Rise IT

Project: Implementation
Project Rise IT–Business Blueprint
BBP-FI-ES-0001:
Enterprise

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Revision History
Created Supriyo(Consultant) Created 04/04/2017
By: Date:
1st Review Team lead 1st Review
By: Date:
2nd Review Key User 2nd Review
By: Date:
3rd Review 3rd Review
By: Date:
Approved Approval
By: Date:

<Client> Process Owner Sign-off

Name: Sing

Position: Process Owner

Sign-off
Date:
Signature:

<Client name> Team Leader Sign-off

Name: IT Project Manager

Position:

Sign-off
Date:
Signature:

Coconut Team Leader Sign-off

Name: SURYA VANGARA
Position: Project Manager
Sign-off
Date:
Signature:

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 Table of Contents
1. SCENARIO OVERVIEW........................................................................4
2. REQUIREMENTS / EXPECTATIONS...............................................4
3. SAP ORGANISATION STRUCTURE.................................................4
4. BUSINESS PROCESS............................................................................5
4.1 BUSINESS PROCESS FLOW CHART......................................................5
4.2 BUSINESS PROCESS DESCRIPTION.......................................................5
5. CHANGES TO EXISTING ORGANISATION...................................6
6. KEY BUSINESS IMPROVEMENT.....................................................6
7. DESCRIPTION OF FUNCTIONAL DEFICITS.................................6
8. NOTES ON FURTHER IMPROVEMENTS.......................................7
9. SYSTEM CONFIGURATION CONSIDERATIONS.........................7
10. DEVELOPMENTS CONSIDERATIONS........................................7
10.1 DATA CONVERSION CONSIDERATIONS................................................7
10.2 INTERFACE CONSIDERATIONS.............................................................7
10.3 REPORTING CONSIDERATIONS............................................................7
10.4 FORM CONSIDERATIONS.....................................................................8
10.5 ENHANCEMENT CONSIDERATIONS......................................................8
11. Authorisation Considerations................................................................8

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 1. Scenario Overview
The Accounts Receivable is an integral part of purchase department. It is a
subsidiary Ledger. To connect a link between Accounts Payable and Finance we
use reconciliation account.

2. Requirements / Expectations

Accounts payable will have to record and manage the accounting data
relating to all vendors. It will also need to be closely integrated with the
procurement and inventory management system. Any transaction in
procurement, which has a financial implication, would have to
automatically be reflected in accounts payable as well as the general
ledger. Also, different GL accounts should be affected based on the
nature of the transaction, for example, advance payments, bank
guarantees and security deposits given.

Alok would look at tracking and monitoring open items, analysis of

vendor outstanding and generation of balance confirmation letters. It
would also require settling payments against appropriate outstanding
and settling advances against appropriate invoices.

3. SAP Organisation Structure

The processes for Accounts Payable are:
Payments for purchases done for material, equipments and other items
against purchase order and GRN for local and import procurement.

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 Payments for services
Payments for excise and / or other statutory requirements.
Payments made in advance to suppliers and tracking the same through
a separate control account.
Payments made after IV but before due date and availing cash
discounts.
Vendor – Customer cross adjustments.
Partial payments, with or without discounts
Cheque printing

The Vendor Master maintains the fields like

1. General Data
2. Company Code Data

4. Business Process
4.1 Business Process Flow Chart

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 4.2 Business process Description

Step Activity Data input Data T Department System Remarks

# Output Code
in
SAP
Create Acct Group 400000 FK01 FI DEV
1 Vendor Co Code
Master Reconciliation
account
Payment
method
Payment
terms

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 Step Activity Data input Data T Department System Remarks
# Output Code
in
SAP
Bank Details
Sort Key
Cash Mgmt
Group

5. Changes to Existing Organisation

Advance Payment to Vendors will be treated as down payments made
using a special GL indicator.
.

6. Key Business Improvement

none

7. Description of Functional Deficits

Ref. Description of Functional Recommendation to Fulfill

# Deficits Functional Deficits

8. Notes on Further Improvements

None

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 9. System Configuration Considerations

The accounts payable application component records and manages

accounting data of all vendors.
Framework of the Accounts Payable Process is as follows:
Process of AP will start from invoice verification / advance payment.
Payment of advance to the vendor.
Invoice verification will be done against the GRN and PO number by
finance.
TDS is deducted if applicable
Once the invoice is verified it will be available for payment in finance.
If any advance is out standing against the vendor system will prompt
while doing the verification.
Adjusting of advances paid against open invoices.
Payments can be made by cheque, Bill of Exchange or by adjusting
credit notes issued to supplier.
Part payments can be made if required.
Once the payment is processed the bank account will get credited and
vendor account will get debited.
TDS is calculated and deducted if applicable and if not deducted already
while Invoice Verification.

The processes in Accounts Payable are:

Component wise display of PO terms during IV. For example, Basic rate,
ED, Sales Tax, Freight etc.
Down payments to vendors and clearing of the same.
Generation of accounting document for payables based on vendor
invoice.
Debit notes / Recoveries for online rejections.

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 Scheduling payables to vendors based on payment terms and funds
position.
Payment of money to the vendor (with reasons for deductions, if the
invoice amount and payment amount do not match).
Accounting of the payment against the appropriate outstanding.

Flow of Journal entries in SAP:

A) At the time of GR / Service entry sheet update inventory.
Dr. Inventory (with restricted inventory type) a/c
Dr. Expenses A/c (for expense related purchases)
Cr. GR/IR a/c

B) At the time of QC check if the material is found as per the ordered

quality there will be a system entry, which will reverse Restricted
Inventory type to Un-Restricted Inventory type.

C) Invoice Verification is done by Finance dept after receipt of Invoice

from Vendor. Invoice is entered with reference to the PO and GRN.
Liability to the Vendor is created at this point of time. At the time of
Invoice verification the system will prompt the user if any advance
payment exists. In case of Service related PO, TDS is also deducted if
the Vendor is liable to TDS. Invoice verification will pass the following
entry:
Dr. GR/IR a/c
Cr. Vendor (AP) A/c
Cr. TDS Payable A/c

At the time of making payment there are 2 options:

a) Automatic payment run –

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 This clears all the open items against the I.V & will list down all the
cleared items after which automatic cheque printing will be done by the
system. Finally, the FI postings will also be done by the system
automatically.
b) Manual payment run –
Here, the user will have to manually select the parties to whom payment
has to be made. TDS will also be deducted if not already deducted at the
time of Invoice Verification. This transaction will be executed using SAP
transaction code F-53 or F-58. The transaction F-53 will be used when
the user wants to post the payment transaction but does not want to print
cheque.
In SAP there is a feature to record the cheque number for the payment
document in case of manual check preparation. The user will attach the
cheque number to the payment document through FCH5.
The transaction F-58 will be used when the user wants to post the
payment transaction and also prints checks for the vendor.

The entry passed will be:

Dr. Vendor a/c
Cr. Bank Clearing a/c
Cr. TDS Payable

At the time of upload of the bank statement, the following entry will clear
the bank sub account. Entry will be as follows:
Dr. Bank Clearing a/c
Cr. Bank a/c

Process Flow for Non GRN based Purchases

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 This process is related to passing of invoices in finance module where
material management department is not involved. Invoices that will be
routed through FI include Auditor’s remuneration, insurance payments,
subscriptions, training expenses etc. These invoices will be passed
through T-code F-43 or FB60.
The respective departments will approve the document for expenses.
The Finance dept verifies the document & updates the payables a/c i.e.
creates a liability.
The system prompts the user in case an advance exists for the service.
Finance processes the payment through the normal bank payments after
adjusting the advance.
The cheque printing process would be manual / automatic based on
requirements and specifications.

Flow of Journal entries in SAP:

A) At the time of booking the expense
Dr. Expense a/c
Cr. Vendor a/c
Cr. TDS Payable a/c

B) At the time of outgoing payment

Dr. Vendor (main) a/c
Cr. Vendor (advance) a/c
Cr. Bank (Clearing) a/c

C) At the time of upload of the bank statement, the following entry will
clear the bank sub account. Entry will be as follows:
Dr. Bank (Clearing) a/c
Cr. Bank a/c

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 Process flow in SAP for Advance payments
The advance payment request is approved by the respective department
based on the PO terms & conditions through standard workflows.
The finance department verifies the payment approval.
The advance payment to vendor is processed as a normal payment with
respective entries for TDS in FI.
Entry in SAP
Dr. Vendor (Down Payment) A/c
Cr. Bank A/c.
Cr. TDS Payable A/c.

Process Flow In SAP For Imports

PO is raised on the foreign vendor after necessary approvals from the
respective departments & heads.
Next step involves paying up any advance to the foreign vendor, if the
terms of the PO so state. Alok would request the bank to open a Letter of
Credit in favour of the vendor.
Once the LC is opened, the vendor dispatches the goods to Alok.
Simultaneously it sends the set of Non-Negotiable documents viz. Bill of
Entry, Shipment documents, etc.
At location, Goods receipt is done. Once this is done, an entry is passed
in FI to update Inventory & GR/IR a/c.
The next step is Invoice verification where various expenses are booked
& vendor liability created. At this stage, the system will prompt in case an
advance already exists. At this point exchange rate differences between
time of GR (at Bill of Exchange date exchange rate) and time of IV will
get inventorised in case the material is still in inventory. In case the

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 materials have already been consumed, the exchange rate difference
would be charged off to price variance account.
The bank will remit the amount to the vendor as per the PO.
Once the bank pays the vendor, it debits the account of Alok along with
its charges & intimation is send for the same.
Alok acknowledges this payment & makes appropriate entries in FI.
Exchange rate differences between date of IV and date of payment is
accounted for at this point.
Flow of journal entries in SAP:
A) Release Advance payment to vendor
Dr. Vendor (advance) a/c
Cr. Bank (Clearing) a/c

B) At the time of GR / Service entry sheet update Excise register

RG23A.
Dr. Inventory a/c
Cr. GR/IR a/c

C) At the time of Invoice verification the system will prompt the user to
notify if any advance payment exists. Exchange rate differences are also
accounted for here.
Dr. GR/IR a/c
Cr. Vendor (AP) a/c

At the time of making payment there are 2 options:

For payments made to vendor for the material
The bank directly remits the amount after the usance period & debits
Alok’s a/c for basic invoice value & also bank charges. On receipt of

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 intimation, Alok makes appropriate entries in it books including impact of
exchange rate fluctuations.

Automatic payment run –

This clear all the open items in the Vendors Accounts & will list down all
the cleared items after which automatic cheque printing will be done by
the system. Finally, the FI postings will also be done by the system
automatically. The functioning of the Automatic Payment run is explained
in the Bank Accounting chapter.
Manual payment run –
Here, the user will have to manually select the parties to whom payment
has to be made. Also the cheque printing & FI posting will be done
manually.
The entry would be:
Dr. Vendor A/c
Cr. Bank (Clearing) A/c
Cr. Vendor (advance) A/c
At the time of upload of the bank statement, the following entry will clear
the bank sub account. Entry will be as follows:
Dr. Bank (Clearing) A/c
Cr. Bank A/c
At the period end, entries will be passed as part of foreign exchange
items valuation for balances in foreign exchange
For Payment through Bills of Exchange, the Vendor Invoice is cleared
and a Special GL Open Item is created. For raising a liability towards the
Bank, the Bank Bills Payable is credited and the Bank Bills Payable
clearing A/c is debited as an offsetting entry.
Dr. Vendor (AP) A/c
Cr. Vendor (Bills/Exch) A/c

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 Dr. Bank Bills Payable Clearing A/c
Cr. Bank Bills Payable

When Alok pays off the Bills Payable on the due date, the special GL
open item is cleared, the Bank A/c is credited, the liability towards the
Bank is cleared and the Bank Bills Payable A/c is credited as an
offsetting entry
Dr. Vendor (Bills/Exch) A/c
Dr. Bank Bills Payable
Cr. Bank Bills Payable Clearing A/c
Cr. Bank A/c

With holding Taxes

TDS to be deducted from the Vendors will be handled by Withholding
taxes functionality in Country Version India. The TDS certificates and
challans can be printed through CIN module.
Withholding Tax codes will be maintained for different rates of TDS.
Following TDS rates are applicable and will be created as Withholding
tax Codes and will be maintained in the Vendor Master.
Rec. Ded Tax Edu
TDS Section Type Description Rate Rate Surcharge Cess
194H N Commission or brok (ind/huf)<10 5.61 5 0.5 0.11
194H N Commission or brok (ind/huf)>10 5.1 5 0 0.1
194-H C Commission or brokerage (c) 5.61 5 0.5 0.11
194H N Commission or brokerage (o) 5.61 5 0.5 0.11
194-J N Fees for prof./tech ser-ind/huf<10 5.61 5 0.5 0.11
194J N Fees for prof./tech ser-ind/huf> 10 5.1 5 0 0.1
194-J C Fees for prof. Or techn. Ser. (c) 5.61 5 0.5 0.11
194-J N Fees for prof. Or techn. Ser. (o) 5.61 5 0.5 0.11
193 N Int. On securities (ind/huf) < 10 11.22 10 1 0.22
193 N Int. On securities (ind/huf) > 10 10.2 10 0 0.2
194-A C Int. Oth. Than int. On security (c) 22.44 20 2 0.44
194-A N Int. Oth. Than int. On security (o) 11.22 10 1 0.22

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194-A N Int.oth.than int. on sec-ind/huf<10 11.22 10 1 0.22
194A N Int.oth.than int. on sec-ind/huf>10 10.2 10 0 0.2
193 C Interest on securities - (c) 22.44 20 2 0.44
193 N Interest on securities - (o) 11.22 10 1 0.22
195 C Other sums (195) 15.37 15 0.37 0
Pay. To cont&sub-cont.
194-C N (ind/huf)<10 2.244 2 0.2 0.044
Pay. To cont&sub-cont.
194C N (ind/huf)>10 2.04 2 0 0.04
194-C C Pay. To cont. & sub-cont. Advt. (c) 1.122 1 0.1 0.022
194-C N Pay. To cont. & sub-cont. Advt. (o) 1.122 1 0.1 0.022
194-C C Pay. To contractor & sub-cont. (c) 2.244 2 0.2 0.044
194-C N Pay. To contractor & sub-cont. (o) 2.244 2 0.2 0.044
Pay. to cont&sub-con adv-
194-C N ind/huf<10 1.122 1 0.1 0.022
Pay. to cont&sub-con adv-
194C N ind/huf>10 1.02 1 0 0.02
194-I C Rent (company) 22.44 20 2 0.44
194-I N Rent (ind/huf) < 10 16.83 15 1.5 0.33
194I N Rent (ind/huf) > 10 15.3 15 0 0.3
194-I N Rent (others) 22.44 20 2 0.44
-- N TDS on works contract 2 2 0 0
C – Company
N – Non Company
Flow of Entries in SAP:
A) When TDS is deducted during the Invoice Verification
Dr. GR/IR A/c
Cr. Vendor A/c
Cr. TDS Payable A/c

B) When TDS is deducted during payment transaction.

Dr. Vendor A/c
Cr. Bank Clearing A/c
Cr. TDS Payable A/c

C) For paying the TDS deducted.

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 Dr. TDS Payable A/c
Cr. Bank A/c

9.1 Data Conversion Considerations

Ref. Description of Objects / Data to Data Conversion Reference
# be Converted Method (CATT, Development
LSMW, Specification
Development) Number
<To be updated at
Cutover data for vendor masters, the end of Blue
balances & open line items will print phase>
have to be captured as part of
data migration. The formats for
the same will be finalized during
the realization phase

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 9.2 Interface Considerations
Ref. Description of System / Process to be Reference Interface
# Interfaced Specification Document
Number

The accounts payable module is

closely linked with the materials
management module of sap as well as  .
the banking sub-module in finance.
Since the individual applications
(general ledger and sub ledgers) all
exchange data, individual business
transactions only have to be entered
once. The accounts payable
component is not merely a basis for
correct accounting procedures. Due to
the close integration with material
management, it provides data for
effective payables management.

Accounting data is posted for vendors

in accounts payable. From there, the
data is sorted by vendor and made
available to other components, for
example material management. When
you post data in accounts payable, the
system creates a document and
passes the data entered to the general
ledger. General ledger accounts are
then updated according to the

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Ref. Description of System / Process to be Reference Interface
# Interfaced Specification Document
Number
transaction concerned (payable, down
payment, bill of exchange, and so on).

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 9.3 Reporting Considerations
Ref. Description of Report Requirements Reference Report
# Development
Specification
FK10N Display Vendor
Balances.

FBL1N
Display Vendor Line
Items
S_ALR_87012078
Due Date Analysis for
Open Items
S_ALR_87012084
Open Items - Vendor
Due Date Forecast

9.4 Form Considerations

Ref. Description of Forms Reference
# Enhancement
Specification Number
<To be updated at the
end of Blue print phase>
NONE

9.5 Enhancement Considerations

Ref. Description of Enhancement Requirements Reference
# Enhancement
Specification Number
<To be updated at the
end of Blue print phase>
NONE

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Ref. Description of Enhancement Requirements Reference
# Enhancement
Specification Number

10. Authorisation Considerations

The authorization requirements would be finalized during the realization
phase

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