SRM Training Guide

Invoice Verification Workflow

Agenda

 Invoice Verification Workflow Overview

 Topic 1: Remind emails to requester

 Topic 2: Process Prepayment

 Exercises

SRM Training
Page 2
Business Process Overview
Invoice Verification Workflow

SRM Training
Page 3
New Process Benefits

 Invoicing provides paperless electronic flow within company.

o Requestors can receive the system reminder email if the invoice be

blocked/parked/subsequent delivery
o Accounting can trace PO and GR information through system, and if any
unmatched case can be followed per system reports and process

 SRM provides parked invoice function.

o It will reduce the chance of missing invoice in the paper transfer process
o Controllers can support by system report for provision analysis

SRM Training
Page 4
Course Objectives

After completing this course you will be able to:

 Understand the new overall process of Invoice Verification, Parked Invoice,

and Prepayment

 Requester aware of the remind emails format

SRM Training
Page 5
Key Terms (1/3)

 Purchase Order (PO)

o Formal request from L’Oreal China to a vendor to provide a certain quantity of
good(s) or service(s) at or by a certain point in time.

 Goods receipt (GR)

o Goods Receipt is to do the goods receipt record in SRM system
o It’s based on PO information.

 Invoice Verification (IV)

o Invoice Verification is to verify the invoice amount, invoice title.
o It’s based on PO and Goods Receipt information.

SRM Training
Page 6
Key Terms (2/3)

 Parked Invoice
o The Parked Invoice provide the function to record invoice before requester confirm
the goods receipt.
o It based on invoice and PO information.
o It will not impact the P&L and B/S.

 Subsequent Delivery
o If Invoice quantity > Goods Receipt quantity, but < PO quantity,
o In SRM, workflow is carried out electronically to requester for a subsequent delivery
to settle the difference.
o After the requester do the subsequent delivery, Accounting will release the payment
manually per the MRBR report.

 Blocked Invoice
o If the invoice unit price and/or quantity discrepancy, and it is greater than PO unit
price and/or quantity tolerance,
o In SRM, System workflow is triggered, which starts with the PO requester's approval,
then goes through all the defined PO approvers for PO update.
o The payment will be hold until the workflow is finished in SRM.

SRM Training
Page 7
Key Terms (3/3)

 Partial Invoice
o If Invoice quantity < GR quantity, accounting will do invoice verification based on
invoice quantity.
o It will be treated as partial invoice.
o System will effect the payment on due date.

 Workflow
o The process of moving documents and business data between individuals in order to
complete a business process or function.
o Example: POs are created by a requestor and are sent to an approver before being
issued to the vendor.
o In SRM, workflow is carried out electronically.

SRM Training
Page 8
Key Policies (1/6)

 Supporting documents: PO, Invoice, Contract.

o Please mark PO no., L’Oreal contact, brand, and contract no. as request on Invoice,
which will facilitate for internal follow up. If it’s installment payments, please mark
the payment percentage on invoice.

o The contract is requested to be signed for total purchasing amount is over/equals

RMB100,000.00.

o The annual contract hard copy is not requested from vendor but request to mark
contract no. on invoice,
- e.g. Legal Department, Purchasing Department, should pass the contracts to
accounting when signed.

o The information must be matched among PO, Invoice, and Contract, including amount,
company title.

SRM Training
Page 9
Key Policies (2/6)

 Insufficient supporting documents

o If any supporting document is insufficient, e.g. no PO create in system, missing contract,
invoice without PO no. etc., accounting will return the documents to vendor with specific
reason for checking.

 Company title unmatched

o If company title is unmatched among PO, Invoice, and contract, accounting will return the
documents to vendor for checking.

 Parked Invoice of IV document received without system GR

o Accounting will park the invoice, and release payment until requester confirms GR. The
system will send the reminder email (reference to attachment 1) to requester to follow up.
o Accounting will follow up the monthly parked invoice report (T-code: YFD1). For any long
term outstanding, accounting will send reminder to requester. If 6 months no answer,
accounting will cancel parked invoice and return the invoice to vendor.

SRM Training
Page 10
Key Policies (3/6)

 Unit price and/or quantity discrepancy (1/3)

o Attention: the system tolerance

- Media (PO in value): 0% for unit price, 5% for quantity, and Rmb2000 for total amount.
- Other service: 5% for unit price, 0% for quantity, and Rmb2000 for total amount.
- Physical goods: same as other service.

o Subsequent Delivery (Quantity Discrepancy: IV>GR, IV<PO)

- If Invoice quantity > Goods Receipt quantity, but < PO quantity, accounting will do
invoice verification based on invoice quantity.
- System will send email (reference to attachment 2) to requester for a subsequent
delivery to settle the difference.
- The requester action according to the situation: dunning supplier, enter the missing
GR, activating the final delivery flag, etc.

SRM Training
Page 11
Key Policies (4/6)

 Unit price and/or quantity discrepancy (2/3)

o Blocked Invoice (Quantity Discrepancy : IV>GR, IV>PO; Price Discrepancy: IV>PO)

- If the invoice unit price and/or quantity discrepancy, and it is greater than PO
unit price and/or quantity, accounting will block invoice in system.
- System workflow is triggered, which starts with the PO requester's approval, then
goes through all the defined PO approvers for PO update.
- Accounting will follow up the monthly blocked invoice report (T-code: MRBR),
checking block reason and release manually some blocked invoices. For any long
term outstanding, accounting will send reminder to requester. If 6 months no
answer, accounting will cancel parked invoice and return the invoice to vendor.

o Partial Invoice (Quantity Discrepancy: IV<GR)

- If Invoice quantity < GR quantity, accounting will do invoice verification based on
invoice quantity.
- System will effect the payment on due date.
- Accounting will treat it as partial invoice.

SRM Training
Page 12
Key Policies (5/6)

 Unit price and/or quantity discrepancy (3/3)

o Reverse Expenses (Price Discrepancy: IV<PO)

- If Invoice unit price < PO unit price, accounting will do invoice verification based
on invoice unit price.
- System will effect the payment on due date.
- Accounting will manually reverse the difference into the expenses.

o All matched information

- If all information matched, accounting do invoice verification in system, then go
to payment process.

SRM Training
Page 13
Key Policies (6/6)

 The policy and process for Accrual for Parked Invoice:

o Park the invoice immediately but accrue only once a month
o Accrue on the last working date of month end, should be no later than AP’s GR cut-off time
o The code for accrue parked invoice will be 2181930000: Other Payable-Park Invoice
o Put the accrue parked invoice list on I drive I:\Accounting\PL\2008

 The policy and process for GR reverse:

o Mark reasons on printed PO for GR cancel
o For amount < RMB500k, approval from Brand GM + Brand controller + Accounting Director are
required
o For amount > RMB500k, approval from Division GM + Division controller + Accounting Director
are required.
o For corporate, R&D, and DOA, approval from Budget Manager + Corporate controller +
Accounting Director are required.

 The policy and process for Accrual for Missing GR:

o This is only for running out the information then pass to controller for tracing GR, accounting
must not to post the accrual for missing GR.
o Test run this report around 20th of each month
o Put the accrue missing GR list on I drive I:\Accounting\PL\2008

SRM Training
Page 14
Agenda

 Invoice Verification Workflow Overview

 Topic 1: Remind emails to requester

 Topic 2: Process Prepayment

 Exercises

SRM Training
Page 15
System Navigation Topic 1: Remind emails to requester – Parked Invoice New

1. If the invoice is parked, the

requester will receive an email
2. Requester instruction to
accounting according to the
situation: dunning supplier,
entering the missing GR,
activating the final delivery
flag, etc.

SRM Training
Page 16
System Navigation Topic 1: Remind emails to requester – Subsequent Delivery
New

1. If the subsequent delivery is

request, the requester will
receive an email
2. Requester instruction to
accounting according to the
situation: dunning supplier,
entering the missing GR,
activating the final delivery flag,
etc.

SRM Training
Page 17
System Navigation Topic 1: Remind emails to requester – Blocked Invoice New

1. If the invoice is blocked for

payment, the requester will
receive an email
2. If the requester approved, the PO
will be re-approved
3. If the requester reject, the
requester should contact vendor
and inform accounting to solve.

SRM Training
Page 18
Agenda

 Invoice Verification Workflow Overview

 Topic 1: Remind emails to requester

 Topic 2: Process Prepayment

 Exercises

SRM Training
Page 19
System Navigation Topic 2: Prepayment (Overview) New

How do I process prepayment and finish whole prepayment process?

In SAP R3, use T-code: F-43. And use T-code: MIRO/FB60, F-44, MRBR,
MIR7, YFD1.

 Book prepayment and release payment

o F-43 is for booking prepayment.
 Book normal IV or book parked invoice
o MIRO/FB60 is for processing invoice verification for PO/EPR,
o MIRO is also for processing parked invoice
o Note: The difference between normal IV and Parked Invoice for Prepayment (booking
text and follow up report).
 Offset prepayment and IV
o F-44 is for offset vendor and prepayment
 Check the report and release the invoice
o MRBR is for checking and releasing the blocked invoice
o YFD1 is for checking parked invoice and processing invoice verification for the case
that actual expense period is later than prepayment period

SRM Training
Page 20
System Navigation Topic 2: Prepayment – Book Prepayment ( T-code: F-43 )

1
New
1. Support of PRF form, this form will apply
to all prepayment case, including media.

SRM Training
Page 21
Agenda

 Invoice Verification Workflow Overview

 Topic 1: Remind emails to requester

 Topic 2: Process Prepayment

 Exercises

SRM Training
Page 22
Learning Assessment Questions (1/1)

 On what kind of case, the reminder email will be sent to the requester?

 How to deal with insufficient supporting documents?

 Describe the related steps of prepayment, including payment and booking steps.

SRM Training
Page 23
 Congratulations!
You have completed the Invoice Verification Workflow
Course!!

SRM Training
Page 24