Logistic Invoice Verification Overview In Sap MM

Logistic Invoice Verification Overview

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

It is the end of the logistics supply chain

It verifies Incoming Invoices in terms of their

• Content, prices, and arithmetic and invoice are 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 the accuracy of prices and contents.

Payment processing: Financial Accounting normally deals with vendor payments.

Types of Invoice Verifications:

1. Invoice verification online (Enter Invoice):

• Invoices with purchase order reference (PO-based invoice verification)
• Invoices with a goods receipt reference
• Invoices without purchase order reference

2. Invoice Parking:

• When an invoice is parked the system saves the invoice document
• It does not make any posting i.e. No accounts are posted
• You can post this parked document after verification.

3. Invoice verification in the background:

• To save time just enter the total amount of the invoice, system checks for matching invoices in the background
• If no errors, it posts the doc in the background
• If errors, the invoice is parked or blocked.& it has to be processed separately

4. Automatic Invoice verification:

• Evaluated Receipt Settlement (ERS): Here you don’t receive any invoices from the vendor but post them yourself based on the info in PO & GR.
• Consignment and Pipeline Settlement: No invoice is expected from the vendor, instead, you settle the posted with drawls yourself & send the vendor a statement of the settlement
• Invoicing plan: No need to wait for an invoice from the vendor every time. Instead, you can create invoices based on the dates scheduled in the PO, and these.
• Revaluation

5. Invoices Received via EDI:

• Invoices sent by the vendor through EDI are verified by our SAP system and are posted automatically.
• If there are any differences or errors that occur, they are settled manually.
• You can also send PO through EDI.

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

The Invoice Processing:

In the Invoice verification process:

• Vendor invoices and credit memos are entered
• Contents and prices are checked
• Payment & evaluation is not part of Invoice verification. This task is passed to the other departments
• Invoice verification is a Link between MM & external or internal accounting.

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, the 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

• Vendor a/c
• Stock a/c

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

GR/IR clearing a/c

a. At GR

• The net invoice amount expected is posted to stock a/c
• The offset entry is posted to GR/IR clearing a/c

b. At IR

• GR/IR clearing a/c to offset entry will be cleared
• Offset entry on the vendor a/c

Tax A/c

The price difference a/c

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

Cash Discount clearing a/c

When you post a net invoice value,

• A cash discount is taken into a/c in the invoice,
• it reduces the value of the items
• The offset postings are made in cash discount clearing a/c which is then cleared when payment is made

Freight clearing a/c

• The stock account is debited with the planned delivery cost at GR
• Offset posting to the freight clearing account
• This is cleared by an offsetting entry to vendor a/c at invoice receipt

ERS – Evaluated Receipt Settlement.

You need not wait for the 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.

• In the Vendor master purchasing view, you have to flag the ERS settlement and you have to use the tax code (sales tax) in the purchase order itself (in invoice tab) a. Sales tax -> Sales tax on sales or sales tax on purchasing (we have to pay to the vendor)
• Subsequent settlement
  • When you are using vendor consignment & pipeline materials.
  • Based on the issue of material from consignment a liability will be created.
  • For posted withdrawn you have to make payments periodically to the vendor.
  • Here you don’t get an invoice from the vendor.
  • There is no PO. There is no GR issue.
• An invoice Plan is used for blanket PO or Network PO (for projects). For the organization, you have ordered stationery through the PO. You specify the invoice dates in PO. Based on the invoices received 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 the calculation procedure
3. Check and change the settings for the 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 ->

3. Configure How Unplanned Delivery Costs Are Posted

SPRO -> MM -> LIV ->

4. Define Mail to Purchasing When Price Variances Occur

SPRO -> MM -> LIV ->

5. Configure Vendor-Specific Tolerances

SPRO -> MM -> LIV ->

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

SPRO -> MM -> LIV ->

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