Unit 1: Invoice Entry

Lesson 1 · Introducing Invoice Verification

Key concepts

Procurement in MM runs through three stations: Purchasing creates the commitment (purchase order), Inventory Management records what physically arrived (goods receipt), and Logistics Invoice Verification checks what the supplier charges. The invoice check looks at three dimensions: content (is it really our order and our delivery?), price (does the price and quantity match the PO and GR?) and arithmetic/accounting (are totals, tax and balances correct?). Once the invoice is accepted and posted, LIV passes the information to Financial Accounting (the open vendor item that Accounts Payable will pay) and to Controlling and other follow-on applications.

LIV is not a stand-alone component. It reads data from Purchasing (PO conditions, terms of payment, invoicing party, account assignment) and from Inventory Management (GR quantities and values, delivery notes). An invoice can therefore be entered with reference to a purchase order, a goods receipt / delivery note, or a service entry sheet; the system proposes the items to be settled and builds the postings automatically.

Every posted invoice produces two documents: an MM invoice document (the logistics view, stored in tables RBKP/RSEG, and visible in the PO history) and an FI accounting document (the journal entry with vendor, GR/IR, tax and possibly stock or price-difference lines). Further documents (CO, profit center, etc.) are derived from the journal entry.

How invoices get into the system

What posting an invoice does

• Posts the item amounts to the right G/L accounts (normally debiting GR/IR clearing and crediting the vendor).
• Creates the MM invoice document and the FI document.
• Updates the purchase order history (invoiced quantity and value).
• Updates the material master where needed (for example, the moving average price when a price variance has stock coverage).

Price control and account movements

For stock material, the price control in the Accounting view of the material master determines where a difference between invoice price and PO price ends up. Indicator S = standard price, indicator V = moving average price (MAP, also called moving average / periodic unit price).

Process flow

Worked example

100 pcs ordered at 10.00 and received. The invoice arrives at 10.50 per piece (1,050). MAP material, all stock still on hand: Dr GR/IR 1,000, Dr stock 50, Cr vendor 1,050 – the MAP rises. Standard price material (standard 9.00): at GR Dr stock 900, Dr PRD 100, Cr GR/IR 1,000; at IR Dr GR/IR 1,000, Dr PRD 50, Cr vendor 1,050.

Lesson 2 · Working with Logistics Invoice Verification

Two ways to enter an invoice manually

For a PO-referenced invoice the system copies the invoicing party, the terms of payment (if maintained in the PO), the currency and all invoice items that fulfil the allocation criteria; quantities and amounts are derived from the PO history (delivered minus already invoiced). The clerk compares the proposal with the paper invoice, corrects amounts, quantities or tax codes, and deselects items the supplier did not bill. Simulate shows the journal entry before posting; on Simulate or Post each item's quantity and amount are compared with the PO item, which is where variances and blocks are detected (Unit 2).

Screen areas of MIRO

Allocation options

"More allocation criteria" lets you list several documents at once and add selection conditions. In the item list the system proposes and selects every item with a GR that is not yet fully invoiced; items for which no invoice is expected appear unselected without quantity/amount. Only selected items are posted. Remove selections the supplier did not bill, select and fill missing ones, and make an additional allocation if the invoice contains items that were not proposed. Further item-list functions: sort, delete unselected items, search (text only, not numeric fields), and layout.

Layouts and aggregation

SAP supplies several item-list layouts (display variants) for typical scenarios; switch them while processing so the important columns are visible without scrolling. Own variants are screen variants of screen 6310 of program SAPLMR1M: copy an existing variant, then set column order, width, hidden and mandatory columns ("Change with Processing" opens MIRO so you can arrange columns directly).

Aggregation layouts compress many items into one line per criterion, which speeds up checking very long invoices. Criteria: purchase order, delivery note, plant, material, configurable material, net price, returns, selection indicator, tax code. Aggregation variants are screen variants of screen 6350; all criteria are preselected by default.

Configuration (IMG)

Other MIRO functions

• Simulate the account postings.
• Search for allocation via input help when the supplier gave no or a wrong reference.
• Environment information: PO, PO history, supplier, material data.
• Supplier communication: phone, fax, e-mail from the supplier master.
• Hold: saves an incomplete MM document to finish later (see Lesson 4).
• Retain last settings: transaction, reference document category, item-list layout, PO structure visible/hidden.
• Message log collecting errors and warnings.

Not available in MIRO: table-control settings, "personal settings" as in Enjoy FI transactions, invoice upload.

User parameters (user master, SU3)

Users can maintain IVFIDISPLAY ("Display Journal Entry") and IVFIOUISETTINGS themselves with the Edit Settings for Supplier Invoices app.

System steps

1. Start MIRO (or Create Supplier Invoice) and choose transaction "Invoice".
2. Enter invoice date, reference, company code, gross amount and tax (or tick "Calculate tax").
3. Allocate: enter the PO number (or delivery note, etc.) and press Enter.
4. Compare the proposed items with the paper invoice; correct or deselect items until the balance is zero.
5. Simulate, then post. Note the MM document number (and FI number if IVFIDISPLAY is set); display it with MIR4.

Lesson 3 · Using Different Types of Invoice Verification

Key concepts

In GR-based IV the invoiced quantity should not exceed the delivered quantity of the GR. A higher amount can be posted, but an invoice cannot later be reassigned from one GR to another.

Reversal or return after a GR-based invoice

Customizing decides whether a GR may still be reversed or returned after an invoice has been posted for a GR-based item. If you allow it, the GR/IR account can become inconsistent – quantities match but the GR/IR balance is not zero. Typical cause: an invoice with a price variance is posted, the GR is reversed or returned, and then the replacement goods are posted as a normal GR instead of a subsequent delivery (which references the original GR/return and therefore valuates correctly). If you do not allow it, the invoice must be cancelled first, which keeps GR/IR clean. Existing differences are cleared with MR11 (Unit 5).

Process flow (GR-based)

Lesson 4 · Parking of Documents

Why park?

Parking stores an invoice (or credit memo, subsequent debit/credit) in the system without posting it. Typical cases: the clerk is missing information such as an account assignment; a junior colleague captures invoices that an expert checks and posts; an EDI invoice with variances is parked automatically instead of being posted.

Hold vs. Park vs. Save as completed

Statuses you will see: Entered and held (held in the app or MIRO), Parked and held (held in MIR7), Parked, Parked and completed, Parked and released (after workflow approval), Deleted. Held, parked and completed documents can be changed as often as needed and deleted; deleted document numbers are never reused – the header remains with status Deleted while the items are removed. Postings to the G/L happen only on Post.

For the advance VAT return, parked input tax can be listed with report RFPUMS00 (S_ALR_87012362, Input Tax from Parked Documents).

Processing held and parked invoices

Flexible workflow for invoices saved as complete

SAP S/4HANA offers a condition-based flexible workflow to approve parked-as-complete invoices in one or several steps; approvers act in the My Inbox app. Possible start conditions (combinable): account assignment category cost center/order/profit center/WBS element, invoice with PO reference, company code, supplier release group, invoice amount ≥ a value. Approvers can be fixed users or determined dynamically, e.g. the person responsible for the cost center.

1. Open Manage Workflows for Supplier Invoices and select the workflow scenario (release of completed invoices).
2. Create, name the workflow, optionally add description and validity.
3. Define start conditions (one workflow per company code if several company codes are needed).
4. Add at least one step with recipients, step conditions and exception handling.
5. Save and activate; define the order in which workflows are checked – the first whose start conditions match is used, so only one workflow starts.

Technical objects: workflow template WS00800303, tasks TS00800577 (Release Complete Invoice) and TS00800585 (Revise Invoice).

Lesson 5 · Explaining the Attributes of Prepayment

Key concepts

Prepayment lets you pay an invoice that is still held, parked or saved as complete – i.e. before it is posted and before goods receipt and invoice checks are finished. The supplier gets money quickly; the buyer can exploit the payment terms (e.g. take cash discount) independently of slow GR or verification. Because nothing is checked before payment, use it only for trusted long-term suppliers from whom you can reclaim incorrect payments.

Restrictions (SAP Note 937129)

• Only invoices – not credit memos or subsequent credits.
• Not for one-time suppliers.
• Not with import sales tax or acquisition tax, not when cash-discount base ≠ tax base.
• Not with "Calculate tax" or an external tax system.
• No external FI document numbering.
• Not intended for invoices received through the Ariba/Business Network.
• Cannot be entered with the Create Supplier Invoice Fiori app – use MIR7, MIRA (Enter Invoice for Invoice Verification in Background), EDI or BAPI.

Prerequisites

Account movements

When the invoice carries prepayment status A (relevant, not yet saved) and is held or parked, an FI invoice is generated with the document type from the Detail tab; the vendor gets an open item against the prepayment clearing account. No item-level verification takes place at this time: no variance determination and no automatic payment block from tolerances. When the MM document is finally posted, the prepayment clearing account is cleared instead of a new vendor and tax posting. The prepayment document uses the posting date of the invoice; BAdI WRF_PREPAY_INVOICE method SET_POSTING_DATE can change it (e.g. to system date or document date); method PREPAYMENT_RELEVANCE_CHANGE can force or suppress prepayment.

Field control

A field selection group per company code defines which MM header fields may still be changed once a prepayment document exists: not ready for input / changeable if also changeable in the FI prepayment document / always changeable (the prepayment document is then reversed and re-posted). Compliance-relevant fields are locked internally. If changes are not allowed, delete the logistics invoice and recreate it (deleting cancels the FI prepayment document). If the prepayment document is already cleared (paid), deleting the parked invoice or posting it with an invoice reduction requires switching off message M8 791.

Lesson 6 · Applying Taxes

Key concepts

Value-added tax is levied on the value added at each stage of production and trade. The input tax charged by suppliers is a receivable from the tax authority; the output (sales) tax the company charges its customers is a liability. The company pays the authority the net of output tax minus input tax. In the US the term "sales tax" is used and is often non-deductible.

Entering tax data

• One tax rate on the invoice: enter tax amount and code on the Basic Data tab.
• Several rates: enter each code/amount on the Tax tab.
• No tax amounts shown, or you want the system to do it: tick Calculate tax.

Every item carries a tax code. It is read from the PO item; if the PO has none, the first tax code of the invoice header is used. Changing the header code afterwards does not update existing items. The system derives the tax base per tax code from the items and checks the tax data at simulation/posting. All items need a tax code before the invoice can be posted; proposed codes can be changed.

Configuration (IMG)

Tax codes themselves (FTXP) belong to FI Customizing; each rate needs its own code. A code that has been used in documents must not be deleted or have its rate changed.

Per company code: default tax code on Basic Data, and default tax code for unplanned delivery costs (relevant only if these are posted to a separate G/L line).

Restricts which tax codes appear in the F4 help on header and item level.

Lesson 7 · Applying Cash Discounts

Terms of payment

Terms of payment define when the invoice is due and which discount the supplier grants, with up to three levels (e.g. 3 % within 5 days, 2 % within 10 days, net 20 days). In LIV the Basic Data tab shows only the key and baseline date; the Payment tab allows changing them, entering a fixed cash discount amount, and excluding items from discount (No discount checkbox per item).

If no key fits, the clerk can type the days/percentages directly: first line 14 days 3 %, second line 30 days net.

Gross vs. net posting

Configuration (IMG)

A payment-terms key can also propose a payment block and define the baseline-date rule. Installment terms split the gross amount into several parts with different due dates; LIV then creates one vendor line per installment. OMR4 defines which FI document type is proposed per LIV transaction (changeable on the Details tab of MIRO/MIR7/MIRA, or via "See More" in the Fiori app).

Lesson 8 · Entering Invoices in Foreign Currencies

Key concepts

An invoice is in foreign currency when its currency differs from the company code (local) currency. The currency must be defined and an exchange rate between it and the local currency must exist (maintained with OB08; can be fed daily via IDoc EXCHANGE_RATE, report RFTBFF00 or the RFC-based datafeed interface).

For a foreign-currency PO, the buyer decides via the Fixed exchange rate indicator (PO header, Delivery/Invoice tab) whether the PO rate is binding:

Exchange rate differences behave like price differences:

• PO items with account assignment → consumption account.
• MAP material with stock coverage → stock account.
• Standard price material, or MAP without coverage → depending on Customizing either the exchange rate difference account or the normal price difference account.

Configuration (IMG)

Indicator Treatment of exchange rate differences: post to exchange-rate-difference account or to price-difference account. If Treatment of exchange rate differences in company code currency is set, the whole difference is always posted to the exchange rate difference account regardless of price control or account assignment (and the first indicator is ignored). Inventory/consumption is thus valuated at the GR rate, not the invoice rate.

Lesson 9 · Creating Invoices for Purchase Orders with Account Assignment

Key concepts

Items procured for direct consumption – non-stock materials, external services – need an account assignment in the PO (e.g. category K cost center, F internal order, P project/WBS, A asset). From the paper invoice you cannot see it, but the item list in LIV has an Acct Assgt column, and the account assignment can be displayed and – under conditions – changed during invoice entry.

The account assignment category (OME9) controls, among other things, whether a GR and an IR are possible, whether the GR is valuated, and whether the account assignment can be changed at IR. If no GR is possible, LIV proposes PO quantity minus invoiced quantity.

Prerequisites for changing the account assignment in LIV: the category has AA changeable at IR set, and the PO item has a non-valuated GR or no GR.

Account movements

Multiple account assignment

One PO item can be split across several account assignment objects (in ME21N) by quantity, percentage or amount. The partial invoice indicator decides how a partial GR/IR is distributed: progressive fill-up (fill line 1 first, then line 2…) or proportional to the planned distribution. A default can be set per account assignment category. With a valuated GR, the indicator already applies at GR; BAdI MB_ACCOUNTING_DISTRIBUTE can redistribute at GR (but not change the category or the objects).

On the multiple account assignment screen in MIRO: change the total quantity/amount → it is redistributed with the previous pattern (Check or Back); change individual lines → the totals are recalculated and a message issued. Values are defaults until saving. IVAMOUNTADJUST does not work here. Whether quantity and amount are changeable on this screen is configurable:

Lesson 10 · Entering Invoices for a Blanket Purchase Order

Key concepts

For low-value, recurring needs (office supplies, small parts, cleaning, minor services) a separate PO for each requirement is too costly. A blanket purchase order – document type FO (framework order) – covers such needs with a validity period in the header instead of delivery dates and items of item category B (limit) carrying a short text and a value limit. Invoices are posted directly against it during the validity period; the total invoiced must not exceed the limit.

• No goods receipt, no service entry/acceptance – so GR/IR is never involved. The invoice debits the consumption account (plus tax) and credits the vendor.
• Account assignment need not be known in the PO; it can be entered (as many lines as required) or changed at invoice entry. If the PO contains account assignment data it is proposed. Multiple account assignment on the PO item itself is not possible for limit items.

Tolerances

Tolerance keys in LIV Customizing monitor the value limit and the validity period: exceeding the upper limit blocks the invoice for price variance (value) or schedule variance (date). (Typical keys: LA amount of a blanket PO, LD blanket PO time limit exceeded – see Unit 2.)

Unit summary & exam focus

T-codes in this unit

Self-check questions

1. A standard-price material was received at PO price 10 and invoiced at 11. Which account absorbs the difference at IR?
   Answer

   The price difference account (PRD). GR/IR is cleared with PO price × invoiced quantity; the standard price does not change.
2. What is the difference between holding and parking an invoice?
   Answer

   Hold creates only an MM document with minimal checks – no FI document, no PO history update. Parking creates an MM document plus a parked FI document and updates the PO history.
3. Which prerequisites must exist for GR-based invoice verification?
   Answer

   The GR-Bsd IV indicator on the PO item (defaulted from supplier master or info record) and at least one posted GR.
4. Which transaction key and master-data indicator are needed for prepayment?
   Answer

   Key PPX in automatic account determination and the Prepayment indicator in the supplier's company code data; plus company code activation in LIV Customizing.
5. What determines whether cash discount is posted gross or net?
   Answer

   The FI document type used for the invoice (net-posting indicator).
6. When can the account assignment be changed in invoice verification?
   Answer

   When the account assignment category allows "AA changeable at IR" and the PO item has a non-valuated GR or no GR.
7. Which accounts are posted by an invoice for a blanket PO?
   Answer

   Consumption (and tax) debit, vendor credit. GR/IR is not involved because no GR exists.