediateley. In this case, the process modeled in the system must be as short and quick as possible.
If the delivered goods do not meet your quality standards, you might want to return them to your vendor. This can happen either before or after you have received the invoice.

4. Basic Procurement Process: Topic Objectives
At the conclusion of this topic, you will be able to:
Model a basic procurement process in SAP Business One
Use the different transactions of Purchasing – A/P

5. Document Flow in Purchasing
Base document
Target document
Purchase Order
Goods Receipt PO
AP Invoice
1.)
2.)
3.)
Warehouse (Quantity)
General Ledger (Value)
SAP Business One allows you to control the entire purchasing process from negotiations with vendors, purchase requisitions, through to delivery of the ordered goods and processing incoming invoices.
1.) Purchase Order: When you entered a purchase order, no value-based changes are posted in Accounting. However, the order quantities are listed in inventory management. You can view the ordered quantities in various reports and windows such as the inventory status report and the item master data window.
2.) Goods Receipt Purchase Order: Create this document as soon as you receive the goods.
When you enter a goods receipt PO, the goods are accepted into the warehouse and the quantities are updated. If your company runs a continuous stock system, SAP Business One creates the relevant postings to update the stock values as well.
3.) Accounts Payable Invoice: When an incoming invoice is received, the related accounts for the vendor are posted in Accounting.
If a delivery for a purchase order has not preceded the incoming invoice in the system and if you are purchasing items managed in the warehouse, the stocks also increase when the invoice is posted.
Purchasing documents are processed in the same way as sales documents.

6. Draw Document Wizard Goods Receipt PO Purchase Order AP Invoice
Row Ex, Rate for Prices
Use Exchange Rate from Base Document
Use Current Exchange Rate from the Exchange Rate Table
Draw all data (Freight and Withholding Tax)
Customize
When you create a purchasing or sales document based on an already created document, SAP Business One opens the Draw Document Wizard window where you define factors that affect the to be created document.
Selection Criteria:
Use Exchange Rate from Base Document: Select to copy the exchange rate determined for the base documents.
Use Current Exchange Rate from the Exchange Rate Table: Select to use the current exchange rate regardless of the exchange rate determined in the base documents.
Draw All Data (Freight and Withholding Tax): Select to copy all the data from the base documents to the created document including the freight and withholding tax amounts.
Customize: This option allows you to copy part of the data that appears in the base documents to the created document.
If you have copied the base document completely, it will be closed and you will not be able to draw it again to another document. The only exception is a sales quotation which can be copied even if it has been closed.
If a document is partially copied, the quantities, freight and withholding tax values in the base document are updated respectively, so when that base document is chosen for copy again, the original values will be replaced by the updated quantities, freight and withholding tax amounts and the rows will display in gray.

7. Consequences of the Goods Receipt PO
Warehouse (Quantity
Increasing)
1.)
4.)
2.)
Purchase Order
Goods Receipt PO
AP Invoice
5.)
3.)
General
Ledger (Value
Increasing)
Once the Goods Receipt PO is created in the system it has have the following consequences:
1.) The purchase order (base document) can not be changed.
2.) The goods receipt PO can not be changed, because of the journal entry.
3.) The system creates an accounting document.
4.) The system updates the stock situation.
5.) Items that have been partially or completely delivered appear in light gray in the purchase order document.

8. Consequences of the A/P Invoice
Warehouse (Quantity
Increasing)
1.)
2.)
3.)
Purchase Order
Goods Receipt PO
AP Invoice
6.)
4.)
5.)
General
Ledger (Value
Increasing)
Once the A/P Invoice is created in the system in can have the following consequences:
1.) An A/P invoice with reference to the purchase order increases the quantity and value of your stock.
2.) If you reference the goods receipt PO document, only the values update.
3.) A/P invoices do not have to reference to a document. In this case, both the quantities and values update.
4.) You cannot change the A/P invoice.
5.) You can display the accounting document from the incoming invoice.
6.) When you call up the goods receipt PO, the items that have already been partially or completely invoiced display in light gray.

9. Postings in Purchasing Process for Inventory Items
Item Category:
Inventory Item
Sales Item
Purchased Item
Fixed Assets
Purchase Order
Goods Receipt PO
AP Invoice
Allocation Costs Acc.
Allocation Costs Acc.
Stock Acc.
Vendor
100
100
100
100
When you buy inventory items, the system creates the following journal entries:
The goods receipt PO creates a journal entry that posts the value of the received goods to the debit side of the stock account and to the credit side of an allocation costs account. The stock account and the allocation costs account are retrieved from the Inventory Account field and the Allocation Costs Account field on the Inventory Data tab of the item master record.
The A/P invoice creates a journal entry that posts the invoiced amount to the debit side of the allocation costs account and to the credit side of the vendor account. The allocation costs account is retrieved from the Allocation Costs Account field on the Inventory tab of the item master record.
You need the allocation costs account to check if the goods receipts PO and the A/P invoices match. You need to reconcile this account on a regular basis.
If you directly post the A/P invoice without first creating a goods receipt PO, the postings to the allocation costs account are omitted.
To post a purchase order, choose Purchasing – A/P  Purchase Order.
To post a goods receipt PO, choose Purchasing – A/P  Goods Receipt PO.
To post an A/P invoice, choose Purchasing – A/P  A/P Invoice.
This graphic does not cover tax postings or postings of additional revenues and expenses. The purchase order document is not relevant for accounting.

10. Posting Price Differences1 2 3
Goods Receipt PO
A/P Invoice
A/R Delivery
Stock Account
Vendor 1
1000
400 2
1100 3 3 60
Allocation Costs Account
Cost Account
Price Differences Account 3
1000
1000 1 2
400 3 40
The price in the A/P invoice may differ from the price originally entered in the goods receipt PO. In this case, the system posts the difference to the stock account to adjust the stock value.
If the A/P invoice contains a larger amount of items than there is on stock, because you already sold some items from the goods receipt PO, the price difference is posted to a price difference account. This is explained in the graphic:
You receive a goods receipt PO with a total of The system posts the goods receipt PO with a value of 1000 to the stock account and to the allocation costs account.
You sell 40% of your stock and post an A/R delivery. The system posts 400 to the credit side of the stock account and the debit side of the cost account.
You receive the A/P invoice for the goods receipt PO. The invoice total is 1100, which results in a difference of 100. The system clears the allocation costs account and posts the document total to the credit side of the vendor account. Because the A/P invoice is about a larger number of items than you have on stock, the system cannot post the whole price difference to the stock account. 60% of the goods on the A/P invoice you have on stock. Therefore, the system post 60% of the price difference to the stock account and the remaining 40% to the price difference account
You can enter the price difference account in the G/L account determination.

11. Postings in Purchasing Process for Non-Inventory Items
Item Category:
Purchased Item
Fixed Assets
Inventory Item
Sales Item
Purchase Order
Goods Receipt PO
AP Invoice
Expenses Account EU Expenses Acc. Foreign Expenses Acc.
Vendor
100
100
When you buy items that you do not manage as warehouse items (for example, items that are directly consumed), the system does not trigger a posting for the goods receipt PO even if you create one.
The A/P invoice amount is posted on the debit side of an expense account because it goes directly into expenses. The credit side is posted on the vendor account. Although the item is not an inventory item, the Inventory tab does not disappear from the item master record because the system needs it for the G/L account determination. The expenses account is retrieved from the default warehouse on the Inventory tab of the item master record.
If the vendor is located in the same country, the account from the Expenses Account field is used.
If the vendor is located in an EU country, the account from the EU Expenses Account field is used.
If the vendor is located in a non-EU foreign country, the account from the Foreign Expenses Account field is used.
This graphic does not cover tax postings or postings of additional revenues and expenses.

12. Additional Documents and Functionalities of Purchasing: Topic Objectives
At the conclusion of this topic, you will be able to:
Create A/P reserve Invoices, goods returns, and credit memos
Use the split purchase order and partial delivery functions
Explain the stock changes in purchasing
Use the purchasing reports in SAP Business One
Analyze the journal postings that have been created in the purchasing process

13. General Ledger (Value)
A/P Reserve Invoice
Purchase Order
A/P Reserve Invoice
Goods Receipt PO
1.)
2.)
3.)
Warehouse (Quantity)
General Ledger (Value)
You use A/P reserve invoices to create a pro forma invoice.
1.) The available quantity is increased by the purchase order quantity.
2.) You post an A/P reserve invoice before you create a goods receipt PO. Unlike standard A/P invoices, reserved A/P invoices do not change the In Stock quantity. The available quantity increases by the ordered quantity, if you create it without a purchase order as a base document. Reserve invoices create value-based postings.
3.) You post the goods receipt PO afterwards with reference to the reserve invoice. This affects your stock situation.

14. General Ledger (Value)
Goods Returns
Purchase Order
Goods Receipt PO
Allocation Costs Acc.
Stock Acc.
100
100
Goods Returns
Allocation Costs Acc.
Stock Acc.
100
100
Warehouse (Quantity)
General Ledger (Value)
The Goods Returns is the clearing document for a Goods Receipt PO.
When you enter a goods returns, the goods are issued from the warehouse and the quantities are reduced. If your company runs a continuous stock system, SAP Business One creates the relevant postings to update the stock values as well.
To reverse a specific Goods Receipt PO, create the goods returns based on it, provided that an A/P Invoice has not yet been created for that Goods Receipt.
If you have already entered an A/P Invoice for the transaction, use the A/P Credit Memo function to carry out quantity and value-based corrections in the system.
When you return goods to a vendor, goods cannot be received again with reference to the existing documents. When the goods are delivered again, you can either enter a delivery without a reference to a purchase order in the system, or duplicate one of the preceding documents.

15. Credit Memo for Purchasing
Purchase Order
Goods Receipt PO
AP Invoice
Allocation Costs Acc.
Stock Acc.
Alloc.
Vendor
100
100
100
100
Credit Memo
Stock Acc.
Vendor
100
100
Warehouse (Quantity)
General Ledger (Value)
You can use the credit memo document for goods returns that the vendor has already invoiced. The credit memo then updates the stock quantities and corrects the values in accounting.
When you create the credit memo, the system finds the same accounts that were used to post the invoice and posts a negative value to them.
You can post purely value-based credit memos (which do not change stock quantities) in accounting, or you can enter them as a service item.
It is a requirement in certain jurisdictions, e.g. Spain, that sales and purchase credit analysis is shown separately in the Profit & Loss account to the normal sales and purchase accounts. From Release 2005 on, G/L account determination functionality is extended to determine which Profit & Loss accounts are updated on the posting of sales and purchase credit notes. This functionality allows a user to specify different posting accounts for sales revenue and sales credits. It also allows the user to specify different posting accounts for purchase expenditure and purchase credits. If not for any legal requirement this functionality is useful for analysis purposes when seen directly on the face of the chart of accounts.

16. Split Purchase Order Split PO Ship to: Berlin Ship to: Hamburg
Purchase Order Blanket
Item Quantity Warehouse A A
Logistics
Split PO
Purchase Order Blanket
Purchase Order
Purchase Order
Ship to: Berlin
Ship to: Hamburg
Item Quantity Warehouse A
Item Quantity Warehouse A
Business One allows you to split a single purchase order containing items from several warehouses, into a child purchase order created for each separate warehouse. This option might be of great necessity when the company's warehouses are located in different cities or even in different states.
The default setting for splitting purchase orders is made via Administration  System Initialization  Document Settings on the Per Document tab page. Choose Purchase Order in the Document field and check the Split PO box.
You can also check or clear the Split PO box manually while you create a new purchase orders.
A new field containing a secondary numbering segment will be added to the purchase order number. In a blanket purchase order this segment contains the digit 0. For every child purchase order this segment will contain a successive number starting in 1.
Note: You cannot split a purchase order containing items from one warehouse only.

17. Goods Receipt PO: Partial Deliveries/Overdeliveries
Purchase Order
Goods Receipt PO
3.) 1st Partial Delivery #
1 10
2 15
3 2 #
1 6 2 3
4.) 2nd Partial Delivery
1.) Overdelivery
Goods Receipt PO
2.) Add Items
Goods Receipt PO
Goods Receipt PO #
1 4 2 3 # 1
2 20 3 # 1 2 3
1.) If you refer to a purchase order document when you enter a goods receipt, you can increase (over delivery) the copied quantity.
2.) You can also add additional items in the goods receipt.
3.) If you refer to a purchase order document when you enter a goods receipt, you can reduce the copied quantity. This is a partial delivery.
4.) You can create a second partial delivery after 3.).
If you do not expect to receive any additional deliveries after the partial delivery, you should close the purchase order so that the open purchase order quantity can be reduced (choose Data  Close or right mouse-click  Close). The Status of the purchase order will change to Closed.

18. Stock Changes in Purchasing A/P
Model Report: Inventory Status
In Stock -
Committed +
Ordered =
Available
Transaction + +
Purchase order -
Goods receipt PO +
A/P invoice for goods receipt PO
Goods Receipt PO w/o reference to PO
Purchasing / AP + +
A/P invoice with reference to Purchase Order + +
A/P Reserve Invoice w/o reference to PO + +
Goods Recept PO with reference to A/P Reserve Invoice + - - -
Goods returns
You can use the report Inventory Status to analyze the inventory situation for one or more selected items. Choose Inventory  Inventory Reports  Inventory Status.
You can also see the inventory status in the item master on the Inventory Data tab page.
In Stock: The current stock level of the item.
Committed: The item stock that is reserved for customers and for internal use is displayed here. The stock that is reserved for internal use is the quantity of the item for that will be used for a finished product based on the BOMs for existing production orders.
Ordered: This field shows the quantity of the item ordered from the vendor. This figure consists of the quantity ordered from external vendors plus the quantity that is being produced and that will enter the warehouse by a certain date.
Available: The available quantity of an item displays. This figure comprises: In Stock - Committed + Ordered
If the available stock for an item is negative, the value displays in red.
To display the details for the inventory situation of an item regarding open orders, purchase orders, and production orders, select the row for that item in the report. The system opens the Stock Situation sub-window. - -
A/P Credit memo

19. Postings in Purchasing Process for Assets
Purchased Item
Fixed Assets
Inventory Item
Sales Item
Purchase Order
Goods Receipt PO
AP Invoice
Asset Account
Vendor
100
100
100
Special Control Account
You can define an item as a fixed asset by selecting the Fixed Assets indicator. Because the asset is intended for continuous use and not for sale and because you do not place it in stock, the system automatically deselects the Sales Item indicator and the Inventory indicator.
The A/P invoice amount is posted on the debit side of an asset account and on the credit side of the vendor account. In the general ledger, the system posts to a special control account, which belongs to the Assets Account transaction type.
Although the item is not an inventory item, the Inventory tab does not disappear from the item master record because the system needs it for the G/L account determination.
If the vendor is located in the same country, the account in the Expenses Account field is used as the asset account.
If the vendor is located in an EU country, the account in the EU Expenses Account field is used as the asset account.
If the vendor is located in a non-EU foreign country, the account in the Foreign Expenses Account field is used as the asset account.
Usually, you do not distinguish the assets by vendor location. Therefore, you should enter the same asset account in all three fields.
You can configure the G/L account determination on asset item level and enter a separate asset account for each asset item or you can configure the G/L account determination on item group level to gather similar assets on one collection account.

20. Purchasing Reports Purchase Analysis Open Items List
Vendor Liabilities Aiging
Drag & Relate
Purchase Analysis: To manage a business efficiently, you require detailed information about the purchasing volume made from your vendors. You must be able to determine which products you purchase the most, and which of your purchasing employees attains the best deals. This information is provided by the purchase analysis and is made clearer with a graphical display.
Open Items List: This report allows the user to view open sales and purchasing documents. Using this report gives you an accurate picture regarding the status of documents in the system, only documents with Open status appear in this report. Documents that were partially copied to target document also appear in this report. You can also display the documents from the report.
Vendor Liabilities Aging: When processing this report, you can also display the detailed information for each vendor in the row. In the detailed view, the documents are displayed together with the respective liabilities. The report provides the size of the vendor liability and the time that the debt has remained unpaid.
Drag & Relate: The Drag & Relate menu is a tab page in the SAP Business One Main Menu. To switch from the Modules menu to the Drag & Relate menu, choose the Drag & Relate tab. Drag & Relate is an extensive information system that can be used to display information about the business processes quickly and easily. Drag & Relate is an interactive tool that can be used in parallel to regular working methods. The user-friendly interface offers optimum support for finding important information quickly. The Drag & Relate tool uses pre-defined queries in order to generate reports in the system, and searches both in reports and in the master data, such as G/L Accounts and Business Partners. Reports can be filtered using the Filter function.

21. Transaction Journal Report
Goods Receipt PO
09/10/04 Account Debit Credit
You can analyze all the posting documents created in the purchasing process using the transactional journal report journal.
To display the Transaction Journal Report for the different types of transactions choose Financials  Financial Reports  Accounting  Transaction Journal Report.
You can display the journal entries from the purchasing documents (for example AP invoice, goods receipt PO) from the Accounting tab page choosing the orange arrow at the Journal Remark.

22. Purchasing – A/P: Unit Summary
You are now able to:
Model the purchasing process using SAP Business One
Post procurement documents
Post returns and credit memos
Use the reporting functions to analyze your procurement data