GUIDE TO

PURCHASING
[Accounts Payable]

Prepared by: MIS Department

 Overview of Purchasing - A/P Process
The basic three-part process of ordering, receiving, and paying for goods or
services. The flowchart in Figure 1 presents the "big picture" of how SAP Business
One purchasing documents relate to each other, including all of the optional
steps, which are discussed in the next section.

Figure 1: Purchasing document flow in SAP Business One

Definitions

The term item is used in a very specific way in SAP Business One. It refers only
to goods and materials bought, produced, sold, and warehoused.

The purchase order (PO) is the document you provide to the vendor specifying
the items or services you want to purchase, including agreed-to quantities and
prices.

The A/P reserve invoice is similar to a PO but it includes a request for

payment. It is used when the vendor requires prepayment before delivering an
item or service.

The goods receipt PO is the document that denotes the delivery of goods from a
vendor to a company. It is used to update the inventory quantities and values.

The goods return document is used to reverse a goods receipt PO after it has
been posted. It is used whenever part or all of the goods received are returned to
the vendor.

The landed costs document is used when additional costs are involved in the
purchase of items, usually from abroad, such as tariffs, brokers' fees, and so on.

The A/P invoice (or A/P voucher) is the document into which accounts payable
enters the vendor's invoice information and sets up the payment.

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An A/P credit memo (or A/P debit) is used to reverse the A/P invoice, partially
or in its entirety after it has been posted. It credits the company for the goods
returned to the vendor.

Getting Started Common Structure and Key Data

All of the purchasing documents in SAP Business One share a similar structure
and use much of the same data. Before diving into the documents, here's an
explanation of what is the same about each document.

Common Document Structure

Each purchasing document in SAP Business One has nearly identical header and
footer fields and three tabs for Contents, Logistics, and Accounting. This structure
helps to ensure that all relevant data is captured as the A/P process initiated by a
PO gathers steam.

Header fields appear in every window of a purchasing document. You enter

vendor data and delivery dates here, if SAP Business One does not fill it in
automatically as part of the process flow.

Footer fields appear in every window of a purchasing document and contain the
calculated totals for the purchase, including freight costs and tax.

The Contents tab is where all the specific information about the ordered items or
services is entered, such as quantity, price, item number, and description.

The Logistics tab contains the details about where the items or services as well as
payments are to be sent. Shipping method is also specified here. Most of the data
is pulled from preconfigured master company details and vendor data.

The Accounting tab contains the relevant general ledger (G/L) account
information for the purchase pulled from the financial accounting master data.

Figure 2: Anatomy of a purchasing document in SAP Business One

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 PURCHASE ORDER

Creating a PO is the first and most basic task in any purchasing application. In a
nutshell, a PO is a commercial document issued by a buyer to a seller specifying
the items (goods or materials) or services along with agreed-to quantities and
price that the seller will provide the buyer.

PROCEDURE:

1. On your SAP Business One, go to Main Menu
Purchasing
A/P

Purchase Order.

2. After clicking the Purchase Order, a new entry window for PO will appear.
Fill-out the following data needed for the header field of PO:
a. Vendor Supplier of the goods being purchase. It maybe local,
foreign or affiliates
b. Name Once the Vendor code was provided, the name field was
automatically filled up.
c. Contact Person Contact person defined in the Business Partner
Master Data
d. PR No. Vendors reference number.
e. BP Currency Select from the selection depending on the vendor
type.
f. Posting Date PO creation date. It can be change as desired.
g. Delivery Date Date on which you want to received the PO
h. Document Date Current date or PO creation date. It can be
change as desired.

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 Figure 3: Header Fields of Purchase Order

3. Purchase Order can be encoded in two ways:

3.1. By Item Type.

Just fill up the following informations:

a. Item No Type the item no or search it by positioning your cursor
under the Item No and by pressing the <TAB> key. Select from the
list.
b. Quantity Type the quantity of the items you want to place an
order.
c. Unit Price Price of the items to be purchased. Either in Peso or in
dollar amount
d. Tax Code Default tax code of the vendor that links into the
Business Partner Master Data
e. Warehouse Location of the warehouse where the Purchase Order
has been allotted. This can be edited or can be change as desired
because it follows the default warehouse of the item coming from
the item master data.
f. Item Details Other remarks that describes the items.

Fill the contents

tab, check also the
logistics and
accounting tab.

Figure 4: Detail Fields of Purchase Order

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 3.2. By Service Type.
This is to be use when one time consultation service has been rendered
by the vendor. Fill up the following data needed:

a. Description Description of the serviced being rendered.

b. G/L Account Select the appropriate account name by pressing the
<TAB> key.
c. Tax Code Default tax code of the vendor.
d. Total (LC) - Total landed cost

Click the drop

down arrow to
select service.

4. Fill up also the following informations:

a. Sales Engr./Sales Emp. Leave this as blank
b. Prepared by The person who prepared the PO
c. Remarks Additional notations regarding the PO
d. User-defined fields fill up the necessary fields

5. Click the Add command button to save the transaction.

Note: When a PO is added in SAP Business One, no value-based accounting

changes occur. However, the order quantities are listed in inventory
management. You can view items and quantities on order in various reports and
windows, such as the inventory status report and the Item Master Data window.

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 GOODS RECEIPT PO (RR)

In SAP Business One, a goods receipt PO is created when you receive goods from
a vendor. In most companies, the person in the warehouse or in the office is
responsible for taking delivery of shipments executes the goods receipt PO. For
services, the person for whom the services are rendered usually issues the
document.

There two ways of creating Goods Receipt PO.

A. BASIC WAY

1. Go to Main Menu
Purchasing-A/P
Goods Receipt PO.

2. Supply data to the header field like customer, posting date, currency, etc.

3. Start encoding the items to be RR. Supply the correct information to each
field.

Provide details on
item/s received.

Provide data on
footer field
(step 4).

4. Supply also the following information in the footer field:

Sales Engr./Area Super = Sales Engineer/ Area Supervisor
Prepared by = The one who prepared the RR
Discount = For special cases only
Remarks = Other notations if any
Invoice Group = Choose from the List

5. Click ADD to save/post transaction.

6. Print Goods Receipt PO (RR).

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B. CREATING GRPO FROM PO

1. Select the PO that you want to create an RR. From PO entry, click the
Copy To button as shown in the figure below.

2. SAP will then automatically create the GRPO entry for the said PO.

3. Supply/modify necessary information as per documents.

4. Click Add command button to save the transaction.

Note: It is essential that the quantities and prices in your goods receipt PO match
the vendor's shipping document. Unlike a PO, a goods receipt PO cannot be
amended after it has been added to SAP Business One because it triggers both
inventory and accounting transactions.

Prepared by: MIS Department

 A/P INVOICE
The A/P invoice is the purchasing document in SAP Business One that "vouches"
for the invoice that the vendor sends for items or services ordered and received.
The accounts payable clerk usually creates the A/P invoice that is required to
request payment for the vendor. The A/P invoice results in a journal transaction
that reflects an increase in the company's liability to the vendor and updates the
tax account and relevant expense account(s).

1. From PO or GRPO entry, click the Copy To button as shown in the figure
below.

Click copy to
then select
A/P Invoice.

2. SAP will then automatically create the AP entry for the said PO. Check the
details in Contents, Logistics, and Accounting Tab.

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 3. Supply/modify necessary information as per documents.

4. Click Add command button to save the transaction.

Note:

Once posted to SAP Business One, an A/P invoice cannot be changed, as it is the
legal accounting document that generates entries in the general ledger. The
posted A/P invoice also updates the related vendor accounts in accounting. A/P
invoice can only be cancelled using A/P Credit Memos (please refer to A/P CM
procedure).

In those cases where a vendor's invoice arrives before the items are received and
are for items whose purchase ordering is managed in the warehouse, the
resulting A/P invoice also increases inventory quantities and values

Prepared by: MIS Department

 GOODS RETURNS
Of course, there are always those occasions when items received are found to be
defective or otherwise not acceptable and must be returned to the vendor. Since
you can't change or cancel a goods receipt PO, you can create a goods return
document. This purchasing documents reverses in part or completely the quantity
and value-based changes made by the goods receipt PO that was created when
the items were received.

PROCEDURE:

1. On Main Menu go to PURCHASING- A/P
Goods Receipt PO then click

FIND button on your task bar to open GRPO find window.
2. Type the RR or SAP number of the GRPO to be returned then press
<Enter> key.
3. Click on the Copy to then select G. Return. A Return window will be
prompted on your screen.

Click copy to
then select
G.Return.

4. Supply the necessary information needed. (Note: Posting Dates will be

based from the Accounting Department)

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 5. Double check Warehouse and G/L Account code including the Invoice
Group.

6. On the Remarks field, indicate the reason why the item/s is/are to be
returned.
7. Click ADD to save the transaction.
8. Print Return Transaction.

Prepared by: MIS Department

 LANDED COSTS
From time to time you may need to account for costs incurred when importing
items from abroad, such as customs, broker, and insurance fees. For this
purpose, in SAP Business One you can create a landed costs document that is
used to update the cost of the imported items and is required for calculating
inventory valuation, gross profit, or any other inventory-related calculation. It is
mandatory that this purchasing document be based on a goods receipt PO. Since
SAP Business One uses the goods receipt PO as the base reference for the entire
import process, be sure to enter the item prices and quantities correctly at the
time you create the goods receipt PO. After you post the landed costs document,
the price of the imported items is updated. And since it also contains all the costs
that were allocated, the landed costs document creates a journal entry to reflect
the additional import costs in accounting.

PROCEDURE:

1. Open Goods receipt PO using the SAP Business One Main Menu

Purchasing-A/P
Goods Receipt PO.
2. Select the RR No of the items you want to create a Landed Cost. Right
click on the vendors name then select Copy.
3. From the Main Menu go to Purchasing-A/P
Landed Costs then paste
the vendors name that you have just copied from the Goods Receipt PO.

4. Go to Goods Receipt PO button found at the lower right corner of the

window then choose from the selection list prompted on your screen the
RR No you want to create a Landed Costs.

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 5. From the Cost Tab page, supply the information needed for the given data.

5. After you have finished encoding the data needed on the Cost Tab, go
back to Item Tab page. Notice that what have you encoded in the Cost tab
page, it is reflected into the Item Tab Page.

6. Click the Add command button to save the transaction. ( Note: Costing
should be in Peso Form)

Reminder:
Landed Cost will only be closed once the Journal Entry has been
applied.
There is no way to cancel landed cost when there is already a link to
journal entry. It is only safe to cancel landed cost if no journal entry
has been involved.

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CLOSING THE LANDED COSTS ENTRY

7. After you have saved the Landed Costs, go to Journal Tab page then click
on Create Journal Entry

8. Supply the other chart of accounts for the corresponding APV entries you
have made.

9. Click Add to save the transaction.

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PRINTING OF LANDED COST REPORTS

Procedure in printing Landed Cost using SAP Portal

1. In your internet browser type the following: 192.168.100.8 this is the ip

address for our SAP Portal or type sap-portal.

2. You will be prompted to login-in your username and password. Supply

your username and password according to your assigned account and click
Login to enter SAP Portal Main Menu.

3. Under the Purchasing- A/P, select Landed Cost. The page for Landed Cost
will appear.

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 4. Select the BP Vendors name of the supplier you have just created on the
Landed Cost or enter its corresponding landed cost number in SAP then
click on Refresh to view list of landed cost according to preference in
status and in date range.

5. Notice that upon pressing the Refresh button, all the transaction under the
BP name that you have selected will be posted on your screen.

6. Select the landed cost that you want to print to open landed cost form.

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 7. Click on the Print Voucher button located at the left side corner button of
the form to preview the landed cost before printing.

8. To print, click on the printer symbol sign.

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 A/P CREDIT MEMOS
You use the A/P credit memo in SAP Business One to reverse in part or entirely
the inventory or accounting transactions posted by an A/P invoice in the case you
return items later or realize you have made mistakes while entering data in
previous related purchasing documents that have not been corrected.

PROCEDURE:

1. From the Main Menu
Purchasing A/P
A/P Invoice. In the A/P
invoice window, go to Copy to button then select A/P Credit Memos.

2. Check the necessary information. You could change the Posting Date, due
date and Document dates if needed and as per advice by the Accounting
Department. You can also change the quantity or remove particular items
that are to be cancelled.
3. On the remarks section, includes the reason for the CM.
4. Click ADD to post the document.

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 Note: You can create Credit Memos for Item Type or by Service Type
depending on what was encoded in the A/P Invoice.

A/P CM FOR SERVICE TYPE:

1. Open the A/P Invoice of service type. See sample below:

2. Click the Copy To button located at the right-lower corner of the window,
then select A/P Credit Memos. SAP will then automatically create an A/P
Credit Memos entry for the said invoice.

3. Check on the details and put remarks on why the invoice should be
cancelled.
4. Click Add to post/save the transaction.

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 A/P DOWN PAYMENT REQUEST
An A/P down payment request is a request by your vendor that a down payment
be made at a certain time. This document does not generate any accounting or
inventory posting, so if you create an A/P down payment request based on a
purchase order or a goods receipt PO, the base document is not closed. This
allows you to copy the same base document to a higher level purchasing
document, such as an A/P invoice.

1. On the SAP Business One Main Menu, go to Purchasing A/P
A/P

Down payment Request.

2. Copy the vendors code from the transaction you made in the Purchase
Order data entry then paste it into the A/P Down Payment Request
module. Another way to encode the vendors name is by clicking this icon
then search for the particular vendors name.

3. Click on the Copy From select Purchase Orders then from the List of
Purchase Orders window select the PO transaction you want to request for
payment then click on Choose command button.

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 4. A window wizard will prompt up, select the desired exchange rate then
click on Finish.

5. Click on the Payment Means icon located on your toolbar.

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 6. On the Payment Means window supply the informations needed:
6.1. Check Payment
a. Due Date
b. Bank Name
c. Manual Put a check on the box
d. Check Number Type check no
e. Amount Type the amount of payment being requested.
f. Click on the OK command button

6.2. Cash Payment

a. Select G/L Account name
b. Type the amount on the Total textbox
c. Click OK.

7. Double check if all the informations being encoded are correct then click
ADD command button to save the transaction.

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 A/P Reserve Invoice
The A/P reserve invoice is similar to a PO but it also includes a request for
payment. It is used when the vendor is concerned about your creditworthiness
and requires prepayment before delivering an item or service.

The A/P reserve invoice is a combination of a PO and a request for payment. It

can be created new or from an existing PO. Once posted, the document debits the
relevant accounts in the general ledger without affecting inventory quantities and
values. The A/P reserve invoice cannot be used for services.

PROCEDURE:

1. On the SAP Business One Main Menu, go to Purchasing A/P
A/P

Reserve Invoice. A new entry for A/P reserve invoice will appear.

2. Supply data in the header field like vendor, currency, and posting date. Also
provide items, unit price, and quantity to order in the detail tabs.

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3. Click the payment button located in the toolbar menu to enter payment
for the said invoice. Select Payment option like cash, check, etch then inter the
amount to be paid. Then click ok to post the said payment.

Set currency, payment Enter amount

option, and the G/L here.
Account for said
payment.

4. After clicking the Add button, a system message will appear. Just click yes
button to proceed in posting.

5. You will be prompted to input withholding tax.

6. If no, the invoice is now posted. If yes, enter withholding tax calculation.

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 PROCEDURES IN POSTING DOCUMENT DRAFT
UNDER PURCHASING A/P

1. On the SAP Business One Main Menu go to Purchasing- A/P

Document Draft.
2. Under the Document Drafts- Selection Criteria, just check the reports you
want to generate then click on OK.

3. The Document Draft list be prompted on your screen, choose the

document you want to open, You can sort the data either in ascending or
in descending structure by double clicking the Draft No or you can used
the other headers like Form No depending on your own preference.

4. Select the document you want to view then click OK or double click the
record that you have highlighted.

5. Post the Data then save the transaction.

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 PROCEDURES IN DELETING DOCUMENT DRAFT
UNDER PURCHASING A/P
6. On the SAP Business One Main Menu go to Purchasing- A/P
Document
Draft.
7. Under the Document Drafts- Selection Criteria, just check the reports you
want to generate then click on OK.

8. The Document Draft list be prompted on your screen, choose the

document you want to delete. You can sort the data either in ascending or
in descending structure by double clicking the Draft No or you can used
the other headers like Form No depending on your own preference.

9. Choose the document you want to delete then right click on your mouse,
select Remove. Do the same for the other reports you want to delete.

10. After you have finished deleting the posted draft entries, click on Updates
so that it will permanently remove the entries on the Draft Document.

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 Accounting and Inventory Impact
Summarized in the following table are the most important inventory management
and accounting implications of the SAP Business One purchasing documents

Purchasing
Accounting impact Inventory impact
Document
Purchase No posting of value-based changes Allows viewing of ordered
order quantities in various reports
and windows, such as
inventory status report and
Item Master Data window

A/P reserve Debits accrued payable/allocation Allows viewing of ordered

invoice account and credits business quantities
partner's A/P control account

Goods receipt Debits inventory account and credits Increases inventory

PO accrued payable/allocation account quantities

Goods return Debits accrued payable/allocation Reduces inventory quantities

account and credits inventory
account

Landed costs Debits inventory account and credits Updates last purchase price
landed-costs expense account of imported item(s)
containing all costs that were
allocated in price lists

A/P invoice If the A/P invoice is based on a Posts no changes in

goods receipt PO, debits accrued-
payable/allocation account and
credits business partner's A/P control
account.
If the A/P invoice is not based on a
goods receipt PO, debits inventory
account and credits business
partner's A/P control account
inventory (A/P invoice with
reference to goods receipt
PO)
Posts inventory changes (A/P
invoice without reference to
goods receipt PO)

A/P credit Debits business partner's A/P control Reduces inventory quantities
memo account and credits inventory only if not based on goods
account return

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 Purchasing Checklist

Getting Started

Vendor master data contains current vendors

Payment method is set

Item master data contains goods and/or services previously purchased

Step 1: Purchase order

Create a PO by selecting existing or entering new vendor and item data

Specify Delivery Date in document header

If vendor requires prepayment for goods or services, use an A/P reserve

invoice instead of a PO

Step 2: Goods receipt PO

You receive items or services from vendor

Document receipt of items or services using the goods receipt PO

If you need to return goods after creating the goods receipt PO but before the
A/P invoice has been posted, use the goods return document

If you must account for additional import-related purchasing costs, use the
landed-costs purchasing document based on a goods receipt PO

Step 3: A/P invoice

You receive an invoice from vendor

Enter invoice information into an A/P invoice, which allows payment to be

issued once an invoice is posted

If you return goods after an A/P invoice is posted, use an A/P credit memo

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