FI330 Umoja Accounts Receivable Process. Umoja Accounts Receivable Process Version 20

Transcription

1 FI330 Umoja Accounts Receivable Process Umoja Accounts Receivable Process Version 20 Copyright Last Modified: United 27-September-13 Nations 1

2 Agenda Course Introduction Module 1: Introduction to Accounts Receivable Module 2: Customer Invoice Processing Sales and Distribution Module 3: Customer Invoice Processing Lease Administration Module 4: Other Receivables Module 5: Incoming Payment Processing Module 6: Write-Offs Module 7: Accounts Receivable Reports Course Summary Course Assessment Course Survey 2

3 Introduction Please share with us: Your name Your section/unit Years of experience in the field An interesting fact about you 3

4 Ground Rules Please consider the following guidelines during the training session: Turn your cell phone to silent mode. Please step out of the class to take any important phone call Please do not access your or the Internet outside of breaks Participate fully in the training session and respect each other s contribution Breaks are included at the discretion of the trainer X X No Phones Do Not Access Participate Ask Questions Breaks 4

5 Course Overview The purpose of the Umoja Accounts Receivable Process course is to explain how to: a. Maintain accurate records of the money owed to the UN by its customers, b. Correctly apply money received from customers to their debtor accounts and, c. Write-off uncollectible debts. Prerequisite Review You should have completed the following prerequisite courses: Umoja Overview Umoja Master Data and Coding Block Overview Umoja Accounts Receivable Overview Umoja Navigation Course Duration: 6 hours 5

6 Course Objectives After completing this course, you will be able to: Explain the Umoja solution for AR Explain the AR processes in Umoja Report on revenue received by the UN Process Customer Invoices in Sales and Distribution and Lease Administration Recover costs due to the UN Apply incoming payments to the accounts of customers Perform the write-off of accounts that remain uncollectible 6

8 Module 1 Objectives After completing this module, you will be able to: List the roles in the AR process Explain the Umoja solution for AR Explain how the Umoja Solution enables the UN to comply with relevant IPSAS on Income Reporting. Describe various document types used in AR processing. Explain the high-level AR process 8

9 Key Terminology Key Term Accounts Receivable (AR) Invoice Billing Business Partner (BP) Customer Master Reconciliation Account Description A legally binding document itemizing money owed for products or services rendered. The process of calculating the amount a customer owes the UN for services rendered or products purchased. It refers to a person or an organization that has a business interest with UN. A BP can be a commercial customer that purchases goods or services from UN and also a UN agency or staff member. A Business Partner (BP) data record (i.e. with Customer role) containing all the information necessary to conduct business with a single customer. Each record includes three levels of data: general level data, company code level data and sales organization level data. An account that reflects sub-ledger activity in the General Ledger. Details of customer (or vendor) transactions are recorded in the sub-ledger in reconciliation accounts which are summarized in the General Ledger. Each customer (or vendor) is assigned to a reconciliation account at the time of set up. 9

10 Roles & Responsibilities The following Umoja Enterprise roles are involved in the AR process: Financial Accounting User (AR) Creates AR customer invoices and credit memos within the AR Sub-ledger and submits them into the workflow Creates dunning notices for customers when items are overdue Clears AR customer invoices Financial Accounting Approver (AR) Reviews/approves/rejects customer invoices and credit memos created by Financial Accounting User (AR) within AR Sub-ledger through a workflow Reviews/rejects printed dunning notices (manual step) Posts parked invoices and clears them Financial Accounting (FI) Senior User Creates and posts FI documents that are not subject to workflow, such as accruals, reversals and recurring entries Clears FI documents 10

11 Accounts Receivable Accounts Receivable Recap: The Accounts Receivable process area is comprised of all business processes related to recording and tracking receivables from member states, donors, commercial customers, staff members and any other entity that owes money to the UN. AR activities are undertaken at both UNHQ and in the field. Examples include: Goods sold and services rendered Recovery of: o VAT from host government o Vehicle repair charges from UN Agencies o Use of conference facilities o Advances and other recoveries from staff members o Advance to organize programs o Common services used by UN Agencies and NGOs Sale of assets Catering Services Sale of Publications Guided tours Sale of audio/visual products Lease administration for owned and subleased properties Proceeds from the sale of used and surplus property Grants billing to donors, and Transfer of revenue bearing work/service order management to other UN agencies 11

12 Umoja Solution for Accounts Receivable The AR module in Umoja has the following capabilities: Umoja introduces the concept of centralized master data, eliminating the need to maintain separate customer accounts at each respective location. Centralized Data Interfaced Postings in A/R Since Sales and Distribution and Real Estate are integrated with Umoja, customer receivables and credit/debit memos are updated as batches through the interface to the A/R sub ledger. Dunning The Dunning process creates reminders or notices automatically based on the scenarios defined in the Umoja system. The dunning functionality proposes overdue items based on dunning interval, grace days and dunning level. 12

13 Accounts Receivable Subsidiary Ledger In Umoja, AR transactions are maintained in the Accounts Receivable sub-ledger. Umoja uses three integrated sub-ledgers Accounts Receivable, Accounts Payable and Asset Accounting, to organize financial data. General Ledger Accounts Receivable (AR) (contains Customer accounts) Accounts Payable (AP) (contains vendor accounts) Fixed Assets (FA) (contains accounts of assets not recorded in Galileo) Note: Currently, sub ledgers do not exist in Sun systems and IMIS 13

14 General Ledger vs. Subsidiary Ledgers The Subsidiary Ledger is a supporting ledger that provides detailed information about individual accounts, which are not kept in the General Ledger. Subsidiary ledgers divide financial data into distinct and more manageable categories. The total of all individual accounts in the subsidiary ledger equals the balance of the Reconciliation Account in the General Ledger. The Reconciliation Accounts are only updated through the integrated sub-ledgers. This ensures that sub ledgers always reconcile with the General Ledger. Subsidiary Ledgers Postings from sub ledgers to Control or Reconciliation Accounts General Ledgers 14

15 Reconciliation Accounts Updates to Reconciliation Accounts are done automatically in real-time when postings are made in the subsidiary ledgers. The entries in the Reconciliation Account can only come from a Subsidiary Ledger. AR Subsidiary Ledger 2,000 Customer A General Ledger In the AR Subsidiary Ledger, the accounts of the three customers are debited by the amounts of sales on credit. Customer B 5,000 Customer C 3,000 AR- Reconciliation Account 10,000 In the GL, the AR Reconciliation A/c has only one entry, which is the total of the individual debit balances of the three customer accounts. 15

16 AR Reconciliation Accounts in Umoja AR Reconciliation Accounts in the GL for different kinds of customers are as follows: Grouping Account Group AR SPGL Description Normal Recon SPGL G/L Account indicator G/L Acct Z011 Member State M AR Assessed Contribution Z011 Member State V AR Volunt Contribution AR Z011 Member State K AR Volunt Contribution In Kind Z011 Member State N AR VAT Receivable Z011 Member State A, F Downpayment Received Z012 Non Member State M AR Assessed Contribution Z012 Non Member State V AR Volunt Contribution AR Z012 Non Member State K AR Volunt Contribution In Kind Z012 Non Member State N AR VAT Receivable Z012 Non Member State A, F Downpayment Received Z013 Government and Local Authority V AR Volunt Contribution AR Z013 Government and Local Authority K AR Volunt Contribution In Kind Z013 Government and Local Authority N AR VAT Receivable Z013 Government and Local Authority A, F Downpayment Received Z014 UN Agency Fund Programme V AR Volunt Contribution AR Z014 UN Agency Fund Programme K AR Volunt Contribution In Kind Z014 UN Agency Fund Programme L AP Loan Payable Z014 UN Agency Fund Programme A, F Downpayment Received Z015 Intergovernment and NGO V AR Volunt Contribution AR Z015 Intergovernment and NGO K AR Volunt Contribution In Kind Z015 Intergovernment and NGO A, F Downpayment Received Z018 Commercial Customer V AR Volunt Contribution AR Z018 Commercial Customer K AR Volunt Contribution In Kind Z018 Commercial Customer A, F Downpayment Received

17 Income Reporting in the UN The UN reports its income under three sections. The recording of some of these incomes results in the creation of accounts receivable. Income Section 1 Income from Staff Assessment Income Section 2 General Income Income from rental of premises Reimbursement of services provided to Specialized Agencies & Others Bank Interest Sale of Used Equipment Refund of Previous Year Expenditures Contribution of Non-Member States Television and similar services Miscellaneous Income Income Section 3 Services to Public United Postal Administration Operations Services to Visitors Revenue Services of DESA Sales of Gift Items Newsstand Operations Garage Operations Catering Operations Other Commercial Operations 17

18 Income Recognition and Measurement Relevant IPSAS Prior to reporting, the income must first be recognized and measured. Guidance on income recognition and measurement is given by two key income relevant IPSAS. IPSAS 9 Revenue from Exchange Transactions An exchange revenue transaction for the UN is defined as one where the UN receives resources, assets or services, or has liabilities extinguished, and directly gives approximately equal value to the other party in exchange. The value given by the UN could be in the form of inventory (IPSAS 12), Property, Plant and Equipment (IPSAS 17), services or the use of assets belonging to the UN. IPSAS 23 Revenue from non-exchange Transactions A non-exchange transaction occurs when the UN either receives value from another entity without directly giving approximately equal value in exchange, or gives value to another entity without directly receiving approximately equal value in exchange. Examples include Assessed Contributions and Voluntary Contributions. The Umoja solution provides the means to capture the information that supports compliance with these standards. 18

19 Income Reporting Billing/Cost Recovery Methods Various methods are used in Umoja to capture both Revenue from Exchange Transactions and Revenue from non-exchange Transactions. The choice of which method to use is a function of two factors type of customer and type of income. Type of Customer Internal or External to Umoja All Business Partners with a customer role are classified as either internal or external to Umoja, depending on whether or not they use the system for their financial reporting. Internal Customers are entities that are: a. Already using Umoja e.g. UNIFIL, UNSCOL or b. Are in preparation to do so e.g. PKMs before 1 November External Customers are entities that are not using Umoja and do not intend to do so in the near future e.g. non-secretariat UN organizations, Military Contingents, Permanent Missions, commercial vendors, civilians Type of Income Exchange or non-exchange Revenue from Exchange Transactions is subdivided into two categories: a. Income from the supply of goods and services with the exception of rental services. b. Income from the rental of premises. Revenue from non-exchange Transactions is also subdivided into: a. Assessed contributions b. Voluntary contributions 19

20 Income Reporting Billing/Cost Recovery Methods Based on the type of customer and type of income, the following billing/cost recovery methods are used in Umoja. Internal External Types of Customers UN offices (both live in Umoja) UN offices (in transition to Umoja) Other UN related Organizations (Non-Secretariat), NGOs, Military Contingents, Member States, Non-Member States, Permanent Missions, Vendors UN Staff Members Exchange Transactions Types of Income Direct Costs, Static Pricing (Standard Rates) Rent, Utilities & Other Lease-related Charges Cost Recharge with inter-fund JV and immediate cash settlement through cash pool (Internal Rev. Spendable) Real Estate (Lease- Out) Internal Posting (Internal Revenue) Inter-Office Voucher (IOV) Real Estate (Lease-Out) External Billing (Internal Revenue) Billing / Cost Recovery Method Sales and Distribution (Standard Order) Billing, (External Revenue - Spendable) Real Estate (Lease-Out) External Billing, (External Revenue - Spendable or Non-Spendable) Accounts Payable Subledger Credit Memo (-ve Exp Account) Non-Exchange Transactions Assessed Contributions Voluntary Contributions n/a Direct Recording of receivables in the AR Sub-ledger SD (Standard Order) Billing as part of Grants Billing) n/a 20

21 Billing/Cost Recovery and Accounts Receivable Not all the transactions to bill or recover cost create AR. The only transactions which result in receivables are: 1. Sales and Distribution (Standard Order) Billing 2. Real Estate (Lease-Out) External Billing 3. Direct recording of receivables in the AR Sub-ledger. The following Business Partner Groups - Commercial Vendors UNGM, Individuals external (Retirees, Consultants, Independent Contractors, Survivors etc) with index numbers, UN Staff Members, Military and Police - do not have customer roles. They only have vendor roles. Accordingly, any cost recoveries from them e.g. telephone bills, fuel, liberty hours etc. are done by debiting their vendor accounts through a credit memo in the Accounts Payable Sub-ledger. The Accounts Receivable Sub-ledger is only used to record receivables for Business Partners who have a customer role in Umoja. In the next three modules, we ll examine how receivables are created in AR using each of the three transactions above. For now, let s look at key document types used in AR. 21

22 AR Document Processing Customer Invoices A number of documents are used in Umoja to process Accounts Receivable. We ll briefly look at these documents in the remainder of this module before we examine the actual AR processes in the next modules. Future Term Current Term Definition Customer Invoice Document (DR) Customer Credit Memo Document (DG) Incoming Payment Document (DZ) Noted Items Billing Document Accounts receivable documents created directly in the AR sub ledger: Requires a Business Partner with Customer Role Dr Accounts Receivable Manual entry or Excel document load file Can be open or cleared In AR, a Customer Credit Memo is a posting that reduces the balance of receivables. It is normally created if the goods or services provided are returned or a discount is given on the price charged. Credit Memo documents are created directly in the AR sub ledger: Require a Business Partner with Customer Role Cr Accounts Receivable Manual entry or Excel document load file Can be open or cleared Document recorded either automatically by Cash Management or manually by user Cr Accounts Receivable Customer open item Dr Bank Clearing Reset and reverse FBRA Documents that are one-sided memo entry. A subsequent event will update the noted item and create a normal two-sided financial document. Noted items don t appear in financial reports (e.g. trial balance). 22

23 AR Document Processing Customer Invoices Future Terms Current Terms Definition Customer Down Payment Request (DA) Entry View General Ledger View Parked Document Save as Parked Parked Document Save as Complete Posted Document Reversal Document Special GL Indicator Advances from Other Unapproved Document Unapproved Document Approved Document This document creates a noted item to tell Cash Management module to expect a specific amount from a specific Customer. Once payment is received, an Incoming Payment document (DZ) is created to record cash and a liability on the Customers account in AR sub ledger. If you choose document display, the document is first displayed in the entry view. This view contains the line items originally entered. Typically the Customer number is shown on the first line of the document. In the General Ledger view, a document contains the line items originally entered and split line items generated by document splitting. Documents in the General Ledger view always apply to a specific ledger. Typically we see GL accounts and all coding block that has been derived instead of the Customer number. Used to store (park) incomplete documents without carrying out extensive edit and budget checks. Parked documents can be completed, checked, and then posted at a later date; if necessary, by a different user. Used to carry edit checks. Only documents with successful checks can be saved with status Save as Complete. If checks are failed, document can be saved with status Save as Parked. Saving as Complete triggers workflow. Document that has been approved through workflow. With the exception of payment method, payment terms, and long text, document information can no longer be changed. Documents that have been posted and contain an error can be reversed. The reversal document will refer to the original document while the original document will be updated to reference the reversal document number. Attribute of a posting which instructs Umoja to swap the default GL account for a special GL account. SPGL are only available in AR and AP sub ledgers. E.g. VAT receivable. 23

24 AR Document Processing Customer Invoices Future Terms Current Terms Definition Zero Balance Clearing Account Document Splitting Customer Clearing Document (DC) Open Item Cleared Item Inter-fund Account Outstanding Receivable Recovered Receivable If the balancing dimensions in a document do not produce a balance of zero, the system creates additional lines to balance the document for each splitting dimension (Fund, Business Area, Grant, Segment). The default Zero Balance Clearing Account is the Equity in Pool account (requirement with Cash Control). Note: Creation of AR documents will not hit Zero Balance Clearing Account. Umoja has been configured to automatically balance a document along 4 dimensions: Fund, Business Area, Grant and Segment. This can be accomplished in two ways: 1. Account assignment is copied from the income statement line to the balance sheet line 2. Additional lines are added to the Zero Balance Clearing Account Allows you to display document line items split according to selected dimensions (i.e. Fund, Business Area). In this way, you can draw up a complete trial balance for the selected dimensions at any time. The Split Processor balances inter-fund documents to the Equity in Pool account. N.B. Clearing documents have no transaction lines when the clearing does not cross dimensions. This document associates a receivable document (DR or DG) with an incoming payment document (DZ). Clearing documents have no transaction lines. Clearing can be done automatically when bank file includes a recognizable reference with the incoming payment. Otherwise, user will create and clear incoming payment with account receivable document manually (F-28). Account Receivable document which doesn t have a clearing document. Account Receivable document which has a clearing document. 24

25 High-level Accounts Receivable Process The Umoja Accounts Receivable solution includes the following processes: Customer Invoice Processing Incoming Payment Processing Collections and Write-Offs Customer Invoice Processing will be covered in the next three modules in line with the three ways through which receivables are created in the AR Sub-ledger namely: 1. Sales and Distribution (Standard Order) Billing 2. Real Estate (Lease-Out) External Billing 3. Direct recording of receivables in the AR Sub-ledger. 25

26 Touch Points Touch points are those instances where one process or functionality interacts with another process or functionality. These touch points seen between Accounts Receivable and other functionality are outlined in the diagram below: General Ledger (FI) Business Partner Master Data (system-wide) Accounts Receivable (FI) Sales and Distribution (SD) Real Estate Module (RE) Grants Management (GM) 26

27 Learning Checkpoint 1 All of the following are capabilities of the Umoja Solution, EXCEPT: Select the correct option. A. Centralized Data B. Automatic posting in A/R C. Siloed functionality by functional area D. Dunning 27

28 Learning Checkpoint 1 All of the following are capabilities of the Umoja Solution, EXCEPT: Select the correct option. A. Centralized Data B. Automatic posting in A/R C. Siloed functionality by functional area D. Dunning Option C is correct. The key benefit of Umoja is the integration of data and functionality under one roof. 28

29 Module 1 Summary The key points covered in this module are listed below: The AR process area comprises all business processes related to recording and tracking receivables from Member States, Donors, commercial customers and any other entity that owes money to the UN The UN reports its income in compliance with IPSAS 9 Revenue from Exchange Transactions and IPSAS 23 Revenue from non-exchange Transactions. There are several methods used for cost recovery/billing in Umoja The AR relevant roles that can be assigned to a Business Partner include FI Customer, UN Customer (i.e. Customer with a Sales and Distribution view), UN Tenant with Vendor Account and Sponsor 29

31 Module 2 Objectives After completing this module, you will be able to: Explain the Services to Public and Staff process List the Master Data elements in the SD module of Umoja Identify the Sales Area associated to your operation Describe the Billing of Services process Describe the Sale of Inventory/Assets process Describe the Third-party Procurement process Explain the steps involved in creating customer invoices in Sales and Distribution 31

32 Key Terminology Key Term Material Item Category Condition Types Plant Sales Area Sales Organization Distribution Channel Description It refers to all products and services procured, sold, charged and delivered by UN. It is an essential part of a sales order that generally controls the behavior of an item in a sales order, such as pricing. It is a set of variables that applies when price is calculated. It is a location where materials are produced, purchased, stored, inventoried, shipped, received and valuated or from which services are provided (Mission/Support Center in Peacekeeping, Country for HQ and OAHs). It is the combination of a distribution chain (a sales organization and a distribution channel) and a division. It is used to determine the sales price calculation schema in Sales Pricing. It is the overarching sales body, in this case UN. It determines how materials or services are sold and how they are distributed to customers, for example, retail, wholesale or selfcollection. 32

33 Key Terminology Key Term Division Business Area Profit Centre Funds Center Fund Functional Area Cost Center Description It is an organizational unit that establishes responsibility for profits from materials and services. It can be used to organize materials or services, for example to form product groups or lines. It is a classification of UN entities operating in Umoja. Examples of business areas include Peacekeeping Missions, Special Political Missions and Offices Away from Headquarters. It represents a business function in Umoja. It is an organizational unit within the FM module that controls a budget. It is time dependent and has the valid from and to dates. Every Funds Center corresponds to a Cost Center. It represents the foundation for tracking, controlling and reporting on available financial resources in Umoja. It is a Master Data element that is maintained within the FM module. It is also used in FI and CO to classify revenues and expenditures of an organization by function. It is an organizational unit that collects costs and revenues for ongoing operations or functions. 33

34 Services to the Public in the SD Module The Umoja Sales and Distribution (SD) module is used to manage the services that the UN provides to entities that do not use Umoja for their Financial Reporting purposes. These entities include amongst others, UN non-secretariat agencies, NGOs, Military Contingents, Member States, Non-Member States, Permanent Missions, Commercial Customers etc. The services provided to the public and processed in the SD module can be grouped into three main categories: Billing of UN Common Services Sales or Donation of UN Asset and Inventory Third-party Procurement When services to the public are processed in the SD module, invoices are raised to request payment from customers. The raising of an invoice also establishes a receivable in the customer s account in the AR Sub-ledger. 34

35 Services to the Public - Billing of UN Common Services The Umoja SD module is used when billing or seeking cost reimbursement for services provided to parties external to Umoja. These services include: Conference, media, television, broadcast, special events and security Occasional rental or use of UN spaces Ad-hoc facility, engineering and maintenance Travel, visa, Laissez Passer (LP), freight, mail and insurance Aviation, transport and movement control Medical, personnel, training, legal, contractual and document Technology, information and communication 35

36 Billing of Common Services Process The overall steps in the Billing of Services process are as follows: Customer SD User SD User SD Approver Request a Quotation Verify BP and Pricing Conditions Create Quotation Approve Quotation Customer SD User SD Approver AR User AR User Place Order Create Standard Order Approve Standard Order Create and Issue Invoice Process Incoming Payment Steps performed outside Umoja Steps performed in Umoja ECC Optional Steps performed in Umoja ECC Umoj a 36

37 Services to the Public - Sale of Inventory/Assets In Peacekeeping Missions, the Self Accounting Units (SAU s) can identify inventory/assets to be disposed through sale, donation or other methods. The Property Disposal Unit (PDU) of the mission s Property Management Unit consolidates the list of inventory/assets to be disposed and submits it for the approval of the Local or Headquarter Property Survey Board. This activity is currently carried out in Galileo WODM. After the list of assets and inventory is approved for disposal by sales, an unfunded Shopping Cart is created and approved in Umoja Supplier Relationship Management (SRM) for procurement action. The Shopping Cart should contain the line item(s) associated with the material(s), asset(s) or lot(s) to be disposed. The Procurement team conducts solicitation to seek bidders for the goods to be disposed. The offers are then evaluated and lots are awarded to the highest bidder. At this point, the process is moved into the SD module and the steps are listed in the subsequent slide. 37

38 Sale of Inventory/Assets Process The overall steps in the Sale of Inventory/Assets process are as follows: External Role Requisitioner/ Approver Buyer Buyer Buyer SD User Identify Assets and Inventory to be disposed (in Galileo) Create/Approve Shopping Cart Conduct Solicitation Issue Award or Bill of Sales (in Galileo) Create Sales Contract (Optional Step) Verify Business Partner SD User SD Approver AR User AR User Create Standard Order Approve Standard Order Create and Issue Invoice Process Incoming Payment Steps performed outside Umoja Steps performed in Umoja ECC Steps performed in Umoja SRM 38

39 Services to the Public - Third-party Procurement Third-party procurement occurs when a UN agency or any other entity external to Umoja requests UN to procure services or materials on its behalf. UN may agree to purchase and pay for the goods or services on the condition that reimbursement is received before or after the goods/services are delivered. UN recovers the cost of the purchase, plus any other applicable fees, by issuing an invoice to the concerned UN agency or entity. For this purpose, the SD User creates a Standard Order with the item category of the relevant material changed to TAS Third Party Items. While creating a Standard Order, the system automatically creates a Purchase Requisition, which will be transferred to SRM for procurement to create a Purchase Order (PO). When goods are delivered and the Goods Receipt is posted to enable the vendor payment, the goods will not be transferred to Galileo and therefore will not become part of the UN stock. However, the UN counterpart needs to perform good receipt or certify the service received before the invoice can be paid. 39

40 Third-party Procurement The overall steps in the Third-party Procurement process are as follows: External Role SD User SD User SD Approver SRM Approver Place Order Verify BP and Pricing Conditions Create Standard Order Approve the Standard Order Approve the Shopping Cart automatically created Buyer AR User Treasury AR User External Role Conduct Solicitation & Create a PO Create and Issue Invoice Make Payment to Vendor & Receive Money from Customer Process Incoming Payment Deliver Order Steps performed outside Umoja Steps performed in Umoja ECC Steps performed in Umoja SRM Note: The Third Party Procurement Process is rarely used in Peacekeeping missions. If the process does occur it requires ad hoc authorization from the Procurement division 40

41 Customer Invoices in the SD Module The AR Senior User only comes in at the time an invoice is issued because it is at this moment that a receivable is booked against the customer in the AR Sub-ledger. Business Partner (Customers) Material Master (Services) Material Master (Goods) Pricing Conditions Sales Contract Quotation Standard/Sales Order Reference Data Currencies, Country Codes and Commodity Codes Return Order Credit/Debit Memo Request General Master Data Delivery Document Delivery Document SD Specific Master Data Post Good Issue Good Receipt SD Specific Processes Shared Processes Invoice Credit/Debit Memo ---- Applicable for UNHQ & OAHs only Financial Document 41

42 Sales Organization, Distribution Channel & Divisions Before the AR Senior User can issue an invoice in SD (thus creating a receivable in the AR Sub-ledger), s/he must specify the Sales Area for which they are responsible. For each Peacekeeping mission, this will be a combination of the Sales Organization, Distribution Channels and Divisions. Sales Organization UN Distribution Channels 01 Retail 02 Distributor 03 Online 04 Direct Sales 05 Stock Transport - STO 06 Grants 07 Billing/Cost Recovery 08 Subscription Divisions 00 General Services & Others 01 UN Postal admin 02 Bookshop services 03 Visitors services 04 Publications 05 Properties & Equipment 06 Statistics 07 Conf, Media & Events 08 Facility & Engineering 09 Travel & Transportation 10 Aviation & MovCon 11 Personnel & Training 12 Inventories & Supplies 13 Legal, Contract & Document 14 ICT services 42

43 Invoice Management Processes Issuing an invoice in SD is only one of the many processes that the Senior AR User can perform on invoices. S/he can also display, change, print or cancel invoices. Customer SD User SD Approver FI Senior User Treasury Place Order Create Standard Order Approve Standard Order Issue Invoice Receive Payment Steps performed outside Umoja Steps performed in Umoja ECC FI Senior or any other FI User Display & Review Standard Orders FI Senior User Issue Single or Combined Invoice FI Senior User Execute Financial Postings Umoj a FI Senior User Cancel Invoice FI Senior User Display/ Change Invoices Note: The remainder of this module looks at the SAP steps to perform the various invoice management processes. FI Senior User Print Invoices 43

44 Issue an Invoice in Sales and Distribution The process begins when the user has logged into Umoja. Step 1: Access the Maintain Billing Due List Page. a Enter VF04 in the Command field b Press the Enter button b a 44

45 Issue an Invoice in Sales and Distribution The Maintain Billing Due List screen appears. Step 2: Enter the appropriate data. c Enter 1000 in the Sales Organization Field d Enter relevant Distribution Channel, Divisions and/or Shipping Point to limit the display to the relevant Sales Area and site location e Click the Order-related since invoices to be issued from SD are usually orderrelated Step 3: Click the DisplayBillList button. c 1000 d e 45

46 Issue an Invoice in Sales and Distribution The Billing Due List is populated with bills due based on the criteria entered on the previous screen. Step 4: Select the appropriate document number, then click the Individual billing document button. [Note: Click the Combine billing document if consolidated billing is required] Step 5: Click the Save button to create an invoice. Step 6: Record the invoice number for use later in the process. Note: The system will copy everything from the Sales order to the Invoice. Relevant financial posting will automatically take place. To issue a combined billing documents, all customer, sales area and site information of the selected SD documents have to be the same. 46

47 Cancel an Invoice in Sales and Distribution Generally, financial postings will be executed automatically when an invoice is issued in the SD Module. In case this fails to happen, the Senior AR User should investigate (using the Failure Log) and fix the problem causing the failure. This may require the cancellation of the invoice issued, which in turn will restore the Standard Order to its original state. To cancel an invoice, follow the steps below: Step 1: Access the Cancel Billing Page. a Enter VF11 in the Command field Press the Enter button b b a 47

48 Cancel an Invoice in Sales and Distribution Step 2: c Enter the number of the invoice to cancel in the Document Field. d Press Enter The Billing Document Cancel: Billing Document Overview screen will display, showing two lines: one for the original invoice and the other for the cancellation. d c Step 3: e Click on the Save icon and note the document number shown at the bottom of the page. f Click on the Back icon (or type /n in the Command Field) to return to the SAP Easy Access Screen. Type VF04 and press Enter. It will be noticed that the Standard Order for the invoice cancelled is ready for invoicing. e f 48

49 Display/Change Invoice in Sales and Distribution Step 1: Access the Change Billing Document screen. a Enter VF03 (Display) or VF02 (Change) in the Command Field. b Press the Enter button b a The Display/Change Billing Document Screen appears. Step 2: Enter the invoice number in the Billing document field. Step 3: Click the Billing items button. 49

50 Display/Change Invoice in Sales and Distribution The Overview of Billing Items screen for the invoice entered appears. Step 4: Click the Display doc. Header details icon to display invoice header detail. 50

51 Display/Change Invoice in Sales Distribution The Header data for the Billing invoice being reviewed appears. Step 5: Review the information for accuracy. Step 6: Click the Accounting icon for a List of Documents in Accounting. 51

52 Display/Change Invoice in Sales Distribution A List of Documents in Accounting opens. Step 7: From the list double click the document number of the Accounting document. The Data Entry View of the invoice appears. This gives another view of the same invoice. Once the review is done the invoice can then be printed. 52

53 Printing an Invoice in Sales Distribution Invoices can be printed from the Header Data screen by executing the following steps: Step 1: Click the Output icon. The Output page for the invoice being Reviewed appears. Step 2: Enter ZRD0 in the Output column of the Output table. Step 3: Press the Enter key. The ZRD0 output row is automatically populated with the appropriate information. Step 4: Click the icon located above the Output table. 53

54 Printing an Invoice in Sales and Distribution The Printing Information screen of the Output page appears. Step 5: Enter LOCL in the Logical Destination field. Step 6: Select the checkbox next to the Print Immediately and Release after output options. Step 7: Click the Back button to return to the main Output screen. Step 8: Click the top of the screen. icon at the 54

55 Printing an Invoice in Sales and Distribution The Further Data section of the Output screen appears. Step 9: Select Send immediately (when saving the application) From the Dispatch Time dropdown menu. Step 10: Click the back button to Return to the main Output page. 55

56 Printing an Invoice in Sales and Distribution Step 11: Click the Save button to initiate invoice printing. If the invoice does not automatically print, press the Enter key to validate the Output page for errors. 56

57 Grant Billing: Overview After the Donor agreement or amendment is signed, scanned and uploaded into the Umoja system, the Grant Billing process is performed through standard accounting transactions. For monetary contributions, appropriate income and AR s are recorded based on the recognition criteria and in compliance with the IPSAS requirements. For goods, the value stated in the agreement is recorded. If not stated, the Fair Market Value will be recorded as income and expenditure. For services, only rights-to-use will be recorded as income and expenditure. All other services will be recorded through memorandum accounts. Note: The detailed Grant Billing Process is similar to the SD Billing Process and can be found in FI311 Umoja Grants Management Process ILT Framework 1 57

58 Touch Points The Umoja system is an integrated system and most of its modules integrate with each other to complete a process. Touch points are those instances where one process, subprocess or activity interacts with another process, sub-process or activity. Sales/Donation of UN Assets Third Party Procurement Billing of UN Common Services Grants Management Customer Invoice Processing 58

59 Simulation Activities Throughout this training, users will have the opportunity to conduct activities in the form of simulations. Simulations are interactive recordings of the Umoja system used to help facilitate a hands on learning experience. The simulation links are provided on the corresponding activity slides. Users can access simulations in three different modes: Show me: Users view a video of an entire transaction being conducted Let s do it together: Users will be prompted to input data at key points during the transaction (recommended) Try it: Users can complete an entire transaction on their own, with no additional instructions provided 59

60 Activity 1 Transaction Name: Create an invoice originating from SD Transaction Code: VF02, VF04 Link to the uperform simulation: entdetails?noderef=workspace://spacesstore/e819cec8-27d7-4f53-8f a5f 60

61 Learning Checkpoint 1 The SD module is used to raise invoices for which of the following services? Select the correct option. A. Conference, media, television, broadcast, special events and security to a Permanent Mission B. Recovery of phone bills from Military Observers C. Ad-hoc facility, engineering and maintenance services to the Host Government D. Medical, personnel, training, legal, contractual and document the Red Cross E. Recovery of liberty miles from staff members 61

62 Learning Checkpoint 1 The SD module is used to raise invoices for which of the following services? Select the correct option. A. Conference, media, television, broadcast, special events and security to a Permanent Mission B. Recovery of phone bills from Military Observers C. Ad-hoc facility, engineering and maintenance services to the Host Government D. Medical, personnel, training, legal, contractual and document the Red Cross E. Recovery of liberty miles from staff members Option A, C and D are correct. The SD module is used to raise invoices for services rendered to customers who are external to Umoja. Military Observers and Staff Members only have vendor roles in Umoja. Recoveries from them are done through credit memos in the AP Sub-ledger. 62

64 Module 3 Objectives After completing this module, you will be able to: Define Lease Administration Describe the lease types identified for UN Explain the Lease Administration lifecycle Describe the integration of Real Estate with Funds Management Explain how the Financial Accounting Senior User creates receivables in the tenant s account 64

65 Key Terminology Key Term Lease-in External Lease-out Internal Lease-out Sales-based Lease-out Business Partner (BP) Description This lease type is used when the space is leased from an external party and is used by UN for its own use. This lease type represents the UN as the Tenant. These are leases where the space is leased to a UN agency external to Umoja or to any other commercial entity. For example, UNDP, UNICEF or JP Morgan Chase. These are leases where the space is leased to an entity internal to Umoja. The amounts owed are paid by the tenant via an internal debit to the tenants expense and credit to the landlord's revenue. These are leases with a commercial entity where all or a portion of the rent is based on the amount of revenue generate by the tenant. It may also include other tenant charges. This refers to a person or an organization that has a business interest related to real estate property with UN. A Business Partner can be an owner, tenant, property manager, lease administrator, staff member, consultant or other affiliate that uses UN premises to perform their activities. These Business Partners may have one or more of the following roles in Umoja Real Estate: Facilities Manager, Facilities Planner, Lease Processor, Contract Approver, Landlord, Tenant or a Contact Person. 65

66 Key Terminology Key Term Building Land/Property Pooled Space Rental Space WBS Element Description It refers to any building structure occupied by UN (owned, leased or right-to-use). It refers to any parcel of property occupied by UN, be it owned, leased or occupied on a right-to-use basis. It refers to a flexible object that an be leased out either as whole or divided into rental spaces. Pooled space cannot be leased out in their own right. It refers to a flexible object that is a space extracted from a pooled space mainly for the purpose of leasing out. A Master Data element that represents a project with its structure. This is covered in the Project Management Process course. 66

67 Lease (Contract) Administration: Definition, Lease renewals, (Contract) lease termination Administration and is critical-date used for the tracking. management of leases and it involves creating, managing, renewing and terminating real estate leases for both owned property and rented premises. It is the process of creating and maintaining leases from initial setup through billing and lease management. 67

68 Lease Types The main lease types identified for the UN are: Lease Types Lease-in Where the UN is occupying a space that is not owned by the UN. Lease-out Where the UN is leasing space (owned or not owned by the UN) to a third party, such as another UN agency, host government, commercial entity, NGO or other organization. 68

69 Lease-In Types Financial (lease) arrangements of the real estate object have to be indicated in the Usage View. Lease Arrangements, as per IPSAS: Finance Commercial: When the UN pays market rental rate and the leases meet one or more of the following finance criteria: ownership transferred to the UN by the end of the lease term; UN has the option to purchase the asset at lower than fair market value; lease term is for the major part of the life of the asset, i.e. greater than 35 years; the present value of the minimum lease payments, at the inception of the lease, amounts to substantially all of the fair value of the leased asset (PV 90% of the fair value). Finance Right-to-Use/In Kind: When the leases meet one of the finance criteria and use of the premises has been granted at no cost to the UN. Finance Right-to-Use Nominal: When the leases meet one of the finance criteria and use of the premises has been granted at nominal cost ( USD 1 per year) to the UN. Finance Subsidized: When the leases meet one of the finance criteria and the rent is subsidized. Sometimes the UN receives government funding to cover rental costs or in some other cases, non-profit organization (like FIPOI in Geneva) provides rent that are not profitable or below than market rate for the sake of a specific group. 69

70 Lease-In Types Financial (lease) arrangements of the real estate object have to be indicated in the Usage View. Lease Arrangements, as per IPSAS: Operating Commercial: When the leases do not meet any of the finance criteria and the UN pays market rental rates. Operating Right-to-Use/In-kind: When the leases do not meet any of the finance criteria and use of the premises has been granted at no cost to the UN. Operating Nominal: When the leases do not meet any of the finance criteria and use of the premises has been granted at nominal cost (USD 1 per year) to UN. Operating Subsidized: When the leases do not meet any of the finance criteria and the rent is subsidized. Sometimes the UN receives government funding to cover rental costs or in some other cases, non-profit organization (like FIPOI in Geneva) provides rent that are not profitable or below than market rate for the sake of a specific group. 70

71 Lease-out Types The various Lease-out types are: Lease-out types External: These are leases where the space is leased to an UN agency external to Umoja or to any other commercial entity. For example, UNDP, UNICEF, JP Morgan Chase. Internal: These are leases where the space is leased to an entity internal to Umoja. For example, a Peacekeeping Mission or Special Political Mission. Sales-based: These are leases with a commercial entity where all or a portion of the rent is based on the amount of revenue generated by the tenant. It may also include other tenant charges. 71

72 Lease Administration Lifecycle At the UN, real estate leases (Lease-ins) are negotiated by the Procurement Office and customer contracts (Lease-outs) may be negotiated by Facilities Management, Engineering Unit or General Services. For External Lease-outs, Procurement and Contract Management may also play a role. After the lease is agreed upon and signed by both parties, the lease is entered into the Umoja system with lease terms, conditions, renewal and notice terms. Contract types are the key attributes used to classify different types of leases. Lease-in Contracts Lease-out Contracts Procurement Office Facilities Management 72

73 Real Estate & Funds Management Integration The processing of real estate lease contracts includes an integration of Real Estate with the Funds Management (FM). There are two types of contracts: Vendor Contracts (Lease-in) For Lease-in contracts, a funds commitment is generated by creating a Purchase Order through Procurement. Customer Contracts (Lease-out) For Lease-out external the posting parameters for revenue are maintained on the portfolio usage object. For Lease-out internal, a funds commitment is generated by the Tenant and assigned to the Leaseout internal contract. 73

74 Real Estate Contract Accounting Real estate contract accounting is closely integrated with Umoja Financials and Umoja Controlling modules. Financial Business Partners for real estate processes Tenant and Landlord are linked to accounts in Accounts Receivable and Accounts Payable respectively. Each building owner from whom space is leased-in is created as a UN Landlord Business Partner in RE-FX. The Business Partner has a corresponding vendor master record in Accounts Payable Each external third-party tenant (to whom space is leased-out) is created as a UN Tenant Business Partner with a customer account in RE-FX. The Business Partner has a corresponding customer record in Accounts Receivable Internal tenants are created as UN Tenant Business Partners without customer accounts. They will not have a customer record in Accounts Receivable 74

75 Key Elements of Real Estate Lease The key elements of a lease include the following: Term Renewal/ Notice Refers to the length of the contract. Renewal rules, rent escalations Term and termination options are required for setting up a UN lease. Conditions & Adjustments Conditions contain the amounts due to the landlord or from the tenant. For Term example: base rent, utilities, rental of furniture. Posting Parameters Positing Parameters include information on payment terms, payment frequency and Term organizational assignment (profit center and business area) 75

76 Term, Renewal & Notice Term Renewal/ Notice Conditions & Adjustments Posting Parameters The contract term stipulating the beginning and end of the rental period prevents the system from creating overlapping rental periods for a rental unit. Renewal rules are used to renew fixed-term contracts. A number of renewal rules are delivered as standard by Umoja and will remain unchanged During the creation of contracts, end-users select the renewal rule that applies to their contract and can also create user-specific rules at the same time A termination notice is used to terminate a contract on a specific date. They may only be given on contracts that have been set up with an early termination clause. When the notice is given, the reason to exercise the notice needs to be provided. This justification is then used for notice reporting. 76

77 Conditions & Adjustments T Term Renewal/ Notice Conditions & Adjustments Posting Parameters Conditions are an Umoja terminology that refer to types of rent and are key in capturing the rent variations. Conditions provide UN with the capability to track updated information about revenue generated from rental of premises across geographical areas. Conditions include: Base Rent Rent Escalation Admin Charges Operating Expense Electric Water Gas Sewer Misc Charges Cleaning Pest Control Elevator use Provision/Rental of furniture Provision/rental of video conference Comp/phone and other IT equipment Sales-Based Rent During the life cycle of a lease, the conditions may need to be adjusted based on terms or clauses of leases. 77

78 Posting Parameters Term Renewal/ Notice Conditions & Adjustments Posting Parameters Posting Parameters, which are used in Umoja only in association with Internal and External Lease out contracts, outline agreements on postings, frequency and organizational alignment in SAP. Postings are used for Lease-out external to capture the Landlord (UN entity) House Bank and Account information which is used by the Tenant to send electronic payments and for Lease-out internal, to specify the Tenant s cost center for posting of the Tenant s lease expense Frequency deals with the payment frequency and form for objects in the contracts. Organizational alignment defines the profit center and business area for the objects in the contracts and it is used for Lease-out internal to record the coding block of the Tenant 78

79 External and Internal Lease-out: Process Steps The end-to-end steps required to create a Lease Contract in Umoja SAP are displayed below. Our interest is only on the last two steps, where postings are done and invoices created. Facilities Planner Facilities Planner Facilities Planner Lease Processor Create Architectural and Usage Objects Create Pooled Space Extract Rental Space Approve AO and Approve/Release Usage Objects Check Business Partner Lease Processor Lease Contract Approver Financial Accounting Senior User Financial Accounting Senior User Create /Update Lease-out Contract Approve Lease-out Contract Periodic Posting: Simulation, Execution and Reversal Invoice: Create & Reversal Steps performed in Umoja ECC 79

80 Periodic Posting, Simulation, Execution & Reversal Create Lease-out Contract Update Lease-out Contract Periodic Posting, Simulation, Execution & Reversal Invoice: Create & Reverse In Umoja, the Lease Processor and the Financial Accounting Senior User can simulate periodic postings to check for errors. If the check reviews no errors, the Financial Accounting Senior User will create a receivable in the tenant s customer account. These financial postings represent the revenue due from the tenant and include the associated coding block (fund, grant and so on). The steps to simulate a periodic postings are: 1. Enter RERAPP in the Command field or click the SAP menu and select the Accounting > Flexible Real Estate Management > Accounting > periodic postings > periodic posting: Contracts menu item 1 80

81 Periodic Posting, Simulation, Execution & Reversal Create Lease-out Contract Update Lease-out Contract Periodic Posting, Simulation, Execution & Reversal Invoice: Create & Reverse 2 In the Contract Selection section, enter details in the following fields: Company Code: The Company Code used in Umoja is 1000 Contract from and to: This allows you to run the periodic posting for multiple contracts by entering a range of contract numbers 2 81

82 Periodic Posting, Simulation, Execution & Reversal Create Lease-out Contract Update Lease-out Contract Periodic Posting, Simulation, Execution & Reversal Invoice: Create & Reverse 3 In the Period section, enter details in the following fields: Month for Posting Run: The month the tenant receivables are due Year for Posting Run: The year the tenant s receivables are due Due Date: The date less than or equal to the date through which conditions due on the contract will be collected. For example, if the conditions are due in June, this date will be less than or equal to 30 June 3 82

83 Periodic Posting, Simulation, Execution & Reversal Create Lease-out Contract Update Lease-out Contract Periodic Posting, Simulation, Execution & Reversal Invoice: Create & Reverse 4 In the Posting section, enter details in the following fields: Document Header Text: This is the text displayed at the top of the posting report upon execution. This should be updated as appropriate for Lease-out internal certifications Posting Date: The reference date for when the financial documents will be recognized Document Date: The date the financial documents are created in the system 4 83

84 Periodic Posting, Simulation, Execution & Reversal Create Lease-out Contract Update Lease-out Contract Periodic Posting, Simulation, Execution & Reversal Invoice: Create & Reverse Posting Period: The current open financial period for the financial records Posting Run Mode: During a periodic posting simulation, the Posting Run Mode is always Simulation Type of Posting Run: This is always an Integrated Posting. The integrated posting accrues the revenue due to the tenant, directly to the rental object 84

85 Periodic Posting, Simulation, Execution & Reversal Create Lease-out Contract Update Lease-out Contract Periodic Posting, Simulation, Execution & Reversal Invoice: Create & Reverse 5 Confirm the Posting Run mode is set to Simulation 6 Click the Execute icon 6 85

86 Periodic Posting, Simulation, Execution & Reversal Create Lease-out Contract Update Lease-out Contract Periodic Posting, Simulation, Execution & Reversal Invoice: Create & Reverse After running the simulation, the first screen displays a summarized listing of the run results. Select the Documents button to view the simulated debits and credits with the complete financial coding block of each 7 7 For example: 86

87 Periodic Posting, Simulation, Execution & Reversal Create Lease-out Contract Update Lease-out Contract Periodic Posting, Simulation, Execution & Reversal Invoice: Create & Reverse After simulating and reviewing the posting, the Financial Accounting Senior User re-executes periodic postings, but this time changes the Posting Run Mode to Update Run Click the Execute icon or select to Program -> Execute Note: In the event of an error, the Financial Accounting Senior User can reverse the periodic posting. 87

88 Periodic Posting, Simulation, Execution & Reversal Create Lease-out Contract Update Lease-out Contract Periodic Posting, Simulation, Execution & Reversal Invoice: Create & Reverse The first screen to appear will display a summarized listing of the run results. Select the Documents icon which will show a popup from which you can navigate and display the financial documents created For example: 88

89 Create an Invoice Create Lease-out Contract Update Lease-out Contract Periodic Posting, Simulation, Execution & Reversal Invoice: Create & Reverse The Lease Processor can also simulate invoices but only after the Financial Accounting Senior User has run the periodic posting The steps to simulate an invoice are: 1 Enter RERAIV in the Command field or click the SAP menu and select the Accounting > Flexible Real Estate Management > Accounting > Invoices > Create Invoices menu item 89

90 Create an Invoice Create Lease-out Contract Update Lease-out Contract Periodic Posting, Simulation, Execution & Reversal Invoice: Create & Reverse In the Contract Selection section, enter details in the following fields: 2 Company Code: 1000 is the Company Code used in Umoja Contract Number from and to fields: This allows you to create invoices for multiple contracts by entering a range of contract numbers 2 90

91 Create an Invoice Create Lease-out Contract Update Lease-out Contract Periodic Posting, Simulation, Execution & Reversal Invoice: Create & Reverse In the Selection of Invoice Terms section, enter details in the following fields: 3 Selection Type: Always select Only Items from FI documents Due Period From and To: The dates that correspond with the conditions 3 Note: These fields specify whether or not to pick up items on the invoice that are the result of the periodic posting run execution and/or cash flow forecast in the contract. 91

92 Create an Invoice Create Lease-out Contract Update Lease-out Contract Periodic Posting, Simulation, Execution & Reversal Invoice: Create & Reverse In the Invoice Creation section, enter details in the following fields: 4 4 Execution Mode: Always select Simulation to review the invoice before executing Title: The title of the run Summarize: Always select Per Contract Note: These fields specify whether or not we need pick up items on the invoice that are the result of the periodic posting run execution and/or cash flow forecast in the contract. 92

93 Create an Invoice Create Lease-out Contract Update Lease-out Contract Periodic Posting, Simulation, Invoice simulation Click the Execute icon or go to Program > Execute 5 5 Select an invoice and click the Preview button

94 Create an Invoice Create Lease-out Contract Update Lease-out Contract Periodic Posting, Simulation, Execution & Reversal Invoice: Create & Reverse 7 Review the invoice to ensure that it is correct 7 94

96 Activity 1 Transaction Name: Periodic Posting Execution Transaction Code: RERAPP Link to the uperform simulation: ?mode=EU&originalContext=

97 Learning Checkpoint 1 The Financial Accounting Senior User can simulate periodic postings for rents due from External Lease-Outs in which Umoja module? Select the correct option. A. Cost Accounting B. Financial Accounting C. Funds Management D. Flexible Real Estate Management E. Accounts Receivable 97

98 Learning Checkpoint 1 The Financial Accounting Senior User can simulate periodic postings for rents due from External Lease-Outs in which Umoja module? Select the correct option. A. Cost Accounting B. Financial Accounting C. Funds Management D. Flexible Real Estate Management E. Accounts Receivable Option D is the correct answer. Periodic postings for rents due from External Lease Outs are done by the Financial Accounting Senior User in the Flexible Real Estate Management Module. 98

99 Module 3 Summary The key points covered in this module are listed below: Lease administration is used for the management of leases and involves creating, managing, renewing and terminating real estate leases for both owned property and rented premises In Umoja, a lease is classified into two lease types - Lease-in and Lease-out At UN, real estate leases (Lease-ins) are negotiated by the Procurement division and customer contracts (Lease-outs) are negotiated by Facilities Management, Engineering, or General Service The Financial Accounting Senior User is responsible for creating receivables in the customer accounts of Lease-out external after simulating periodic postings and checking for errors. For Lease-out internal, a funds commitment is generated by the Tenant and assigned to the Lease-out internal contract 99

101 Module 4 Objectives After completing this module, you will be able to: Manually create receivables directly in the AR Sub-ledger using both the Single Line and Excel Upload Methods Describe the process to establish VAT Receivables Explain the process to establish receivables for Assessed Contributions Explain how documents are reviewed and approved in Workflow 101

102 Direct Creation of Receivables in the AR Sub-ledger Receivables not related to sales So far, the receivables we have established in the AR Sub-ledger either originated from the SD module (sale of goods or services with the exception of rental services) or from Lease Administration (rental of premises). Often though, we do have other receivables that we need to set up but for which there is no sale of goods or services. In this case, the receivables are directly created in the AR Sub-ledger. Examples include: VAT Receivable Assessed Contributions due Loans to parties external to Umoja. There are two ways to directly create receivables in the AR Sub-ledger manually i.e. 1. Manual Entry - Single line 2. Manual Entry - Upload from an Excel Spreadsheet We will illustrate both methods by raising receivables for VAT and Assessed Contributions respectively. 102

103 Value Added Tax (VAT) Receivable The UN Charter recognizes that the UN is exempt from direct taxes; however, this is interpreted differently by the Host Countries. In countries where VAT applies, the UN tax exemption varies. In some instances the UN is exempt from the VAT process altogether. In others, it can be exempt from certain material transactions or it can have VAT Reimbursement Status. In this instance, the VAT is levied and is recovered at a later date through a VAT reimbursement cycle. The AP module is used to pay invoices which include VAT and record the taxes paid. There are three scenarios for an invoice that includes VAT. The invoice includes VAT and the VAT is not reimbursable; consequently the VAT is paid and expensed and the UN does not try to recover the amount. The invoice includes VAT. The UN only processes the invoice for the net amount (excluding the VAT) and informs the Vendor (a copy of VAT exemption can be sent to the vendor for their records). The invoice includes VAT, which is reimbursable. When VAT is paid with the invoice, we establish a receivable for the equivalent amount and provide appropriate reports to support the VAT recovery process. Normally, the UN requests VAT reimbursement on a quarterly basis. 103

104 Single Line Manual Entry VAT Receivable As mentioned earlier, the UN pays VAT in the Accounts Payable Sub-ledger when a vendor s invoice is settled. However, the VAT Receivable is established in the Accounts Receivable Sub-ledger. The link between the two sub-ledgers is GL account AR VAT Recoverable. The process steps to establish a VAT Receivable are as follows: Prepare VAT Declaration (Return) Create Invoice Review and Approve Invoice Steps performed in Umoja ECC 104

105 Single Line Manual Entry VAT Declaration (Return) Prepare VAT Declaration (Return) Create Invoice Review and Approve Invoice At the time a vendor s invoice is paid in the Accounts Payable module, the following entries are passed: Debit: Goods Received - Invoice Received (GR-IR) Debit: AR VAT Recoverable Credit: Commercial Vendor (Recon a/c ) The amount accumulated in the AR VAT Recoverable Account ( ) is used to prepare the quarterly VAT Return. To determine this amount, a report is run as follows: Access the Advance Return for Tax on Sales/Purchases screen. 1 2 Enter S_ALR_ in the Command Field Click the Enter icon

106 Single Line Manual Entry VAT Declaration (Return) Prepare VAT Declaration (Return) Create Invoice Review and Approve Invoice The Advance Return for Tax on Sales/Purchases screen opens Click the Further Selections button Enter 1000 in the Company Code field Enter the relevant date in the Posting date field Enter relevant detail in the Tax return Country field Enter relevant detail in the Tax on sales/purchases field Click the Execute icon This will generate the VAT Report

107 Single Line Manual Entry VAT Declaration (Return) Prepare VAT Declaration (Return) Create Invoice Review and Approve Invoice The report has sections for both Input Tax (VAT paid for purchases) and Output Tax (VAT received from sales). A claim for a reimbursement from the Government is made for the amount by which Input Tax exceeds Output Tax. 107

108 Single Line Manual Entry Create Invoice Prepare VAT Declaration (Return) Create Invoice Review and Approve Invoice Once the amount of recoverable VAT is determined, an invoice for the Government can now be prepared. This will create a VAT Receivable as follows: Debit: Customer (Government) Credit: AR VAT Recoverable Since the normal Reconciliation Account for the Business Partner (Government) is , the N Special GL Indicator is used to re-route the amount of the debit to the GL Account AR VAT Receivable. The invoice is created using FV70 as follows: Access the Park Customer Invoice Page. 1 2 Enter FV70 in the Command field Click the Enter icon

109 Single Line Manual Entry Create Invoice Prepare VAT Declaration (Return) Create Invoice Review and Approve Invoice The Park Customer Invoice page appears. Enter the relevant details in the following fields: 3 Customer number SGL Indicator Invoice Date Reference Posting Date Amount Currency 3 109

110 Single Line Manual Entry Create Invoice Prepare VAT Declaration (Return) Create Invoice Review and Approve Invoice 4 Edit (as needed) individual line items, comprising the invoice, as follows: GL Account Number Line item amount Business Area Grant 5 Press the Enter key to validate the information entered in the invoice 6 Navigate to the following menu item: Document > Simulate General Ledger View navigate to Document and select Simulate General Ledger the menu, navigate to Document and 4 select Simulate General Ledger View. 110

111 Single Line Manual Entry Create Invoice Prepare VAT Declaration (Return) Create Invoice Review and Approve Invoice Review the entries to ensure the fields were filled correctly. 7 If the invoice is to be processed further, go to Document on the menu bar and choose Park. Alternatively, if the document is ready for approval, click the Save as Complete button. 7 The invoice then enters workflow for an A/R Approver to review and post. A document number appears at the bottom of the screen. Note it down. 111

112 Single Line Manual Entry Create Invoice Prepare VAT Declaration (Return) Create Invoice Review and Approve Invoice To see the users named in the workflow table who can review or approve this document: 8 Access the Command Field and type the Workflow t- code: SBWP then press Enter. 9 When your SAP Business Workplace Screen opens navigate to Outbox, Started Workflows. This will display the documents you have introduced into workflow with the most recent at the top. Click the document to highlight it. At the lower part of the screen the text: Current data for Started Workflow AR Approval appears

113 Single Line Manual Entry Create Invoice Prepare VAT Declaration (Return) Create Invoice Review and Approve Invoice 11 With the document still highlighted scroll down to the end of the lower part of the screen, then click on Information. 12 This will display the list of users named in the Workflow Table who can approve this document

114 Single Line Manual Entry Review and Approve Invoice Prepare VAT Declaration (Return) Create Invoice Review and Approve Invoice To review and post the invoice: 1 Enter SBWP in the Command Field to access the Business Workplace screen Click the Enter icon 2 3 Navigate to Inbox, Workflow, Grouped According to task, AR Document Approving Agent

115 Single Line Manual Entry Review and Approve Invoice Prepare VAT Declaration (Return) Create Invoice Review and Approve Invoice Then click the document to review and approve. The parked document number will appear at the lower part of the screen. The CC (1000) and year (2013) will be added to the document number in front and at the end respectively

116 Single Line Manual Entry Review and Approve Invoice Prepare VAT Declaration (Return) Create Invoice Review and Approve Invoice The document will open with its attachments. Review it to ensure key data like Customer account, Reference, Amount, GL account etc. are correctly inputted When the review is completed, click on Back (Green arrow icon) to return to the workplace. 7 Double click on document title to go to Decision Options

117 Single Line Manual Entry Review and Approve Invoice Prepare VAT Declaration (Return) Create Invoice Review and Approve Invoice Once the document title is double clicked, the user claims the document. As a result, it becomes unavailable to any other user named in the Workflow Table. Three actions are possible: 8 Cancel If the Approver wants to return the document to workflow so that another user can take action on it. 9 Refuse if the Approver is not satisfied with the document and wants to return it to the Transaction Entry Agent (originator). A reason must be given. Approve if the Approver is satisfied with the document and wants to post it

118 Single Line Manual Entry Review and Approve Invoice Prepare VAT Declaration (Return) Create Invoice Review and Approve Invoice After the invoice is posted, confirm this by reviewing the customer s account as follows: 1 Enter FBL5N in the Command and click the Enter icon. This opens the Customer Line Item Display. Enter the Customer account 2 3 In the Line Item Selection, click Open Items. 4 In Type, uncheck Normal items and check Special G/L transactions. 5 Click on the Execute icon to run the search

119 Single Line Manual Entry Review and Approve Invoice Prepare VAT Declaration (Return) Create Invoice Review and Approve Invoice The Customer s open items with SPGL are displayed. Note that the posted document ( ) is one of them. 119

120 Single Line Manual Entry Review and Approve Invoice Prepare VAT Declaration (Return) Create Invoice Review and Approve Invoice When the invoice is approved, the customer s account in the Accounts Receivable Subsidiary Ledger is debited. This triggers an automatic update of the AR Reconciliation Account in the General Ledger. The approval process is the same as that for creating invoices directly in the AR sub-ledger through Excel Uploads (explained shortly). Once the invoice is approved, account should be allocated to clear the amount of recoverable VAT that has now been transformed into a receivable VAT. This is done using the T-code F-03. An example of how this t-code is used to clear a GL account is as follows: 120

121 Allocating a G/L Account Access the Clear G/L Accounts screen: Enter F-03 in the Command field 1 2 Click the Enter icon. The Clear G/L Account: Header Data page appears 3 Enter required details in the following fields: Customer account number in the Account field 1000 in Company Code field Account currency in Currency field 4 Click the Enter icon Note: Clearing Date and Period populate automatically. 121

122 Allocating an Account in Umoja The Clear G/L Account Process Open Items screen appears displaying accounting line items belonging to the account entered on the previous screen. 5 6 Double-click the two matching line items (debit/credit) The amount for each line item in the matching pair turns blue. Navigate to the following menu item: Document > Post

123 Receivables from Assessed Contributions Member States assessments for the Working Capital Fund, Regular Budget(RB), Peacekeeping Operations(PK), Tribunals and Capital Master Plan(CMP) will continue to be calculated in a legacy system as done currently. Once the RB & PK scales and budgeted amounts for RB, PK, Tribunals and CMP are adopted, the appropriated amounts are apportioned using the applicable scale of assessments. This is done using Excel spreadsheets. The apportioned amounts (Gross, Staff assessment and Net components) will then be uploaded from the Excel Spreadsheets into Umoja, which will automatically create parked invoices for assessments and credit notes for peacekeeping credits. When the invoices and related credits are approved for posting, the system will also post automatic journal entries by recognizing the revenue and posting relevant entries in the AR sub-ledger. 123

124 Manual Upload - Overview Assessed Contributions will be used to illustrate the upload method. As explained earlier, Excel spreadsheets are used to calculated Assessed Contributions. The figures can then be uploaded into Umoja as follows: Upload Assessments and Credit Calculations Review and Approve Invoice Steps performed in Umoja ECC 124

125 Manual Upload - Upload Assessments and Credit Calculations Upload Assessments and Credit Calculations Approve Invoice The process begins when Assessments and credit calculations are uploaded into Umoja. The system parks the invoices or credit notes, so they can be reviewed and posted. Access the Accounts Receivable Doc Upload page. Enter ZARdocload in the Command field 1 2 Click the Enter icon

126 Manual Upload - Upload Assessments and Credit Calculations Upload Assessments and Credit Calculations Approve Invoice The AR Document Upload page appears. Select the document in the File Path field 3 Click the Execute icon

127 Manual Upload - Upload Assessments and Credit Calculations Upload Assessments and Credit Calculations Approve Invoice The Upload is first executed in the Test Mode. If no errors are reported it is next repeated and Saved as Completed. This initiates the workflow process. The invoice is sent to the inbox of the AR Approver for review and posting. 127

128 Manual Upload Review and Approve Invoice Upload Assessments and Credit Calculations Review and Approve Invoice The Invoice is reviewed and posted following the same process described above for the Single Manual Entry Method. 128

129 Touch Points The Umoja system is an integrated system and most of its modules integrate with each other to complete a process. Touch points are those instances where one process, subprocess or activity interacts with another process, sub-process or activity. Assessed Contributions Tax Accounting Customer Invoice Processing Loans to Parties external to Umoja 129

131 Activity 2 Transaction Name: Allocate a GL Account in Umoja Transaction Code: F-03 Link to the uperform simulation: entdetails?noderef=workspace://spacesstore/249d750dc2af df-4a32e6cf

132 Activity 3 Transaction Name: Park a Customer Invoice and Approve in Business Workplace Transaction Code: FV70 Link to the uperform simulation: entdetails?noderef=workspace://spacesstore/783a7c3cfe a4cd-86b15643d75e 132

133 Learning Checkpoint 1 The Accounts Receivable process covers the creation of all of the following automatic and manual customer invoices, EXCEPT: Select all that apply. A. Lease Administration B. Leave Administration C. Grants Management D. Transactions from revenue bearing work 133

134 Learning Checkpoint 1 The Accounts Receivable process covers the creation of all of the following automatic and manual customer invoices, EXCEPT: Select all that apply. A. Lease Administration B. Leave Administration C. Grants Management D. Transactions from revenue bearing work Options B is the correct answer. The Accounts Receivable process covers the creation of Lease Administration, Grants Management and Transactions from revenue bearing work. 134

135 Module 4 Summary The key points covered in this module are listed below: Customer invoices are directly created in the AR Sub-ledger when they do not originate from the sale of goods or services. Customer invoices can be created manually or uploaded into Umoja from an Excel File or legacy system via an interface. VAT is paid in the AP Sub-ledger at the time vendor invoices are paid. However, VAT Receivables are established in the AR Sub-ledger. Assessed contributions are calculated in a legacy system and interfaced into Umoja Customer invoices created directly in the AR Sub-ledger are approved via workflow. 135

137 Module 3 Objectives After completing this module, you will be able to: Explain how to move Incoming Payments from EFT-In to either Customers' Accounts or the Unapplied Cash Account Describe how to move Incoming Payments from the Unapplied Cash Account to Customers Accounts Describe how to apply a partial payment to a Customer s Account Explain how to raise a Credit Memo 137

138 Incoming Payments Processing - Overview Inasmuch as it is important for AR staff members to correctly record the amounts owed the UN in the different debtor accounts of customers, it is equally important that Incoming Payments are correctly applied to the accounts of the customers who made them. This is the focus of this module. Incoming Payments come as cash, cheques or as Electronic Funds Transfer (EFT). With the introduction of House Banks, all bank accounts of missions now belong to one of the three Treasury Pool Funds 64VQA: Main Pool Cash & Investment. As a result, all Incoming Payments are recorded in 64VQA. This results in two sets of entries: 1. An increase in the equity of the mission in 64VQA for which the money is destined i.e. the mission that was owed money. 2. A decrease in the amount owed by the customer who made the payment. In some cases the customer s account will be automatically credited by the system when bank statements are uploaded. This module looks at how AR staff will manually apply Incoming Payments to a customer s account when the automatic application doesn t take place. In addition to an Incoming Payment, a customer's receivable may also be reduced by a Credit Memo. This will be the case if the UN decides to reduce the amount owed by the customer because of reasons such as defective products, overcharging etc. This module will equally look at how Credit Memos are raised. 138

139 Display of Open Items Before proceeding to discuss how open items are cleared with Incoming Payments, we ll first examine how the items can be identified. At any time, receivables from customers can be displayed using FBL5N or ZARFBL5N. The former shows parked, posted and noted items, while the latter shows posted items per Fund or Grant. FBL5N FBL5N ZARFBL5N 139

140 Display of Open Items Open items for all the customers specified in the FBL5N are displayed with a red ball status. When the items are eventually cleared the ball will turn to green. 140

141 Incoming Payments Processing Automatic Clearing Bank Statement Upload Automatic clearing of AR items is not done by the AR staff. When the Bank Statement of the previous day is uploaded into Umoja, a Bank EFT-In clearing account will be credited by the debit of EFTs received as follows: Dr 64VQA Bank Nominal (GL A/c 11011X10) Cr 64VQA Bank EFT In Clearing (GL A/c 11011X16) Matching to Clear If the incoming payment contains information e.g. invoice number, that identifies an existing receivable for the same amount, Umoja will establish a match between the two. The receivable will be automatically cleared by the incoming payment. Dr 64VQA Bank EFT In Clearing (GL A/c 11011X16) Cr 20OLA Customer Open Item (GL A/c 15101XXX) Equity Increase in Treasury Pool At the same time the equity of the Fund for which the incoming payment was meant will increase in the Treasury Pool. Dr 20OLA Equity in Pool Cr 64VQA Equity in Pool 141

142 Automatic Clearance Edit Bank Statement To see which items cleared automatically and which didn t when the bank statement was uploaded is through use of the Edit Bank Statement screen. It is accessed as follows: 1 2 Enter FEBAN in the Command field Click the Enter icon This opens the Selection of Bank Statements by Banks and Account Nos. screen. 3 Enter data in the following fields: Company Code House Bank Currency 4 Click on the Check button at the bottom right corner of the screen to verify input, then execute if no errors are reported

143 Automatic Clearance Edit Bank Statement When the Selection of Bank Statements by Banks and Account Nos is executed, the Edit Bank Statement screen is displayed. The two postings mentioned earlier result in two documents. Posting Area 1 shows the document created for the entries to record the incoming payment in UN s bank account (Doc # ). Dr 64VQA Bank Nominal Cr 64VQA Bank EFT In Clearing Posting Area 2 shows the document created to clear the receivable account of the customer who made the payment (Doc # ). Dr 64VQA Bank EFT In Clearing Cr 20OLA Customer Open Item N.B. FEBAN is also used to manually clear the items that are not cleared automatically. We see this later. 143

144 Incoming Payments Processing Manual Clearing a) Cash and Cheques The Cashier uses the Cash Journal to record cheques and cash receipts. In most instances, especially in Field Missions, the purpose of the receipt will be known at the time the cash/cheque receipt is recorded in the Cash Journal. When a receivable (DR doc type) already exists in the account of the customer making the payment, the Cashier will record the receipt and reference the document number of the receivable in the Assignment Field of the Cash Journal. The system will create an Incoming Payment (DZ doc type) with the following entries: Dr. Cash Cashier Incoming ( X generated by system) Cr. Customer Open Item (GL A/c 15101XXX) AR staff can then manually allocate the customer s account i.e. match the DR doc to the DZ doc using t-code F-32. Exceptionally, the cash/cheque may be received prior to a receivable being set up. In this case, there will be no Customer Open Item to credit. Instead the money should be credited to G/L account Unapplied Cash and later transferred via Journal Voucher (using t-code FV50) to a Customer s Account when a receivable is set up. 144

145 Incoming Payments Processing Manual Clearing b) Electronic Funds Transfer (EFT) For Incoming Payments received through EFT, the manual clearing process is done daily using the t- code FEBAN. As shown earlier, when the Incoming Payment hits the Nominal Account, an EFT-In account is initially credited i.e. Dr 64VQA Bank Nominal (GL A/c 11011X10) Cr 64VQA Bank EFT In Clearing (GL A/c 11011X16) The task of AR staff is to move the funds from the EFT-In account to a Customer s account i.e. Dr 64VQA Bank EFT In Clearing (GL A/c 11011X16) Cr 20OLA Customer Open Item When this second entry is posted, the system will increase UNIFIL s balance in the Treasury Pool, as the receivable was due to the Fund 20OLA. To illustrate the use of FEBAN to apply an Incoming Payment to a Customer s Account, we ll use the following data set. Customer: Government of France Outstanding Amount: US$ 69,000 Being: VAT Receivable AR Document #:

146 Incoming Payments Processing Manual Clearing - FEBAN 1 At the Command Field type FEBAN and press Enter. This opens the Selection of Bank Statements by Banks and Account Nos Screen. 2 Click on the Execute icon at the bottom right corner. This opens the Edit Bank Statement Screen. 3 Double-click the open item you intend to clear. Go to the menu, click Statement Items and select Post (can also be done via Ctrl + S or by right clicking and selecting Post Items). This opens the Post With Clearing Select Open Items screen

147 Incoming Payments Processing Manual Clearing - FEBAN 5 Enter the Customer s Account in the Account Field. 6 Enter D in the Account Type Field. 7 Click the Back icon to go to the Post With Clearing Display Overview Screen

148 Incoming Payments Processing Manual Clearing - FEBAN In the Post With Clearing Display Overview Screen take note of the following: a Doc Type. This is an Incoming Payment (DZ). b Reference. This the number of the uploaded bank statement which carried this Incoming Payment. c Period. The posting date and period refer to the time the bank statement was uploaded. d Line 1. Automatically generated by the system, this is the debit entry to a GL account EFT-In. Hence posting key 40 (GL debit). To create the credit line, 8 Enter posting key 15 (Customer Incoming Payment) in the PstKy Field. 9 Enter the Customer Number again in the Account Field. 10 Click Enter. 10 d 8 9 b d c a 148

149 Incoming Payments Processing Manual Clearing - FEBAN In the Post With Clearing Correct Customer Item Screen: 11 Enter the amount of the credit line. 12 Enter the Business Area. 13 Enter the number of the AR document in the Assignment Field. 14 Add a description of the transaction in the Text Field. 15 Click the More Data Field to input data in the Fund and Grant Fields. 16 In the Menu Bar, click Document and click Simulate. The Post With Clearing Display Overview Screen opens

150 Incoming Payments Processing Manual Clearing - FEBAN Review the entries in the Post With Clearing Display Overview Screen. Ensure that: 17 a The credit line shows the desired Customer A/c. b The sum of debits equal the sum of credits i.e. the balance is zero. To post the document: Click the Post icon. 17 a N.B. Posting an Incoming Payment through FEBAN as described above is not subject to workflow. b 150

151 Incoming Payments Processing Manual Clearing - FEBAN In the Command Field type FEBAN and then click on Execute to return to the Edit Bank Statement Screen. Double click on the Incoming Payment that was just applied to a Customer A/c. It now displays a green status. Review the document number in Posting Area 2 (FB03 or double click the doc#)

152 Incoming Payments Processing Manual Clearing F-28 Unapplied Cash EFT-In being a transitory account, only holds Incoming Payments briefly until they are moved to the accounts of the customers who made the payments. Prior closing books at the end of the month, the EFT-In must be reduced to a zero balance. Thus, even if an Incoming Payment can t be directly applied to a customer s account, FEBAN will still be used to remove it from the EFT-In account. However this time, the credit will go the GL Account AP Unapplied Cash. Once the customer account has been identified, the item will then be moved from Unapplied Cash to the customer account using t- code F

153 Incoming Payments Processing Manual Clearing F-28 Partial Payments At times the amount of an Incoming Payment is less than the amount due. The difference could be attributed to reasons such as exchange rate losses, disputes over the amount owed, inability to clear the outstanding balance in full etc. As long as the UN has not decided to write off part or all of a receivable, any partial settlement of the receivable will be manually applied to the customer s account in such a way that the difference will remain outstanding on the same payment terms. Where the shortfall in the Incoming Payment is due to exchange losses or bank fees, F-28 will be used to apply the Partial Payment to the Customer s Account and a JV raised using t-code FV50 to expense the difference. Scenario The UN supplies Fuel to ICAO Montreal (A/c ). Our records show that ICAO still owes us for fuel supplied and invoiced in May ICAO contends that payment was made in May After reviewing bank statements for May, it is discovered that a payment was indeed received from ICAO but because the amount was less than expected, the money was instead credited to Unapplied Cash. Other details are as follows: Customer Inv# (DR): Amount: $5,000 Date of invoice: 13 May 2013 Inc. Payment# (DZ): Amount: $4, Date of receipt: 17 May

154 Incoming Payments Processing Manual Clearing F At the Command Field type F-28 and press Enter. This opens the Post Incoming Payments: Header Data Screen. 2 Enter data in the following fields: Document Date Reference Doc. Header Text Clearing Text Bank Data Account Bank Data Amount Bank Data Text Open Item Selection A/c 3 Ensure that the Account Type in Open Item Selection is D 4 Click on Enter or Process Open Items

155 Incoming Payments Processing Manual Clearing F-28 Given that the amount owed ($5,000) exceeds the Incoming Payment ($4,476.64) that was initially booked in the Unapplied Cash A/c, a partial payment will be applied to the customer s a/c. 1 1 At the Post Incoming Payments Process Open Items Screen that displays, click Partial Pmt. This opens the Post Incoming Payments Enter Partial Payments Screen. 2 The system selects all open items by default. De-select (double click) each amount except the one you intend to apply the Incoming Payment to. As the items are de-selected this reduces the Payment Amount (narrows the difference between Amount entered and Assigned) 2 155

156 Incoming Payments Processing Manual Clearing F-28 With all other open items de-selected: 3 Delete the Payment Amount $5,000 for Invoice and type the partial amount of $4, This reduces the Not Assigned to zero, indicating that debits equal credits. 5 From the menu bar, click on Document, then Simulate

157 Incoming Payments Processing Manual Clearing F-28 When the Post Incoming Payments Display Overview Screen opens, note that: a The posting key for the debit line is 40 because the account involved is in the GL. b The posting key for the credit line is 15 because the account involved is in the AR Sub-ledger. c The sum of debits equals the sum of credits. 6 Click the post icon to post the transaction. The posting is not subject to workflow. The posted document can be reviewed using t-code FB03 (doc # ). 6 c a b 157

158 Incoming Payments Processing Credit Memo 1 2 In addition to an Incoming Payment, the amount a customer owes may also be reduced through a Credit Memo issued by the UN. 1 In the Command Field enter the t-code FV75 and press Enter. This opens the Park Customer Credit Memo: Company Code 1000 Screen. 2 Enter data in the relevant fields and click Enter. 3 Follow the same procedure for simulating and introducing an invoice into workflow described earlier

159 Incoming Payments Processing Credit Memo 1 When posted, the Credit Memo (DG) can be used to manually clear the Customer Invoice (DR) as follows. 1 In the Command Field enter the t-code FBL5N and press Enter. This opens the Customer Line Item Display Screen. 2 Enter the customer s number in the Customer Account Field. Select Open Items and click Execute. Note the DR and DG docs to clear

160 Incoming Payments Processing Credit Memo 3 In the Command Field enter the t-code F-32 and press Enter. This opens the Clear Customer: Header Data Screen. 4 Enter the customer s number in the Account Field. 5 Select Amount in the Additional Selections section. 6 Click on Process Open Items. This opens the Clear Customer: Selection Criteria Screen

161 Incoming Payments Processing Credit Memo 7 Type the amount of the Credit Memo you intend to allocate to the Customer Invoice in the From and To fields of the Amount (USD) section. 8 Click on Process Open Items. This opens the Clear Customer: Process Open Items Screen. The system displays all documents with the amount (selected by default) specified. 9 De-select (double click)all the amounts you don t intend to allocate in this transaction. Only the debit (DR) and credit (DG) docs should remain selected

162 Incoming Payments Processing Credit Memo Check that the Amount Entered and Assigned both have a zero value, such that Not assigned = zero as well. From the menu bar click Document, then Simulate. This opens the Clear Customer Display Overview Screen

163 Incoming Payments Processing Credit Memo 12 Note the following: a Doc type is DC Document Clearing b Both posting keys relate to the AR Sub-ledger since the clearing is being done there. 07 is Debit Other Clearing and 17 is Credit Other Clearing. c The sum of debits equals the sum of credits. Click on the Save icon to post the transaction. The posting message displays at the bottom of the screen. 13 b 13 c a 163

164 Touch Points Touch points are those instances where one process, sub-process or activity interacts with another process, sub-process or activity. The Incoming Payment Processing interacts with the following processes: Daily Reconciliation of Bank Transactions Incoming Payment Processing Cheque and Cash Daily Reconciliation of Bank Transactions Customer Invoice Processing Incoming Payment Processing Cheque and Cash 164

165 Activity 1 Transaction Name: Display Open Line Items by Customer Transaction Code: FBL5N Link to the uperform simulation: entdetails?noderef=workspace://spacesstore/50bde04fd260-4aee-8ccb-bddfc09b871f 165

166 Learning Checkpoint 1 Which of the following statement is false about the Electronic Funds Transfer (EFT) In Clearing Account? Select all that apply. A. The EFT-In account is a transitory account. B. Incoming Payments are first credited to the EFT-In account before being moved to a customer s account. C. AR staff must always debit the EFT-In account when moving Incoming Payments to customers accounts. D. The EFT-In account must have a zero balance at Month-End Closing 166

167 Learning Checkpoint 1 Which of the following statement is false about the Electronic Funds Transfer (EFT) In Clearing Account? Select all that apply. A. The EFT-In account is a transitory account. B. Incoming Payments are first credited to the EFT-In account before being moved to a customer s account. C. AR staff must always debit the EFT-In account when moving Incoming Payments to customers accounts. D. The EFT-In account must have a zero balance at Month-End Closing Option C is the correct answer. The EFT-In account may be debited automatically at the time bank statements are uploaded if there is a match between an Incoming Payment and an Open Item in a Customer s Account. 167

168 Module 5 Summary The key points covered in this module are listed below: Incoming Payment processing involves the analysis and reconciliation of all incoming payments that have not been automatically applied to an open item at the time bank statements are uploaded. Payments can be cleared manually against the invoice through multiple options Inputs in this process include payments under EFT or receipts of cheque and cash Outputs of this process include a fully or partially cleared invoice and a credit receipt Incoming payments process starts with Incoming payments received by Treasury and transferred over to A/R. Then payments run through an automated clearing process. If payments meet the automatic criteria for clearing, they are cleared automatically. If they do not clear automatically, they can be cleared by a manual process 168

170 Module 4 Objectives After completing this module, you will be able to: Explain the Write-offs process Identify the steps involved in the Write-offs process Create and post the parked document in allowance for bad debt Create and post the parked document on Write-off Block a customer Post general provision (accrual) as a reversal 170

171 Key Terminology Key Term Credit Check Payment Terms Partial Payment Block Payment Block Description A static or dynamic mechanism to block sales orders and delivery documents automatically if the customer has any outstanding invoice for a predefined period. In order to classify customers according to the risk they represent and to trigger the relevant checks, risk categories are defined and assigned to customers. It is the permissible length of time for a customer to pay the AR Invoice. A payment that is posted to an account without any open items being cleared or a portion of an open invoice received. It is a restriction against a customer master data record that prevents the customer from any future activity against the account. There are different types of blocks, such as Posting Block and Payment Block. This block stops payments to the customer at the company code level. 171

172 Key Terminology Key Term Residual Item Dunning Dunning Proposal Dunning Letter Dunning Reminder Dunning Level Description An item that results when a payment is made for less than the actual amount outstanding. The original open item is cleared and the system posts a new open item. This new open item is for the same amount as the original open item minus the amount paid. The process of notifying customers of outstanding debts and systematically applying penalties to ensure payment. A report on aging of the open items indicating the items that will be part of the Dunning process and their levels. A letter that is sent to the customer indicating past due items and containing a message from the UN. It is a letter sent to the customers prior to the due date of an invoice as a reminder that the due date is approaching. It indicates the number of times an invoice has already been included in a Dunning run. 172

173 Write-Off Process - Overview The Write-Off process is aimed at identifying the bad debt which has to be written-off and depicts the process for the write-off approval. It includes requests for blocking customers and changing credit terms on the customer profile. The Write-off process is initiated when one of two scenarios take place: 1. An outstanding payment is not collected despite multiple collection efforts 2. The accounting department has prior knowledge of non-recoverability of debt (without any collection efforts) It is important to separate Write Offs from Allowance for Doubtful Accounts (AFDA). AFDA are estimates of the amounts that won t be recovered and are statistical for budget purposes. They are recorded as accruals at the end of an accounting period and reversed at the beginning of the next period. In Umoja, AFDA are recorded at the General Ledger level while Write-Offs are recorded at the Accounts Receivable sub-ledger level to clear the account receivable open item. This Module describes how to record Write-Off of balances receivable in Umoja after bad debts have been identified and all appropriate approvals for write-off have been received. 173

174 Write Off Open Item Write Off Open Item Block the Customer Change Credit Terms Access the Parked Document Entry page: 1 Enter F-63 in the Command field 2 Click the Enter icon. The Parked Document Entry: Header page displays. 3 In the Header section, enter details in the following fields: Date write off was approved, Current date, DC, Reference of authorizing document 4 Select the checkbox in the Control table 5 Enter the following information in the First in the following Line Item section: Posting Key number Customer Account Number Press the Enter key

175 Write Off Open Item Write Off Open Item Block the Customer Change Credit Terms The Park Document: Change Customer Item screen displays. 7 In the Item 1/Other clearing/17 section, enter information in the following fields: Amount Business Area Assignment (# of original doc) Reference test 175

176 Write Off Open Item Write Off Open Item Block the Customer Change Credit Terms 8 In the Next Line Item section at the bottom of the screen, enter information in the following fields: Posting Key: 40 Account: G/L Write-off Account Number There are a total of six write-off accounts in Umoja: 9 Press the Enter key 176

177 Write Off Open Item Write Off Open Item Block the Customer Change Credit Terms The Park Document: Enter G/L Account Item screen displays. In the Item 2/ Debit entry / 40 section, enter information in the following fields: Amount Business Area Cost Center Text Click the More button

178 Write Off Open Item Write Off Open Item Block the Customer Change Credit Terms The Coding Block screen appears. Enter required details the Fund and Grant fields 12 Click the Enter icon 13 Click the Document Overview icon

179 Write Off Open Item Review Customer Open Items Check for Bad Debt Write Off Open Item Block the Customer Change Credit Terms The Park Document: Overview screen appears. The first line with Posting Key 17 will credit the Customer account and the second line will record the write off Expense. Click the Document tab 15 Click Complete

180 Write Off Open Item Write Off Open Item Block the Customer Change Credit Terms Once the document has been saved as completed, it is sent through workflow for approval. To review the steps followed by the approver to view and approve a document in workflow, please refer to module

181 Block the Customer Write Off Open Item Block the Customer Change Credit Terms When a receivable is written off from a customer's account, it is advisable to put a block on that customer's account. This will ensure that any incoming payments or subsequent transactions cannot be posted to the account. Because of this a block should only be placed after all open items have been cleared. A request for blocking a customer will be prepared by the AR User and forwarded to the Financial Accounting Approver (AR) for review and approval. If s/he endorses the User s proposal for blocking the customer with long outstanding balances, notification will sent to the Business Partner Maintenance team for processing. 181

182 Change Credit Terms Write Off Open Item Block the Customer Change Credit Terms Instead of blocking a customer's account, restrictions should be put on how much they can buy on credit. The following steps are executed to change credit terms: The Financial Accounting Approver (AR) reviews the User s proposal for changing credit terms. The Approver either has the authority to approve the change to credit terms or obtains the authorization from the applicable authority If the proposal is rejected, the Requestor is notified of rejection If the proposal is approved, the approved change requests are forwarded to the Business Partner Master Data Maintenance team for processing 182

183 Learning Checkpoint 2 Which of the following is not an output of the Write-off process? Select the correct option. A. Bad debt is written-off B. Customer is blocked C. Credit terms are changed D. Dunning proposal is run 183

184 Learning Checkpoint 2 Which of the following is not an output of the Write-off process? Select the correct option. A. Bad debt is written-off B. Customer is blocked C. Credit terms are changed D. Dunning proposal is run Option D is the correct answer. The output of Write-off process does not include the activity, dunning proposal is run. 184

185 Module 6 Summary The key points covered in this module are listed below: The Write-off process is triggered when the Write-off Process Requestor identifies a need for bad debt, write-off, blocking the customer or changing credit terms The Financial Accounting User (AR) reviews open items for the customer to determine collection issues The Financial Accounting Approver (AR) reviews the user s proposal for recording allowances for bad debt and for Write-off at the open item level (specific) and decides whether to approve it Approved block requests are forwarded to the Master Data Maintenance Team for processing Approved change requests are forwarded to the Business Partner Master Data Maintenance Team for processing 185

187 Reports Some reports that can be used in Accounts Receivable are: S_ALR_ List of Open Items S_ALR_ List of Customer Open Items S_ALR_ Customer Open Item Analysis(Overdue) S_ALR_ List of Cleared Customer Items S_ALR_ Customer Sales S_ALR_ Customer Payment History S_ALR_ Customer Balances in Local Currency S_ALR_ Open Down Payments S_ALR_ Due Date Analysis for Open Items S_ALR_ Open Item Balance Audit Trail from ZARAGING - Customer Aging Report 187

189 Course Summary In this course we covered: Review of the Umoja solution for Accounts Receivable High level overview of the AR process and the roles involved in that process Key changes to the Cash Management and Treasury process include transition to cash pooling and House Bank creation The steps followed to create and process a customer invoice The steps followed to process an incoming payment The steps followed to record the write-off of bad debt 189

190 Course Assessment Now that you have completed all the modules in this course, you can test your knowledge by completing the Course Assessment. To receive credit for completing this course, you must pass this assessment with a minimum score of 90%. To complete the assessment you must return to the Learning Management System: 1. Log into Inspira 2. Navigate to Main Menu -> Self-Service -> Learning -> My Learning 3. Search for the name of the course under the My Learning Activities section 4. Click the Start link of the course assessment 5. Click the Submit button once you have completed the assessment 190

192 Course Survey Your feedback is important to the continuous improvement of our training program. Please complete the evaluation for this course using the following steps: 1. Log into Inspira 2. Navigate to Main Menu -> Self-Service -> Learning -> My Learning 3. Search for the name of the course under the My Learning Activities section 4. Click the Start link of the course survey 5. Click the Submit button once you have completed the course survey 192

193 Congratulations! You have successfully completed the Umoja Accounts Receivable Process course. 193