Invoicing Plan: Making the Most of Material Management

Below is a snippet from one of hundreds of articles available to ERPtips subscribers.

If you would like a complimentary copy of the full article, please email
Mark.Downs@ERPtips.com
(include the title of the article in your email)

To subscribe to ERPtips, go to
www.ERPtips.com/Subscribe.asp.

ERPtips Journal is published by Klee Associates, Inc.

ERPtips University provides both public and onsite training for SAP clients.
For more about ERPtips University, including the current schedule, click here:
www.ERPtips.com/WorkshopSchedule.asp

Invoicing Plan: Making the Most of Material Management

We`ve all heard “work smarter, not harder”, and we admit that it makes a lot of sense. Yet sometimes we

Click here to read this Snippet

 SAPtips4On Logistics
Invoicing Plan:
Page 1
December/January 2005-06 Volume III Issue 6
Making the Most of Material Management
Editor’s Note: Let’s see a show of
hands for all of you who’ve heard the
phrase “work smarter, not harder”.
Sure, we’ve all heard it, and we admit
that it makes a lot of sense (even if it
is a bit corny). Yet sometimes we over-
look the obvious shortcuts and pro-
cess simplifications. Anurag Barua
provides the magic eyeglasses that
will allow you to see how to elimi-
nate unnecessary, repetitive tasks
from your invoicing routine through
the use of SAP®’s Implementation
Plan feature. Anurag illustrates
how to schedule automatic invoicing
and payment for goods and services
where payment is not tied to receipt
of these (such as leases or installment
payments). He finishes by explaining
the Invoicing Plan framework and
configuration, suggesting the type of
Invoicing Plan that will best fit your
particular need.
Introduction
Have you ever felt the need to have
invoices automatically generated and
paid without having to wait for the
receipt of the goods, or completion
SAPtipsJournal
of a service from the relevant ven-
dor? Since your transactions (such
as leasing or renting) are repetitive
in nature and you do not care about
their delivery or completion, is it pos-
sible for you to schedule invoice gen-
eration and payment, instead of han-
dling the invoices manually? Does
the procurement of certain goods or
services allow you to make install-
ment payments? If the answer to all
these questions is a “yes”, you should
be using SAP’s Invoicing Plan func-
tionality. You can use Invoicing Plans
in standard R/3 if you are on release
4.0A or higher.
It is no surprise
that this function is
tightly integrated
with the Financials
module, the Cash
Management
function in
particular.
The Invoicing Plan feature in
standard SAP enables you to sched-
ule generation and payment of your
open invoices for certain planned
transactions, regardless of the receipt
of goods or services. Think of it, in
a loose sense, as your monthly mort-
gage payment, wherein you have
agreed with your vendor that you
will be “invoiced” monthly, and that
your checking account will be direct-
ly debited by the mortgage company
on the 15th of each month.
What is the Invoicing Plan
Framework?
The Invoicing Plan is part of
the purchasing and servicing sub-
modules of Materials Management
(MM). It is also tightly integrated
with Logistics Invoice Verification
(LIV). Since we are talking about
invoice payments, it is no surprise
that the function is tightly integrated
with Financials (FI), and within this
module, Cash Management (CM) in
SAPtips.com
By Anurag Barua, Washington Post
particular. Most of the configuration
needed to invoke the Invoicing Plan
is done in the purchase order (PO)
customizing, as well as the PO entry.
A portion of the customizing is also
done in the vendor master.
What are the Different
Kinds of Invoicing Plans?
Invoicing Plans come in two fla-
vors: the periodic and the partial.
The periodic Invoicing Plan enables
you to set up a schedule for automat-
ic invoice generation and payment.
You would set up a periodic Invoic-
ing Plan for repetitive transactions
like leases and rentals. The dates on
which you choose to be invoiced can
be configured. You can either manu-
ally enter the dates or have the system
propose dates, based on certain rules.
In this method, the amount invoiced
is equal to the gross amount in the
corresponding P.O. (if it has a single
line item), or the relevant P.O. line
item (if it has multiple line items).
The partial Invoicing Plan lets you
split up the amount in your contract
(or P.O.) across different due dates.
This variant is typically used with
projects that involve the procure-
ment of external services, wherein
you pay a certain percentage based
on the completion of discrete phases
in the project. The gross amount of
the contract (or PO, or PO line item)
is distributed across the due dates
that you and your vendor (or service
provider) have negotiated. Unlike
the periodic Invoicing Plan, the only
option you have with respect to due
dates is to enter them manually. The
only way to avoid manual entry is to
create a new plan with reference to
an existing plan or template.
SAPtips © 2005 Klee Associates, Inc.
 SAPtips4On Logistics
Page 2

December/January 2005-06 Volume III Issue 6

What Configuration Must be

Done Before the Invoicing
Plan Can Be Used?
There are several initial steps that
must be carried out before you will
be able to use the Invoicing Plan fea-
ture. Some of these steps are pure
IMG-related configuration activities.
Others are directly at the P.O. level.
Here are the prerequisites (not in any
particular order):

• The relevant configuration activ-

ities, such as maintaining date
categories and proposals, need to
be carried out in the IMG. (This
will be covered in more detail
later in the article.)

• When creating the P.O., the

“Framework Order” or “FO”
type option must be selected Figure 1: Creating a PO as “Framework Order” in Transaction ME21N
(as shown in Figure 1). Select-
ing this option enables a P.O. to
be created with a predetermined
extended validity period and a
reason for cancellation.

• The purchasing data screen on

the vendor master of the vendor
for whom you are setting up the
Invoicing Plan needs to have the
Evaluated Receipt Settlement
(ERS) indicator on, if you want
invoices to be settled automati-
cally. This is depicted in Figure
2.
SAPtipsJournal

Note: ERS is a mechanism that com-

pletely eliminates vendor invoices. It
enables settlement of goods receipts
(GR) by the automatic generation
and posting of invoices. The invoice
amount is calculated based on infor- Figurre 2: Turning on the ERS Indicator in Vendor Master Maintenance (TX; XK02)
mation in the P.O. and in the Goods
Receipt (GR) document.
– The “Invoice Receipt” flag – The “Goods Receipt” flag should
• The P.O. line item that is to be should be turned on (see Fig- be turned off (see Figure 4).
subject to the Invoicing Plan ure 3).
should have the following indica- • If you want a service entry sheet
tors set as mentioned: – The “GR-based IV” flag should (SES), the “GR non-valuated”
be turned off (see Figure 3). flag needs to be turned on (see
Figure 4).

SAPtips.com SAPtips © 2005 Klee Associates, Inc.