Transcript Asset management

External Accounting
Chapter 8 (C &L) and Chapter 5
BMW: See also the R/3 Simulation
on Customer Invoice and Payment
Processing
Introductions
• Accounting system data is used:
– By decision-makers throughout a company to
plan and manage day-to-day activities
– By managers to make long-range operating
forecasts
– By accountants to generate a company’s
financial statements and other reports
Basic Financial Statement
• Balance Sheet: shows company’s financial
health at a point in time
• Income Statement: shows a company’s sales,
cost of sales and profit or loss for a period.
• “Closing the books” means checking to see that
financial statements are accurate and up to
date. Usually done quarterly or monthly.
Figure 5.1 Fitter Snacker sample balance sheet
Figure 5.2 Fitter Snacker sample income statement
Using ERP for Accounting and
Finance
• Unintegrated systems usually require research
effort by accountants to assemble required data
• ERP systems capture accounting data in real
time as business transactions occur
– Transfer of finished goods from assembly line to
warehouse results in changes to Accounting records
as well as Materials Management records.
Inconsistent Record Keeping
• Companies may have divisions that keep
records in different systems or with
different structures
• Summarizing the data to provide
management summaries may require
additional processing by middleware
systems (e.g. spreadsheets)
ERP for Accounting
Information
• Early information systems gathered data primarily for their
own functional area (sales, production, payroll, etc.)
• Data sharing with accounting did not occur in “real time”
• Accountants and functional area clerks frequently had to do
significant research to gather the data needed for reports
• ERP systems, with centralized databases, avoid these
problems
– Materials Management module sees a goods receipt as an
increase in inventory
– Accounting module sees goods receipt as an increase in
the value of inventory
• A single data entry transaction provides the data for
both
General Ledger
• A company’s accounts are kept in the general ledger
• In SAP R/3, input to the general ledger occurs simultaneously
with the business transaction in the functional module
– Sales and Distribution (SD)
• Sales to customers create accounts receivable entries
– Materials Management (MM)
• Purchase orders create accounts payable entries
– Human Resources (HR)
• Payroll processing creates expense entries
General Ledger
• Other modules also create general ledger entries
– Financial Accounting (FI)
• Manages the accounts receivable and accounts payable
items created in SD and MM
• Module where general ledger accounts are closed at
the end of a fiscal period
– Controlling (CO)
• Tracks the costs associated with producing products
– Asset Management (AM)
• Manage fixed-asset purchases (plant, machinery, etc.)
and associated depreciation
Operational Decision Making Problem:
Credit Management
• A company with an un-integrated information system can
have accounting data that is out-of-date or inaccurate
• Out-of-date or inaccurate data can lead to bad operational
decisions
• Fitter Snacker has this problem with credit management
• Companies routinely sell to customers on credit
• Sound credit management gives customers enough credit to
promote sales while minimizing the risk from default
• Making the correct credit management decision requires
accurate and timely sales and payment data
Operational Decision Making Problem:
Credit Management
• At Fitter Snacker:
– The sales clerk uses a weekly printout of all
customer balances and credit limit to see if credit
should be granted for a new order
– Sales data are transmitted to accounting 3 times
per week
• Both sales and accounting work off data that is not
real-time and may be more than a week old
– Customer orders that would bring them over the credit
limit may be accepted
– Customers may be denied credit because recent
payments are not available to the sales clerk
Credit Management in SAP R/3
• SAP R/3 allows for a number of configuration options to
determine how the system responds to an order that would
cause a customer to exceed its credit limit
– The system may block the sales order
– The system may prevent the sales order from being saved
– The system may issue warning messages to the sales
order clerk
• Credit is a sensitive issue, so the system response must be
configured to match a company’s procedures
• Typically, sales orders are blocked, with no warning given to
the sales order clerk
– A credit specialist would regularly review blocked orders
and take corrective action
Dynamic
credit
check
Only orders for
the next two
months are
considered
Reaction C: warning
message is issued
when order is saved
Figure 5.3 Credit management configuration
Credit limit for Health Express
Outstanding
obligations
Figure 5.4 Credit management for Health Express
Options to release, reject or
forward blocked sales orders
Figure 5.5 Blocked sales order
R/3 and Accounting
• Internal Accounting
– profit center accounting/analysis
• management accounting
• see Chapter 10 and CO module
• Asset Management (chap 11 and AM
module)
• External Accounting
– vendor/customer processing
– financial accounting (Chap 8 and FI
module)
External Accounting
• Vendor Processing (A/P)
• Customer Processing
– A/R, credit management, dunning
• OTA Vendor Processing (one-time accounts)
• Subsidiary/Head Office Accounting
• GL Processing
• Consolidation
Vendor Handling
• A vendor is a business partner that has an
outstanding payable
– AP concerns integration of cash mgt, payment
procedures, G/L, forecasting
– Automatic vs. manual
– dunning procedure for credit memo/returns
– vendor master data
– invoice processing/verification
Vendor
Master Record
Processing
Vendor Processing
Direct
Capitalization
Handling
Fixed Assets
Travel
Management
Source
Administration
Invoice from
Vendor has
Arrived
Creditor
is created
^
XOR
Vendor
invoice
processing
Invoice posted
and released
for payment
Vendor
invoice is
posted
XOR
^
Overheads
mgt with
allocation cost
Vendor Processing (cont.)
Bank sttment
for payments
has arrived
Payment
deadline is
reached
Down
Payment
Release
Down paymnt
is released for
auto payment
^
Manual
Payment
^
Automatic
Payment
XOR
^
Payment
is posted
Payment
carrier is
sent
XOR
^
Complex
Proc. For
investmt measure
Simple Proc
for Investmt
Measure
Project-related
maintenance
proc.
Supplier
proc.
Vendor Master Record Processing
• Vendor master has link into G/L, purchasing
and accounting function
– must generate internal or external account #
• 3-level structure of master record
– general data
– company code data
• correspondence, individual dunning, payment
terms
– purchasing organization data
• individual RFQ, PO, and invoice verification data
Vendor
Master Record
Processing
Vendor Processing
Direct
Capitalization
Handling
Fixed Assets
Travel
Management
Source
Administration
Invoice from
Vendor has
Arrived
Creditor
is created
^
XOR
Vendor
invoice
processing
Invoice posted
and released
for payment
Vendor
invoice is
posted
XOR
^
Overheads
mgt with
allocation cost
Vendor Invoice Processing
• Invoice can be sent in a variety of ways.
– Manual
– EDI
– Web-based EDI
• This triggers invoice processing
– entered into system
– check vendor master
– tax checked and posted
– allocated to a CC
• either fixed asset or current asset account
– balance check
Vendor
Master Record
Processing
Vendor Processing
Direct
Capitalization
Handling
Fixed Assets
Travel
Management
Source
Administration
Invoice from
Vendor has
Arrived
Creditor
is created
^
XOR
Vendor
invoice
processing
Invoice posted
and released
for payment
Vendor
invoice is
posted
XOR
^
Overheads
mgt with
allocation cost
Down Payment Release
• Generates down payments to vendors
• Stored as a separate document
• referred to at final settlement
• May include tax or not
– important for posting to G/L
Vendor Processing (cont.)
Bank sttment
for payments
has arrived
Payment
deadline is
reached
Down
Payment
Release
Down paymnt
is released for
auto payment
^
Manual
Payment
^
Automatic
Payment
XOR
^
Payment
is posted
Payment
carrier is
sent
XOR
^
Complex
Proc. For
investmt measure
Simple Proc
for Investmt
Measure
Project-related
maintenance
proc.
Supplier
proc.
Automatic Payment
• May take months and involve multiple
currencies
• 3 Basic steps
– create payment proposal list
• based on customer master and invoices
– process payment proposal list
• document changes in banks, etc.
• monitors due dates; latest possible preferred
– post payments
• items cleared and linked to payments
Manual Payment
• Many businesses still choose to make
payments manually
• Must enter following information
– G/L account no. for bank
– payment amount
– any charges or fees
– document number
Vendor Processing (cont.)
Bank sttment
for payments
has arrived
Payment
deadline is
reached
Down
Payment
Release
Down paymnt
is released for
auto payment
^
Manual
Payment
^
Automatic
Payment
XOR
^
Payment
is posted
Payment
carrier is
sent
XOR
^
Complex
Proc. For
investmt measure
Simple Proc
for Investmt
Measure
Project-related
maintenance
proc.
Supplier
proc.
Customer payment processing
• Major FI scenario (see R/3 Customer Invoice
and Payment Processing simulation)
• Provides data for credit management
• Supports traditional AR functions
– manual or automatic processing supported
– built in dunning procedures
– integrated with SD, MM and FI
OTA Vendor Processing
• Do not require individual master record
– simplifies master data processing
– one-time accounts created
– provides “one-step” invoice processing
– down payments not supported
Vendor
Master Record
Processing
Vendor Processing
Direct
Capitalization
Handling
Fixed Assets
Travel
Management
Source
Administration
Invoice from
Vendor has
Arrived
Creditor
is created
^
XOR
Vendor
invoice
processing
Invoice posted
and released
for payment
Vendor
invoice is
posted
XOR
^
Overheads
mgt with
allocation cost
Vendor Processing (cont.)
Bank sttment
for payments
has arrived
Payment
deadline is
reached
Down
Payment
Release
Down paymnt
is released for
auto payment
^
Manual
Payment
^
Automatic
Payment
Tax Calculator
XOR
^
Payment
is posted
Paybase
Payment
carrier is
sent
XOR
^
Complex
Proc. For
investmt measure
Simple Proc
for Investmt
Measure
Project-related
maintenance
proc.
Supplier
proc.
Summary of External Accounting
• Scenarios
• Core Processes
– Vendor Processing
– G/L account proc.
– OTA vendor proc.
– Vendor master
– Customer proc.
– Customer master
– OT customer proc.
– invoice proc.
– Consolidation
– clearing
– G/L processing
– payment
– Special purpose ledger
processing
– dunning
– closing