TB1100. SAP Business One Accounting. <Course Number and Course Title ABC123. Overiew> SAP Business One 2010 / Q2. Material number:

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1 <Course Number and Course Title ABC123 TB1100 Overiew> SAP Business One Accounting SAP Business One 2010 / Q2 Material number:

2 Copyright Copyright 2010 SAP AG. All rights reserved. Neither this training manual nor any part thereof may be copied or reproduced in any form or by any means, or translated into another language, without the prior consent of SAP AG. The information contained in this document is subject to change and supplement without prior notice. All rights reserved. Trademarks: Microsoft, Windows, NT, PowerPoint, WinWord, Excel, Project, SQL-Server, Multimedia Viewer, Video for Windows, Internet Explorer, NetShow, and HTML Help are registered trademarks of Microsoft Corporation. Lotus ScreenCam is a registered trademark of Lotus Development Corporation. Vivo and VivoActive are registered trademarks of RealNetworks, Inc. ARIS Toolset is a registered Trademark of IDS Prof. Scheer GmbH, Saarbrücken Adobe and Acrobat are registered trademarks of Adobe Systems Inc. TouchSend Index is a registered trademark of TouchSend Corporation. Visio is a registered trademark of Visio Corporation. IBM, OS/2, DB2/6000 and AIX are a registered trademark of IBM Corporation. Indeo is a registered trademark of Intel Corporation. Netscape Navigator, and Netscape Communicator are registered trademarks of Netscape Communications, Inc. OSF/Motif is a registered trademark of Open Software Foundation. ORACLE is a registered trademark of ORACLE Corporation, California, USA. INFORMIX -OnLine for SAP is a registered trademark of Informix Software Incorporated. UNIX and X/Open are registered trademarks of SCO Santa Cruz Operation. ADABAS is a registered trademark of Software AG The following are trademarks or registered trademarks of SAP AG; ABAP/4, InterSAP, RIVA, R/2, R/3, R/3 Retail, SAP (Word), SAPaccess, SAPfile, SAPfind, SAPmail, SAPoffice, SAPscript, SAPtime, SAPtronic, SAP- EDI, SAP EarlyWatch, SAP ArchiveLink, SAP Business Workflow, and ALE/WEB. The SAP logo and all other SAP products, services, logos, or brand names included herein are also trademarks or registered trademarks of SAP AG. Other products, services, logos, or brand names included herein are trademarks or registered trademarks of their respective owners.

3 Target Audience and Course Prerequisites Target Audience: Consultants and support employees responsible for the implementation and ongoing support of business processes with SAP Business One at customer sites Essential Prerequisites : Familiarity with SAP Business One navigation and functionality. Basic knowledge in financial accounting. Consulting or sales experience with at least one Recommended Prerequisites : Attend the course TB1000 SAP Business One - Logistics

4 Course Goals and Objectives Outline the main financial accounting processes in SAP Business One. Perform the main accounting and banking tasks in each financial process. Manage your accounting procedures with SAP Business One Utilize controlling tools and company reports. Point out the essential settings for accounting functions.

5 Course Content Unit 1 - SAP Business One Standard Financial Processes: Standard financial processes The financial consequences of the sales and purchasing processes on the general ledger Unit 2 - Banking Process: Outgoing and incoming payments Payment means and deposits Clearing an account Bank statement handling and external reconciliations Unit 3 - Financial Process: Manage the Chart of Accounts Post a Journal Entry: Enter manual journal entry From a journal voucher Using a posting template As a recurring posting

6 Course Content (cont.) Unit 4 - Posting Periods Process: Posting periods - process overview Defining periods highlights Post transactions to periods Internal reconciliation process - monitor and perform internal reconciliation Period-End closing process. Unit 5 - Controlling Reports: We will discuss the reports in their financial accounting context: Financial reports Monetary status control Company analysis and planning Unit 6 - Financial Accounting Initialization: Tax system. Currencies. Perpetual inventory/ non-perpetual inventory system.

7 Unit 1: SAP Business One Standard Financial Processes Contents: Standard financial processes Sales and purchasing processes and their consequences on book keeping 1-1

8 SAP Business One Standard Financial Processes: Unit Objectives After completing this unit, you will be able to: Discuss some general accounting conventions Describe the steps in the standard financial processes in SAP Business One Give examples of the automatic journal entries created during the sales, purchasing and inventory processes Discuss the financial consequences of the processes on the general ledger 1-2

9 SAP Business One Standard Financial Processes: Course Overview Diagram SAP Business One Standard Financial Processes Topic 1: Standard Financial Processes Topic 2: Sales and Purchasing Processes 1-3

10 SAP Business One Standard Financial Processes: Business Example You are implementing SAP Business One at a new customer, OEC Computers: Your main contact in the customer site is Maria the accountant. Maria asks about the way SAP Business One handles the financial accounting processes. She wants to make sure she understands the big picture so she can report to the company owners the business results periodically. 1-4

11 Standard Financial Processes SAP Business One Standard Financial Processes Topic 1: Standard Financial Processes Topic 2: Sales and Purchasing Processes System Configuration Master data Purchasing Inbound logistics Warehouse management Production Outbound logistics Marketing & Sales Service Financial controlling 1-5

12 Standard Financial Processes: Topic Purpose After completing this topic, you will be able to: Discuss some general accounting conventions 1-6

13 Finance Basics Every business transaction is recorded in the company's books. This allows you: To manage your company effectively with the option of producing financial reports To report the business transactions to the authorities. Every business transaction results with a value exchange: A certain account increases value and another decreases value, resulting in the recording of balancing debit side and credit side postings. 1-7

14 Value Exchange: Question A/R Invoice In a current sales process what happens to the accounts involved in the A/R Invoice? (Let us assume that this is a non-perpetual inventory system) 1-8

15 Value Exchange: Answer A/R Invoice Debit Credit Customer account 105 Tax account 5 Revenue account

16 Some General Accounting Conventions (1) Each journal entry represents one posted business transaction. Each line in the journal entry represents one posting to an account (which could represent a customer, vendor or a regular general ledger account). Each line in the journal entry represents a posting of either a debit or a credit amount (but never both together). Deposit no Debit Credit Cash clearing account 105 Bank account 105 In this example, when we deposit cash amounts to the company bank account, the cash clearing account decreases value and is credited and the bank account increases value and is debited. This corresponds with the Double Entry bookkeeping system, wherein every transaction or event impacts at least two different accounts. In modern accounting this is done using debits and credits. 1-10

17 Some General Accounting Conventions (2) Each journal entry must include debit and credit amounts; therefore, a journal entry must include at least two lines. There is no limit on lines in a single journal entry. A journal entry must be balanced. That is, the total credit and debit amounts in a journal entry must be equal Deposit no Debit Credit Check clearing account Check clearing account Check clearing account Check clearing account Bank account 765 Total In this example, the check clearing account is credited 4 times because the deposit includes 4 checks (the business received from different customers). The bank account is debited in the total value of those 4 checks. The debit and credit amounts are equal and the journal entry is balanced. 1-11

18 The Account Balance (1) The account balance represents the difference between the total debit transactions and the total credit transactions recorded for that account. The transaction summary or the balance of a certain G/L account or business partner is the initial information the accounting system can provide about the business. Customer XXXX7 Debit Credit Origin 105 Debit A/R Invoice 600 Debit A/R Invoice 400 Debit A/R Invoice 705 Credit Incoming Payment 200 Debit A/R Invoice 100 Debit A/R Invoice Account Balance 700 Debit 1-12

19 The Account Balance (2) Previously, we mentioned that in each journal entry a certain account increases value and another decreases value, resulting in the recording of balancing debit side and credit side postings. The effect on the account balance: Assets, Expenses, and Drawings accounts are generally in debit. Liability, Revenue, and Capital (Equity) accounts are generally in credit. 1-13

20 The Account Balance and the Account Type Profit and Loss Accounts Balance Sheet Accounts For assets: Debit transactions always increase the asset value. Credit transactions always decrease the asset value For liabilities: Credit transactions always increase the liability. Debit transactions always decrease the liability. 1-14

21 Value Exchange and the Account Balance The two accounts increase their values: (Let us assume that the customer is tax exempt and that this is a non-perpetual inventory system) A/R Invoice Debit Credit Customer account 440 Revenue account

22 Sales and Purchasing Processes SAP Business One Standard Financial Processes Topic 1: Standard Financial Processes Topic 2: Sales and Purchasing Processes System Configuration Master data Purchasing Inbound logistics Warehouse management Production Outbound logistics Marketing & Sales Service Financial controlling In this topic we review the sales and purchasing processes discussed in TB1000 and focus on their consequences on bookkeeping. 1-16

23 Sales and Purchasing Processes: Topic Purpose After completing this topic, you will be able to: Describe the steps in the standard financial processes in SAP Business One. Describe the automatic journal entries created during the sales and purchasing processes. Discuss the financial consequences of the processes on the general ledger. 1-17

24 Automatic Journal Entries: Reflection Question In a standard sales process which documents affect the accounting system? Standard Sales Quotation Sales Order Delivery A/R Invoice Incoming Payment Deposit 1-18

25 Automatic Journal Entries: Answer In a standard sales process which documents affect the accounting system? Standard Sales Quotation Sales Order Delivery A/R Invoice Incoming Payment Deposit When managing perpetual Inventory 1-19

26 Examples of Automatic Journal Entries: A/R Invoice In the sales process A/R Invoice, which account is debited and which is credited? (Let us assume that this is a non-perpetual inventory system) Sales Quotation Sales Order Delivery A/R Invoice Debit Credit Customer account 105 Tax account 5 Revenue account 100 In SAP Business One, a journal entry is automatically posted from many documents during the sales, purchasing and inventory processes, such as A/R and A/P invoices. 1-20

27 Examples of Automatic Journal Entries Incoming Payment In the sales process Incoming Payment, which account is debited and which is credited? Sales Quotation Sales Order Delivery A/R Invoice Incoming Payment Possible Payment Means Check Credit card Cash Bank transfer *BOE Cash clearing account Debit 105 Credit Customer 105 *BOE - Bill of Exchange. This option is relevant for Italy, Portugal, Spain and France and activated by default. 1-21

28 Examples of Automatic Journal Entries A/P Invoice In the purchasing process A/P Invoice, which account is debited and which is credited? (Let us assume that this is a non-perpetual inventory system) ) Purchase Order Good Receipt PO A/P Invoice Outgoing Payment Debit Credit Vendor 105 Tax account 5 Expense account

29 Financial Settings: Reflection Question How does the system know which accounts to use automatically? G/L Account Determination Control Accounts 1-23

30 G/L Account Determination G/L Account Determination defines default G/L accounts related to a specific business process: Sales Purchasing General (for example, Period End Closing) Inventory three available options to choose the default G/L method for an item: At the warehouse level At the item group level At the item level You need to make decisions about G/L Account Determination together with the client accountant. When you implement SAP Business One you define default G/L accounts to be used when transactions are created. Administration Setup Financials G/L Account Determination. G/L Account Determination: the window is divided into four tabs. Each tab contains the definitions for G/L accounts related to a specific business process: Sales, Purchasing, General, and Inventory. When you choose a pre-defined Chart of Accounts template, most of the defaults are already defined. You can change them if required. When choosing a G/L account in the G/L Account Determination window it appears in green in the Chart of Accounts. Whenever you add a document that posts a journal entry, A/R Invoice for example, the system determines the G/L accounts to be used from the default accounts. 1-24

31 G/L Account Determination - Example The Revenue default G/L account is defined in the G/L Account Determination window, under the Sales tab. Revenue account A/R Invoice Debit Credit Customer account 105 Tax account 5 Revenue account

32 Control Accounts Accounts Receivable = Control Account A/R Invoice Control Account Debit Credit Accounts Receivable Customer 105 Tax account Tax account 5 Revenue account Revenue account 100 In the G/L Account Determination window you also define the Control Accounts: Accounts Receivable for the Sales process, Accounts Payable for the Purchasing process. A control account links the business partner sub-ledger accounts to the general ledger. You need to define a G/L account as a Control Account in the Chart of Accounts. Whenever you post a document to a business partner, the system automatically register the journal entry to: The Business Partner Master Data account balance. The control account balance. (You cannot post journal entries directly to a control account). In an A/R Invoice, for example, when the customer is debited the Accounts Receivable account is also debited. This journal entry appears now in both accounts balances (the customer and the control account). Note, that the Business Partner Master Data balances do not appear in the Chart of Accounts. The receivable and payable control accounts accumulate the customers and vendors transactions in their balances. Hence, the Chart of Accounts presents the complete financial status of the company. As well as the Financial Reports (P&L, Balance Sheet). Some transactions, such as transactions with bills of exchange, must be posted to special control accounts. Therefore, you can assign these special accounts to predefined transaction types, such as Open Debts, Assets Account, Down Payments Receivable/Payable or other (country-dependent). In the G/L Account Determination window you can select if you want to assign different control accounts to different customers or vendors. Assigning control accounts to each customer or vendor is done in the Business Partner Master Data window. Choose Business Partners Business Partner Master Data Accounting tab General tab Accounts Receivable/Accounts Payable field. If this option is not selected, the control accounts defined in the G/L Account Determination window are used for all customers and vendors. You also have the ability to change the default control account in marketing documents. Choose the Accounting tab Control Account field. If you are working with several control accounts, the system can display the business partner balances separately for every control account. Business Partners Business Partners master Data open the linking arrow in the Account Balance field and choose the View by Control Account button. 1-26

33 Exercise - Control Accounts Go to Reports Financials Financial Balance Sheet. Run the report. Locate the Accounts Payable in level 5. Go to level 1 and check that the report is balanced. How is the report balanced? 1-27

34 The Automatic Journal Entry Value How does the system know the value to be credited and debited in an automatic journal entry created by an A/R Invoice? (Let us assume that the customer is tax exempt). A/R Invoice Debit Credit Customer account 440 Revenue account

35 Value Calculation Invoice Sales Process Purchasing Price List = 100 Reseller Price List = 110 Retail Price List = 120 Star Trek Computers = Reseller Price List Reseller Price List = 110 Unit Price * Quantity = Total Value 110 * 4 = 440 Sales Quotation Sales Order Delivery A/R Invoice Let us refresh our memory with some of the topics from the Logistics course TB1000. Here is a common scenario of how prices are set in SAP Business One during the sales process: Our customer Star Trek Computers asks for an offer on 4 portable media players. Jean creates a sales quotation. She chooses the customer and then the item. The price per unit appears in the quotation. How? The Item master data includes 3 optional prices for this item. Each one of them is represented in a different Price List. Star Trek Computers is a reseller customer and so his default price list as defined in his master data record is the Reseller Price List. Therefore, in the Sales Quotation, the unit price for a portable media player is 110, the Resellers Price List. Jean enters quantity of 4.The total value of the quotation is 440 (assuming there are no additional items in the quotation and that no discount or tax amounts are added). Star Trek Computers faxes us a Sales Order based on the Sales Quotation. In SAP Business One, jean copies the Sales Quotation to a Sales Order. 2 days later Joe, the warehouse manager, dispatch the company truck with the weekly devilries, including 4 portable media players for Star Trek Computers. Later on the day, the accountant copy the Delivery to an A/R Invoice. Since no change was done to the price during the Copy To process, the Invoice total value is 440 and these are the Credit and Debit amounts in the automatic journal entry created by the A/R Invoice. 1-29

36 Value Calculation A/P Invoice Purchasing Process Purchasing Price List = 100 Reseller Price List = 110 Retail Price List = 120 Coconut Devices = Purchasing Price List Purchasing Price List = 100 Unit Price * Quantity = Total Value 100* 10 = 1000 Purchase Order Good Receipt PO A/P Invoice Debit Credit Vendor 1000 Clearing acc In the Purchasing process a common scenario of how prices are set would be: Joe, the warehouse manager, issues a Purchase order of 10 portable media players. He chooses the vendor Coconut Devices and then the item - portable media player. The price per unit appears in the Purchase Order. How? Since Coconut Devices is a vendor, his default price list as defined in his master data record is the Purchasing Price List. Therefore, in the Purchase Order, the unit price for portable media player is 100, the Purchasing Price List from the portable media player item master data. Joe enters a quantity of 10. The total value of the Purchase Order is 1000 (assuming there are no additional items in the Purchase Order and that no discount or tax amounts are added). Joe s the Purchase Order to the vendor. Few days later Joe receives a delivery including 10 portable media players from Coconut Devices. In SAP Business One, he copies the Purchase Order to a Goods Receipt PO. A week later, the Invoice from Coconut Devices arrives via mail and the accountant copy the Goods Receipt PO to an A/P Invoice. Since no change was done to the price during the Copy To process, the A/P Invoice total value in 1000 and these are the Credit and Debit amounts in the automatic journal entry created by the A/P Invoice. 1-30

37 Value Calculation Inventory Process Purchase Order Good Receipt PO A/P Invoice Debit Credit 100 * 10 = 1000 Unit Price * Quantity = Total Value Clearing acc Inventory acc Calculated Value = 90 Item Cost Purchasing Price List = 100 Reseller Price List = 110 Retail Price List = 120 Sales Quotation Sales Order Delivery A/R Invoice Debit Credit 90 * 4 = 360 Item Cost * Quantity = Total Value Cost of Goods Sold acc. 360 Inventory acc. 360 Let us go one step back, to the Goods Receipt PO that Joe entered based on the Delivery he got from the vendor. Assuming the company runs perpetual inventory, an item cost value is being calculated automatically in each stock transaction. More details on Perpetual Inventory will be provided in the last Unit of the course. When Joe entered the Goods Receipt PO to SAP Business One, the Purchasing Price List value (100 per unit) affected the unit price in the Goods Receipt PO and also the item cost value. The item cost value is calculated automatically, behind the scene, according to the valuation method chosen for the item (Moving Average, FIFO, Standard). The calculated item cost value after the Goods Receipt PO was 90. Joe entered a quantity of 10 portable media players. Therefore, the total value of the journal entry created by the Goods Receipt PO was 1000 and these are the Credit and Debit amounts registered to the inventory default accounts. The value of the journal entry linked to the Delivery sent to the customer is 360. That is, quantity of 4 items multiplied by the Item cost value at that moment (90). Remember that the total value of the Invoice based on that Delivery was 440. It was calculated according to the Reseller Price List (110) that is defined as the default price list in the customer master data record. 1-31

38 The Financial Process in SAP Business One Financial Settings Sales and Purchasing process Chart of Accounts G/L Account Determination Good Receipt PO A/P Invoice Outgoing Payment A/R Invoice Payment Deposit Automatic Journal Entries Manual Journal Entries Reconciliations Period End Closing General Ledger, Chart of Accounts and Reports Let us review the steps that occur regularly in the financial process in SAP Business One (most steps, except the financial settings, are recurring and could happen in a different order. This is an example of a common scenario): Financial Settings - when you implement SAP Business One you define: Chart of Accounts and default G/L accounts to be used when transactions are created in the different business process: Sales, Purchasing, Inventory and more. You need to make these decisions together with the client accountant. Sales and Purchasing processes - the financial consequences of the steps in the sales and purchasing processes are Automatic journal entries and system reconciliations. Automatic Journal Entries - are posted from many documents, such as A/R and A/P invoices. Manual Journal Entries for business transactions that are not represented in forms or documents. The accountant enter transactions like loan, rent, or payroll using Manual Journal Entry. The Journal Entry file contains all the accounting transactions: automatic and manual. Reconciliations Internal system reconciliations are created automatically: In a Business Partners Master Data - Invoice/ Payments, Invoice/ Credit Memo; In a G/L account - Payment/ Deposit. Internal user reconciliation for example, when an advanced payment needs to be reconcile with the Invoice. Period End Closing a process that transfer the balances of the Profit and Loss accounts to a Balance Sheet account the retained earnings account when a fiscal year or posting period ends. In some localizations (Italy, Spain, France, and Portugal) you can also transfer the balance sheet account balances from one fiscal year or period to another. There is a list of tasks required while preparing for Period-End Closing. General Ledger, Chart of Accounts and Reports all the previous steps affect the Journal Entry file, the account balances (refer to the next slides) and the financial reports. like in the examples we reviewed: When we discussed the control accounts that link the business partner accounts to the general ledger. The Business Partner Master Data balances do not appear in the Chart of Accounts. The receivable and payable control accounts accumulate the customers and vendors transactions in their balances. Hence, the Chart of Accounts presents the complete financial status of the company. As well as the Financial Reports (P&L, Balance Sheet). Another example, is the Period End Closing that transfer the balances of the Profit and Loss accounts to a Balance Sheet account and hence affect the Profit and Loss and the Balance Sheet results. 1-32

39 Unit 2: Banking Process Contents: Outgoing and incoming payments. Payment means (cash, check, credit cards, bank transfer, BOE, payment wizard). Deposits. Clearing an account - by payments and deposits. Bank statement handling and external reconciliations. BOE - Bill of Exchange. This option is relevant for Italy, Portugal, Spain and France and activated by default. 2-1

40 Banking Process: Unit Objectives After completing this unit, you will be able to: List the basic steps in the banking process in a typical small business Explain the consequences of each step on the involved G/L accounts Perform the banking process steps in SAP Business One Choose the appropriate option of bank statement handling according to the customer needs and localization. Perform the steps of bank statement handling and external reconciliations in SAP Business One. 2-2

41 Banking Process: Course Overview Diagram Banking Process Topic 1: Handling Payments Topic 2: Managing External Reconciliations in the Bank Account 2-3

42 Banking Process: Business Example You are implementing SAP Business One at a new customer, OEC Computers. Your main contact in the customer site is Maria the accountant. You ask Maria about the way they handle payments and bank statement. You then make a quick needs analysis and explain to Maria how SAP Business One can help her in handling and tracking the banking process in everyday work. 2-4

43 Handling Payments Banking Process Topic 1: Handling Payments Topic 2: Managing External Reconciliations in the Bank Account 2-5

44 Handling Payments: Topic Purpose After completing this topic, you will be able to: List the steps of the payment process and perform them in SAP Business One including: Incoming Payments, Outgoing Payments, Deposits and the Payment Wizard Explain the consequences of each step on the involved G/L accounts. Adjust the appropriate payment scenario to the customer needs and localization. You need to make decisions together with the client accountant. 2-6

45 Handling Incoming Payments: Business Example (1) The customers pay their debts, that is open A/R Invoices, according to agreed payment terms: Cash Basic, Installments, Net 30, etc. Maria, the accountant at OEC Computers, deals with Incoming Payments every afternoon: When registering an Incoming Payment you first choose the customer and then you choose the A/R Invoices the customer pays. Lastly, you record the payment means. During the day OEC Computers employees created Incoming Payments for customers who shopped in the store point of sale or called the customer service center. So Maria needs to register the remaining Incoming payments and monitor the ones that were registered during the day. Note! In this example we use the manual payments process. You have the Payment System and the Bank Statements Processing options that enable incoming and outgoing payments creation automatically and semi-automatically. From the manual reconciliation screen, you can also deposit cash, check and credit card payments and post journal entries, or create payments. For more details on these options refer to next slides. 2-7

46 Handling Incoming Payments: Business Example (2) Maria enters Incoming Payments for checks received by mail. She checks the credit card accounts (Visa and Master Card) to see the amount of credit card Incoming Payments issued in the store point of sale and in the customer service center during the day. She checks the Cash on Hand account to see the amount of cash Incoming Payments issued in the store point of sale. And she connects the company bank account on-line: To see the amount of bank transfer Incoming Payments received from customers. To make sure that Visa and Master Card transferred the credit card payments according to the agreement with OEC Computers. 2-8

47 Handling Incoming Payments: Business Example (3) At the end of the day: Maria enters a Credit Card Deposit in SAP Business One to record the payments Visa and Master Card transferred to the company bank account. Then, she goes to the ATM located just across the street and deposits: The money accumulated in the cash register. The checks received today. She issues Check Deposit and Cash Deposit in SAP Business One based on the ATM reference. Now, Maria can go home. 2-9

48 Reflection Question: A customer pays with check. You deposit the check 2 days later. When is the customer account being credited in SAP Business One? When the incoming payment is entered. When the check is deposited in the bank. A/R Invoice Incoming Payment Deposit 2-10

49 Reflection Question: Answer A customer pays with check. You deposit the check 2 days later. When is the customer account being credited in SAP Business One? When the incoming payment is entered. When the check is deposited in the bank. A/R Invoice Incoming Payment Deposit Debit Credit Debit Credit Debit Credit Customer 105 Income account 105 Check clearing account 105 Customer 105 Check clearing account Bank account The customer is not involved in the Deposit Journal Entry. 2-11

50 The Payment Process in SAP Business One Sales Incoming Payment: Payment Means Check Credit card A/R Invoice Incoming Payment Clearing Account Deposit Bank Account Cash Debit Credit Debit Credit Clearing Account: Check/ Credit card/ Cash 105 Clearing Account : Check/ Credit card/ Cash 105 Customer 105 Bank Account 105 Incoming Payment: Payment Means Bank transfer A/R Invoice Incoming Payment Bank Account Debit Credit Bank Account 105 Customer 105 When you issue an Incoming Payment the open invoice on the customer account is closed. You can also issue an Incoming Payment that is not based on an invoice. for example, Payment on Account. Cash, check, and credit card payment means are posted to a clearing account. Note that the term Clearing is used in the US localization. In other localizations it could be: Temporary Account or Suspense Account. The instructor should use the term used in their localization. When a customer pays using cash, check or credit card, you enter an Incoming Payment that generates the following automatic journal entry: (The customer usually pays using one payment mean. It is, however, possible to pay using a combination of payment means in a single payment). Debit on a clearing account - cash on hand/ credit card/ checks received. Credit on customer account. - Cash: the system retrieves the cash on hand account from the Cash on Hand field on the Sales tab under Administration Setup Financials G/L Account Determination. - Credit Cards: the system retrieves the credit card account from the G/L Account field in the credit card definition under Administration Setup Banking Credit Cards. - External tools like point of sale system and authorization of credit card transactions can be integrated into the standard process. - Check: the system retrieves the checks received account from the Checks Received field on the Sales tab under Administration Setup Financials G/L Account Determination. - You can change the default clearing account while issuing the Incoming Payment. A Deposit document must be processed in order to transfer the funds from the clearing account to the house bank account and clear the clearing account. The Deposit function in SAP Business One. Banking Deposits Deposit. Bank Transfer: this payment mean does not involve a clearing account. The customer transfer the payment directly to your house bank. Debit on the house bank account, Credit on the customer account. 2-12

51 Structure of a Payment Document Incoming / Outgoing Payments Payment Document Header Open Invoices, Credit Memos, and Journal Entries Totals, Remarks Add Cancel Deselect All Select All Add in Sequence The screens for incoming and outgoing payments are almost identical. The screen is divided into the following parts: The document header area The area for selecting open invoices, credit memos and journal entries, and assigning the payment amounts The area for entering remarks and displaying totals To post an incoming payment, choose Banking Incoming Payments Incoming Payments. To post an outgoing payment, choose Banking Outgoing Payments Outgoing Payments. 2-13

52 The Payment Document Header Incoming / Outgoing Payments Code Name Pay to Contact Person Project Vendor master record No. (from Series or Manual) Posting Date Due Date Document Date Reference Customer master record Transaction No. Add Cancel Deselect All Select All Add in Sequence In the document header, you choose the customer or vendor code for the payment. The system then copies the Name and the standard Contact Person from the master record. The default value for incoming payments is Customer and for outgoing payments Vendor. You can create both incoming and outgoing payments for Customer, Vendor, or Account. For incoming payments, the system copies the Bill to address from the business partner master record into the address field in the document header: For outgoing payments: the system copies the default Pay to address. You can manually choose a different Pay to address or the bank of the vendor. Then you can check Display Invoices With Matching Billing Address to filter the open invoices displayed in the payment screen. You can either enter the document number manually or have the system assign it automatically out of a document series. The system proposes the current date as the Posting Date, Due Date and Document Date. You can enter an external document number in the Reference field. You can assign the payment to a Project or to a Distribution Rule for cost accounting. When you post the document, the system automatically assigns it a Transaction Number (number of the journal entry) and displays it in the relevant field. 2-14

53 How To Determine the Payment Amount Incoming / Outgoing Payments Payment Document Header Display Invoices with Matching Billing Address Sel. Doc. Installm. * Total Balance Due Discount Doc. Type Total Payment of 2 * IN of 2 1 of % IN CN of 1 * RC of JE 25 Payment on Account Total Amount Due Open Balance 25 Add Cancel Add in Sequence The system displays the open invoices and credit memos with the installment number. If you select the BP Reference Number indicator in the Form Settings, the system displays the customer/ vendor reference numbers instead of the invoice number. This option is helpful when you enter outgoing payment and base it on the invoices number you received from the vendor. Display Invoices with Matching Billing Address - Only available when an outgoing payment is created for a vendor. Displays in the table only invoices with pay to address/bank details identical to the address/bank selected in the Pay To field. The document type field tells you the origin of the line (IN for A/R invoices, CN for A/R Credit Memos, PU for A/P invoices, PC for A/P Credit Memos). An account may contain postings that are not invoices or credit memos (for example, journal entries or payment on account). The system only displays these transactions if you select the Display All Transactions indicator in the Form Settings. The system displays these transactions as blue lines below the invoices and credit memos. An asterisk (*) after the invoice date indicates that the invoice is due. The system displays the invoice amount and balance due (invoice amount less any partial payments or credit memos) for each invoice. If cash discount applies (according to the business partner payment terms), the system deducts the cash discount from the due balance and proposes the final amount for payment. To enter payments that cannot be assigned to an invoice select the Payment on Account indicator. The system then lets you enter the payment amount manually. For example, when you get a payment in advance. To select an open invoice for payment, select the checkbox for the line. You can also enter a smaller amount as partial payment by changing the Total Payment amount column. The system displays the full payment amount (sum of all selected lines in the table plus the manual entered amount) in the Total Amount Due field. 2-15

54 How To Specify the Payment Means 1.Determine the Payment Amount 2.Split the Payment Amount According to Payment Means Possible Payment Means: Check Bank Transfer Credit Card Cash After you determine the payment amount, you must specify the payment means for the payment. You can select one of the following payment means: Check, Bank Transfer, Credit Card, and Cash. You can define a default account for incoming checks and cash payment means. Choose Administration Setup Financials G/L Account Determination Sales tab General tab Checks Received and Cash on Hand fields. You can define a default account for outgoing bank transfer payment means. Choose Administration Setup Financials G/L Account Determination Purchasing tab General tab Bank Transfer field. You can copy the total amount to an amount field by choosing CTRL + B or right-click the mouse and choose Copy Balance Due. In most cases, the payer pays the amount in full using one means of payment. However, it is possible to split the amount among several means of payment. The system takes the details on the means of payment for incoming payments from the customer master records. You can define a maximum amount for over and underpayments. This is relevant when small differences exist between the payment and the balance due. The process will be transparent to the user. Choose Administration Setup Financials G/L Account Determination. Choose the Sales tab to define the G/L account to be used in case of over or under payment. Do the same on the Purchase tab. Choose Administration Setup Financials Currencies, the following four columns define the max. amount to be posted as over or under payment: Incoming Amt Diff. Allowed/ Outgoing Amt Diff. Allowed - for a specific currency, specify the maximum amount allowed for incoming/ outgoing payment differences. The field is enabled only if the amount in the Incoming/ Outgoing % Diff. Allowed field is zero, or if the field is blank. Incoming % Diff. Allowed/ Outgoing % Diff. Allowed - for a specific currency, specify the maximum percentage allowed for incoming/ outgoing payment differences. The field is enabled only if the amount in the Incoming/ outgoing Amt Diff. Allowed field is zero, or if the field is blank. The base amount for the percentage calculation is the total amount paid, which is the sum of the amounts entered in the Payment Means window. When you post a payment, the system reconciles the payment with the selected invoices, and closes the transactions. If the payment was posted as Payment on Account, the invoices and the payment stay open. If a partial payment was made, the system adjusts the Balance Due appropriately. 2-16

55 Deposits of Cash and Checks Customer Cash on Hand Bank OI Open Invoice Incoming Payment Payment Means Cash Cash Deposit Customer Checks Rec. Bank OI Open Invoice Incoming Payment Payment Means Check Deposit of Checks If you take cash from your cash register or checks from your check drawer and bring them to your bank, you can use the Deposit transaction to post this transfer. Choose Banking Deposits Deposit and select the Cash tab to post a cash deposit. Enter the cash on hand account that represents your cash register into the G/L account field. The system displays the balance in the Balance field. Enter the amount that you want to deposit into the Amount field. Enter the G/L account number that represents your bank account into the Bank Account field. If you try to deposit an amount greater then the account balance, the system will block you. Choose Banking Deposits Deposit and select the Checks tab to post a check deposit. The system lists all checks which are not deposited yet in the table. Highlight the checks which you want to deposit. Enter the G/L account number that represents your bank account into the Bank Account field. If you have selected the Reconcile Amounts After Deposit indicator, the system reconciles the debit and the credit line items on the cash on hand account or the checks received account with each other. The debit line item on the bank account is always managed as an open item. This distinguishes it from the line items that have already been reconciled with the bank statement belonging to this bank account. The reconciliation finally closes the debit line item. 2-17

56 Handling Outgoing Payments: Business Example OEC Computers pays open vendor A/P Invoices, according to agreed payment terms: Cash Basic, Installments, Net 30, etc. Maria, the accountant at OEC Computers, deals with outgoing payments every morning: She runs the Vendor Liabilities Aging report and enters today's date in the Due Date To field to display the open A/P Invoices to be paid today. She then enters Outgoing Payments to those vendors. OEC Computers pays using Bank Transfer or Checks according to agreement they have with each vendor. Maria issues Outgoing Payments with Checks as Payment Means. She then prints the checks that are created automatically and sends them via mail. She connects to the bank account and transmits Bank Transfers to the vendors online. She then issues Outgoing Payments in SAP Business One with Bank Transfer as Payment Means to document those online Bank Transfers. Note! In this example we use the manual payments process. You have the Payment System and the Bank Statements Processing options that enable incoming and outgoing payments creation automatically and semi-automatically. From the manual reconciliation screen, you can also post journal entries, or create payments. For more details on these options refer to next slides. 2-18

57 The Payment Process in SAP Business One Purchasing Outgoing Payment: Payment Means Check Credit Card A/P Invoice Bank Account/ Cash account Outgoing Payment Cash Bank Transfer Debit Credit Bank Account 202 Vendor 202 Note that the system does not involve a clearing accounts for manual outgoing payments for credit card, checks and bank transfers. Instead, the credit posting is done directly on the bank account. An interim account can always be manually inserted in the G/L account field in the Payment Means. Then, when the payment is reduced from the bank, an entry should be entered to debit the interim account and credit the bank account. The payment wizard can be used to automatically generate payments against the clearing account. If you want to use clearing accounts automatically, you can use the Bank Statement Processing functionality (refer to the next slides) which can be set up to automatically post the transfer between the clearing and bank accounts. The same is true for the Cash and Bank add-on which is relevant for some localizations. Note that Cash and Bank is not available if the Bank Statement Processing functionality has been switched on. Postings for Outgoing Payments: Cash: Debit on vendor account, credit on cash on hand account or the bank account number. Because most companies have multiple cash registers with one assigned cash on hand account each, you must manually enter the correct cash on hand account number. Credit Card: Debit on vendor account, credit on bank account. You must manually enter the bank account number. Check: Debit on vendor account, credit on bank account. You must manually enter the bank account number. Bank Transfer: Debit on vendor account, credit on bank account. The system retrieves the bank account from the Bank Transfer field on the Purchase tab under Administration Setup Financials G/L Account Determination. 2-19

58 Exercise Incoming Payments and Deposits 2-20

59 The Payment Process in SAP Business One Bank Account Reconciliation Bank Transfer Deposit Deposit Deposit Bank Statement Outgoing Payment Outgoing Payment House Bank Account Outgoing Payment 3 options for external reconciliation: You can create payment documents while you reconcile the bank statement with the bank G/L account in SAP Business One. Incoming Payments, Outgoing Payments and Deposits post journal entries to the house bank account. You need to reconcile those transactions with the Bank Statement and adjust where needed. The Bank Statement serves as a legally binding notification instrument from the bank to its customers. In SAP Business One you have three options for external reconciliation (For more details on each option refer to next slides): Manual Reconciliation - from this screen you can create adjustments to close any discrepanices and bring the difference down to 0. For example, you can deposit cash, check and credit card payments that appear on the printed bank statement. You can also post journal entries, or create payments. Reconciliation. Bank Statement Processing - With this option, you manually enter a bank statement and reconcile the G/L account and at the same time post bank transfer payments. 2-21

60 The Payment Process in SAP Business One Business Partner A/R Invoice Incoming Payment Debit Credit Debit Credit Customer 105 Income account 105 Internal Reconciliation Check clearing account 105 Customer 105 A/P Invoice Outgoing Payment Debit Credit Debit Credit Vendor 202 Expense / Clearing account 202 Internal Reconciliation Bank Account 202 Vendor 202 When you post a payment, the system reconciles the payment with the selected invoices, and closes the transactions. If the payment was posted as Payment on Account, the invoices and the payment stay open. If a partial payment was made, the system adjusts the Balance Due appropriately. More details on internal reconciliations in business partners (system and user) will be provided in Unit 4 Financial Periods Process. 2-22

61 The Payment Process in SAP Business One Payment Wizard Payment Wizard Incoming Payments: Bank Transfer Bank Account Outgoing Payments: Bank Transfer Checks The Payment Wizard enables you to create outgoing and incoming payments in batches for bank transfers, checks and bills of exchange. The payments are created according to your selection criteria and payment methods. Outgoing: check or bank transfer, incoming: only bank transfer The Payment Wizard runs cover A/P and A/R documents and transactions that are not fully paid, credited, or reconciled and un-reconciled/allocated payments on account. If the created payments are bank transfer payments or direct debit payments, the Payment Wizard creates the payment files in the correct country-specific. The Payment Engine or other 3 rd party add-on is required to create the correct files for the bank. 2-23

62 The Payment Wizard (1) Selection Criteria Payment Run Sel. General Parameters Business Partners Selection Criteria Document Parameters Payment Method Selection Criteria Load Saved Payment Runs Save Recommendations Execute The Payment Wizard enables you to create outgoing and incoming payments in batches for bank transfers, checks and bills of exchange. The payments are created according to your selection criteria and payment methods. The Payment Wizard runs cover A/P and A/R documents and transactions that are not fully paid, credited, or reconciled and un-reconciled/allocated payments on account. Each run of the payment wizard is identified by a payment run name and the date of the payment run. When starting the payment wizard, you specify several selection criteria: General parameters, such as the date of the next planned payment run, type (outgoing or incoming), payment means (check or bank transfer), and document series which are used to create the payment documents. The business partners that the system checks for due invoices. Selection criteria for the documents that the system includes. The payment methods that the system uses. Enhancements in 8.8 release - Added range for Due date criteria (tolerance days are still taken into account). - Added filter criteria Document date. - Enhanced processing of saved runs in locked periods. Based on these selection criteria the system creates a recommendation report or a list of suggested payments. You can accept or reject the recommendations. You can save the recommendations and proceed at a later date, or you can execute the payments. The button Non-Included Trans. creates a list of all open items that could not be included in the payment run. To run the payment wizard, choose Banking Payment Wizard. You should define defaults values for the payment wizard. Choose Administration Setup Banking Payment Run Defaults. This data is used by default in every payment run. 2-24

63 The Payment Wizard (2) Selection Criteria Payment Run Sel. General Parameters Business Partners Selection Criteria Document Parameters Payment Method Selection Criteria Report Printing Recommendations Document Printing To Deutsche Bank - Four*Hundred - Check Printing - 400,- The printed text must not be modified or crossed out. Acc. No. X X X X Checks Payment documents $ Bank Transfer Payment File SAP 2007 / Page 25 When you execute the payments, the system automatically creates the payment documents for your accepted recommendations. A payment usually includes the amounts of several invoices if you did not specify differently in the business partner master record (select Single payment indicator on the Payment System tab). The system always compares the cash discount that is currently valid with the cash discount that is to be valid at the date of the next payment run minus the number of tolerance days. If the created payments are bank transfer payments or direct debit payments, the Payment Wizard creates the payment files in the correct country-specific format. If you need to create or adapt file formats you can use the Format Definition add-on. This SAP Business One add-on is a graphic tool that lets you define and modify incoming bank statement formats. For more details on Bank File Formats and Creating Bank Files with the Payment Wizard, refer to the appendix. If the created payments are check payments, they can print directly from the system under Banking Document Printing or Banking Outgoing Payments Checks for Payment to print single checks. After the check is printed, the system assigns the check numbers. Once the process is complete, use the Banking Check number confirmation to confirm the numbers assigned. 2-25