Logistic Invoice Verification Over View

• Logistics Invoice Verification is a part of Materials Management (MM).

• It is end of the logistics supply chain

• It verifies Incoming Invoices in terms of their

– Content, prices and arithmetic and invoice is posted.

– When you post LIV certain G/L accounts are updated in FI & controlling for their further actions. This is the integration of FI & CO

• Up to 4.6B versions – there is CIV (Conventional Invoice Verification)

• From 4.6C onwards CIV is dropped and LIV is adopted. LIV – With this you can verify the invoices, which are generated from procurement. You can also process the invoices which are not generated from invoices i.e. other expenses i.e. inspection costs, travel costs etc.

• Invoice verification: Vendor invoices are checked for accuracy of prices and contents.

• Payment processing: Financial Accounting normally deals with vendor payments.

Types of Invoice Verifications:

1. Invoice verification online (Enter Invoice)

a. Invoices with purchase order reference (PO based invoice verification)

b. Invoices with goods receipt reference

c. Invoices without purchase order reference

2. Invoice Parking:

a. When an invoice is parked the system saves the invoice document

b. It does not make any posting i.e. No accounts are posted

c. You can post this parked document after verification.

3. Invoice verification in background:

a. To save the time just enter the total amount of the invoice, system checks for matching invoices in the back ground

b. If no errors, it post the doc in background

c. If errors, the invoice is parked or blocked.& it has to be processed separately

4. Automatic Invoice verification:

a. Evaluated Receipt Settlement (ERS)

i. Here you don’t receive any invoice from the vendor but post them yourself based on the info in PO & GR.

b. Consignment and Pipeline Settlement

i. No invoice is expected from vendor, instead you settle the posted with drawls yourself & send the vendor a statement of the settlement

c. Invoicing plan

i. No need to wait for invoice from the vendor every time.

ii. Instead you can create invoices based on the dates scheduled in the PO and these

d. Revaluation

5. Invoices Received via EDI:

a. Invoices are sent by vendor through EDI are verified by our SAP system and is posted automatically.

b. If there are any differences or error occurs, they are settled manually.

c. You can also send PO through EDI.

Note: Most commonly used is Invoice verification online and in US is ERS.

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The Invoice Processing:


• In Invoice verification process:

– Vendor invoices and credit memos are entered

– Contents and prices are checked

– Payment & evaluation is not the part of Invoice verification. This task is passed to the other departments

– Invoice verification is Link between MM & external or internal accounting.


Additional Notes on

• Important Notes

• Logistics Invoice Verification creates a separate accounting document in addition to the invoice verification document. This is used in Financial Accounting to settle the invoice, but can also be processed by distributed systems or external systems In Invoice Verification; you enter all the relevant data for the vendor invoice (for example gross amount, tax, invoice date, and so on).

• The system checks this data in subsequent processing steps and compares it with data that already exists in the system, such as the purchase order document and the goods receipt document.

• When you enter an invoice with reference to a purchase order

– The system suggests data from the purchase order and the goods receipts for the purchase order (for example, vendor, material, quantity still to be invoiced, terms of payment, and so on).

– If there are discrepancies between the purchase order or goods receipt and the invoice, the system warns the user, and depending on how the system is configured, blocks the invoice for payment

– You can also assign the invoice items to a purchase order using the number of the delivery note or bill of lading, provided that these numbers were entered at goods receipt.

– The posting of the invoice completes the invoice verification process. The system updates the purchase order history and Financial Accounting initiates payment for the open invoice items

Important A/c info in Invoice verification

– When you post the invoice, the system selects the accounts to be posted

– Account assignment is based partly on

• Your entries when you create on-line

• On information stored in the system

Important a/c in LIV

1. Vendor a/c

2. Stock a/c

a. The system only posts to the stock a/c when price difference occurs for an invoice

3. GR/IR clearing a/c

a. At GR

i. Net invoice amount expected is posted to stock a/c

ii. The off set entry is posted to GR/IR clearing a/c

b. At IR

i. GR/IR clearing a/c offset entry will be cleared

ii. Offset entry on the vendor a/c

4. Tax A/c

5. Price difference a/c

a. When price difference occurs, system post into this a/c and no posting to stock a/c

6. Cash Discount clearing a/c

a. When you post a net invoice value,

i. Cash discount is taken into a/c in the invoice,

ii. it reduce the value of the items

iii. The offset postings is made in cash discount clearing a/c which is then cleared when payment is made

7. Freight clearing a/c

– The stock account is debited with planned delivery cost at GR

– Offset posting to freight clearing account

– This is cleared by an offsetting entry to vendor a/c at invoice receipt


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Additional Notes on

ERS – Evaluated Receipt Settlement.

You need not wait for invoice or you are not going to receive the invoice from the vendor. Based on the information available in the system & in the PO invoices are posted.

1. In the Vendor master purchasing view you have to flag the ERS settlement and you have to use the tax code (sales tax) in purchase order itself (in invoice tab) a. Sales tax -> Sales tax on sales or sales tax on purchasing (we have to pay to vendor)

2. Subsequent settlement

a. When you are using vendor consignment & pipeline materials.

b. Based on issue of material from consignment a liability will be created.

c. For posted with drawn you have make payments periodically to vendor.

d. Here you don’t get any invoice from vendor.

e. There is no PO. There is no GR issue.

3. Invoice Plan: are used for blanket PO or Network PO (for projects). For organization you have ordered stationary through PO. You specify the invoice dates in PO. Based on the invoices receive in the PO you can settle payments to the vendor

Invoice Verification: IMG Settings

- Maintain Number assignment for accounting docs

- Configure how unplanned delivery costs are posted

- Configure Vendor specific Tolerance

- Set check for duplicate invoices

- Tax settings

1. Check Calculation procedure

2. Assign country to calculation procedure

3. Check and change the settings for calculation procedure

4. Define tax codes for sale & purchases

1. Maintain Number assignment for accounting docs

SPRO -> MM -> LIV -> Incoming Invoice -> Number Assignment ->

Maintain Number Assignments for Accounting Documents

2. Maintain Default Values for Tax Codes

SPRO -> MM -> LIV ->

4. Configure How Unplanned Delivery Costs Are Posted

SPRO -> MM -> LIV ->

5. Define Mail to Purchasing When Price Variances Occur

SPRO -> MM -> LIV ->

6. Configure Vendor-Specific Tolerances

SPRO -> MM -> LIV ->

7. Activate Direct Posting to G/L Accounts and Material Accounts

SPRO -> MM -> LIV ->

8. Set Check for Duplicate Invoices

TAX Settings:

1. SPRO-> Financial Accounting -> Financial Accounting Global Settings -> Tax on

Sales/Purchases -> Basic Settings -> Check Calculation Procedure

2. SPRO-> Financial Accounting -> Financial Accounting Global Settings -> Tax on

Sales/Purchases -> Basic Settings -> Assign Country to Calculation Procedure

3. SPRO-> Financial Accounting -> Financial Accounting Global Settings -> Tax on

Sales/Purchases -> Calculation -> Define Tax Codes for Sales and Purchases

Invoice Verification

- Entering of Invoice (in MIRO)

- Parking of Invoice

- Holding of Invoice

- Releasing of Parked and hold invoices