sap business one accounting

<Course Number and Course Title ABC123Overiew>TB1100SAP Business OneAccounting

SAP Business One

2010 / Q2

Material number: 50098704

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Target Audience and Course Prerequisites

Target Audience:Consultants and support employees responsible for the implementation and ongoingsupport of business processes with SAP Business One at customer sites

Essential Prerequisites :Familiarity with SAP Business One navigation and functionality.Basic knowledge in financial accounting.Consulting or sales experience with at least one

Recommended Prerequisites :Attend the course TB1000 SAP Business One - Logistics

Course Goals and Objectives

Outline the main financial accounting processes in SAP Business One.Perform the main accounting and banking tasks in each financial process.Manage your accounting procedures with SAP Business OneUtilize controlling tools and company reports.Point out the essential settings for accounting functions.

Course Content

Unit 1 - SAP Business One Standard Financial Processes:Standard financial processesThe financial consequences of the sales and purchasing processes on the generalledger

Unit 2 - Banking Process:Outgoing and incoming paymentsPayment means and depositsClearing an accountBank statement handling and external reconciliations

Unit 3 - Financial Process:Manage the Chart of AccountsPost a Journal Entry:

Enter manual journal entryFrom a journal voucherUsing a posting templateAs a recurring posting

Course Content (cont.)

Unit 4 - Posting Periods Process:Posting periods - process overviewDefining periods – highlightsPost transactions to periodsInternal reconciliation process - monitor and perform internal reconciliationPeriod-End closing process.

Unit 5 - Controlling Reports:We will discuss the reports in their financial accounting context:

Financial reportsMonetary status controlCompany analysis and planning

Unit 6 - Financial Accounting Initialization:Tax system.Currencies.Perpetual inventory/ non-perpetual inventory system.

1-1

Unit 1: SAP Business OneStandard Financial Processes

Contents:Standard financial processesSales and purchasing processes and their consequences on book keeping

1-2

SAP Business One Standard Financial Processes:Unit Objectives

After completing this unit, you will be able to:Discuss some general accounting conventionsDescribe the steps in the standard financial processes in SAP Business OneGive examples of the automatic journal entries created during the sales, purchasingand inventory processesDiscuss the financial consequences of the processes on the general ledger

1-3

SAP Business One Standard Financial Processes:Course Overview Diagram

SAP Business One Standard Financial Processes

Topic 1: Standard Financial Processes

Topic 2: Sales and Purchasing Processes

1-4

You are implementing SAP Business One at a new customer, OECComputers:

Your main contact in the customer site is Maria the accountant.Maria asks about the way SAP Business One handles the financialaccounting processes.She wants to make sure she understands the big picture so she can reportto the company owners the business results periodically.

SAP Business One Standard Financial Processes:Business Example

1-5

Standard Financial Processes




System Configuration

Purchasing

Warehouse management

Production

Inboundlogistics

Outboundlogistics

Marketing&

SalesService

Financial controlling

Master data

1-6

After completing this topic, you will be able to:

Discuss some general accounting conventions

Standard Financial Processes:Topic Purpose

1-7

Finance Basics

Every business transaction is recorded in the company's books.This allows you:

To manage your company effectively with the option of producing financialreportsTo report the business transactions to the authorities.

Every business transaction results with a value exchange:A certain account increases value and another decreases value, resulting in therecording of balancing debit side and credit side postings.

1-8

Value Exchange: Question

A/R Invoice

In a current sales process what happens to the accounts involved in theA/R Invoice?(Let us assume that this is a non-perpetual inventory system)

1-9

Value Exchange: Answer

A/R InvoiceDebit Credit

Customeraccount 105

Tax account 5

Revenueaccount 100

1-10

Some General Accounting Conventions (1)

Debit Credit

Cash clearingaccount 105

Bank account 105

Deposit no. 500070

Each journal entry represents one posted business transaction.Each line in the journal entry represents one posting to an account (which could represent acustomer, vendor or a regular general ledger account).Each line in the journal entry represents a posting of either a debit or a credit amount (but neverboth together).

In this example, when we deposit cash amounts to the company bank account, the cash clearingaccount decreases value and is credited and the bank account increases value and is debited.

This corresponds with the Double Entry bookkeeping system, wherein every transaction or eventimpacts at least two different accounts. In modern accounting this is done using debits and credits.

1-11

Some General Accounting Conventions (2)

Debit Credit

Check clearingaccount 105




Bank account 765

Total 765 765

Deposit no. 500071

Each journal entry must include debit and credit amounts; therefore, a journal entry must includeat least two lines.There is no limit on lines in a single journal entry.A journal entry must be balanced. That is, the total credit and debit amounts in a journal entrymust be equal

In this example, the check clearing account is credited 4 times because the deposit includes 4 checks(the business received from different customers).The bank account is debited in the total value of those 4 checks.The debit and credit amounts are equal and the journal entry is balanced.

1-12

The Account Balance (1)

CustomerXXXX7 Debit Credit Origin

105 Debit A/R Invoice



705 Credit IncomingPayment



AccountBalance 700 Debit

The account balance represents the difference between the total debit transactions and the totalcredit transactions recorded for that account.The transaction summary or the balance of a certain G/L account or business partner is theinitial information the accounting system can provide about the business.

1-13

The Account Balance (2)

Previously, we mentioned that in each journal entry a certain account increases value andanother decreases value, resulting in the recording of balancing debit side and credit sidepostings.

The effect on the account balance:Assets, Expenses, and Drawings accounts are generally in debit.Liability, Revenue, and Capital (Equity) accounts are generally in credit.

1-14

The Account Balance and the Account TypeB

alan

ce S

heet

Acc

ount

sPr

ofit

and

Loss

Acc

ount

s

For assets:Debit transactions always increase the asset value.Credit transactions always decrease the asset value

For liabilities:Credit transactions always increase the liability.Debit transactions always decrease the liability.

1-15

Value Exchange and the Account Balance

Debit Credit

Customeraccount 440

Revenueaccount 440

A/R Invoice

The two accounts increase their values:

(Let us assume that the customer is tax exempt and that this is a non-perpetual inventory system)

1-16

Sales and Purchasing Processes




System Configuration

Purchasing

Warehouse management

Production

Inboundlogistics

Outboundlogistics

Marketing&

SalesService

Financial controlling

Master data

In this topic we review the sales and purchasing processes discussed in TB1000 and focus on theirconsequences on bookkeeping.

1-17

After completing this topic, you will be able to:Describe the steps in the standard financial processes in SAP BusinessOne.Describe the automatic journal entries created during the sales andpurchasing processes.Discuss the financial consequences of the processes on the general ledger.

Sales and Purchasing Processes:Topic Purpose

1-18

Automatic Journal Entries:Reflection Question

Standard

Sales Quotation Sales Order Delivery A/R Invoice Incoming Payment Deposit

In a standard sales process which documents affect the accountingsystem?

1-19

Automatic Journal Entries:Answer

Standard

Sales Quotation Sales Order Delivery A/R Invoice Incoming Payment Deposit

When managing perpetual Inventory

In a standard sales process which documents affect the accountingsystem?

1-20

Examples of Automatic Journal Entries:A/R Invoice

Debit Credit

Customeraccount 105

Tax account 5

Revenue account 100

In the sales process A/R Invoice, which account is debited and which is credited?

(Let us assume that this is a non-perpetual inventory system)

Sales Quotation Sales Order DeliveryA/R Invoice

In SAP Business One, a journal entry is automatically posted from many documents during the sales,purchasing and inventory processes, such as A/R and A/P invoices.

1-21

Examples of Automatic Journal Entries –Incoming Payment

Debit Credit

Cash clearingaccount 105

Customer 105

Possible Payment Means

CheckCredit cardCashBank transfer*BOE

*BOE - Bill of Exchange. This option is relevant for Italy, Portugal, Spain and France and activated by default.

In the sales process Incoming Payment, which account is debited and which iscredited?

Sales Quotation Sales Order Delivery A/R Invoice Incoming Payment

1-22

Examples of Automatic Journal Entries –A/P Invoice

Debit Credit

Vendor 105

Tax account 5

Expense account 100

In the purchasing process A/P Invoice, which account is debited and which iscredited?

(Let us assume that this is a non-perpetual inventory system)

)

Purchase Order Good Receipt PO A/P Invoice Outgoing Payment

1-23

Financial Settings:Reflection Question

G/L Account DeterminationControl Accounts

How does the system “know” which accounts to use automatically?

1-24

G/L Account Determination

G/L Account Determination – defines default G/L accounts related to aspecific business process:

SalesPurchasingGeneral (for example, Period End Closing)Inventory – three available options to choose the default G/L method for an item:

At the warehouse levelAt the item group levelAt the item level

You need to make decisions about G/L Account Determination together with the clientaccountant.

When you implement SAP Business One you define default G/L accounts to be used when transactionsare created. Administration Setup Financials G/L Account Determination.G/L Account Determination: the window is divided into four tabs. Each tab contains the definitionsfor G/L accounts related to a specific business process: Sales, Purchasing, General, and Inventory.When you choose a pre-defined Chart of Accounts template, most of the defaults are already defined.You can change them if required.When choosing a G/L account in the G/L Account Determination window it appears in green in theChart of Accounts.Whenever you add a document that posts a journal entry, A/R Invoice for example, the systemdetermines the G/L accounts to be used from the default accounts.

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G/L Account Determination - Example

Debit Credit

Customeraccount 105

Tax account 5

Revenueaccount 100

A/R Invoice

The Revenue default G/L account is defined in the G/L Account Determinationwindow, under the Sales tab.

Revenue account

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Control Accounts

Control Account Debit Credit

AccountsReceivable Customer 105

Tax account Tax account 5

Revenue account Revenue account 100

Control AccountAccounts Receivable =

A/R Invoice

In the G/L Account Determination window you also define the Control Accounts: Accounts Receivable for theSales process, Accounts Payable for the Purchasing process.A control account links the business partner sub-ledger accounts to the general ledger.You need to define a G/L account as a Control Account in the Chart of Accounts.Whenever you post a document to a business partner, the system automatically register the journal entry to:

The Business Partner Master Data account balance.The control account balance. (You cannot post journal entries directly to a control account).

In an A/R Invoice, for example, when the customer is debited the Accounts Receivable account is also debited.This journal entry appears now in both accounts balances (the customer and the control account).Note, that the Business Partner Master Data balances do not appear in the Chart of Accounts.The receivable and payable control accounts accumulate the customers and vendors transactions in theirbalances.Hence, the Chart of Accounts presents the complete financial status of the company. As well as the FinancialReports (P&L, Balance Sheet).Some transactions, such as transactions with bills of exchange, must be posted to special control accounts.Therefore, you can assign these special accounts to predefined transaction types, such as Open Debts, AssetsAccount, Down Payments Receivable/Payable or other (country-dependent).In the G/L Account Determination window you can select if you want to assign different control accounts todifferent customers or vendors.Assigning control accounts to each customer or vendor is done in the Business Partner Master Data window.Choose Business Partners Business Partner Master Data Accounting tab General tab AccountsReceivable/Accounts Payable field. If this option is not selected, the control accounts defined in the G/LAccount Determination window are used for all customers and vendors.You also have the ability to change the default control account in marketing documents. Choose the Accountingtab Control Account field.If you are working with several control accounts, the system can display the business partner balances separatelyfor every control account. Business Partners Business Partners master Data open the linking arrow in theAccount Balance field and choose the View by Control Account button.

1-27

Exercise - Control Accounts

Go to Reports Financials Financial Balance Sheet.

Run the report.

Locate the Accounts Payable in level 5.

Go to level 1 and check that the report is balanced.

How is the report balanced?

1-28

The Automatic Journal Entry Value

Debit Credit

Customeraccount 440

Revenueaccount 440

How does the system “know” the value to be credited and debited in an automaticjournal entry created by an A/R Invoice?

(Let us assume that the customer is tax exempt).

A/R Invoice

1-29

Value Calculation – Invoice – Sales Process

Unit Price * Quantity = Total Value

Purchasing Price List = 100

Reseller Price List = 110

Retail Price List = 120

Star Trek Computers = Reseller PriceList

110 * 4 = 440Reseller Price List= 110

Sales Quotation Sales Order DeliveryA/R Invoice

Let us refresh our memory with some of the topics from the Logistics course TB1000. Here is acommon scenario of how prices are set in SAP Business One during the sales process:Our customer Star Trek Computers asks for an offer on 4 portable media players.Jean creates a sales quotation. She chooses the customer and then the item. The price per unit appearsin the quotation. How?

The Item master data includes 3 optional prices for this item. Each one of them is represented in adifferent Price List.Star Trek Computers is a reseller customer and so his default price list as defined in his master datarecord is the Reseller Price List.Therefore, in the Sales Quotation, the unit price for a portable media player is 110, the ResellersPrice List.

Jean enters quantity of 4.The total value of the quotation is 440 (assuming there are no additional itemsin the quotation and that no discount or tax amounts are added).Star Trek Computers faxes us a Sales Order based on the Sales Quotation.In SAP Business One, jean copies the Sales Quotation to a Sales Order.2 days later Joe, the warehouse manager, dispatch the company truck with the weekly devilries,including 4 portable media players for Star Trek Computers.Later on the day, the accountant copy the Delivery to an A/R Invoice.Since no change was done to the price during the Copy To process, the Invoice total value is 440 andthese are the Credit and Debit amounts in the automatic journal entry created by the A/R Invoice.

1-30

Value Calculation – A/P Invoice – PurchasingProcess


Coconut Devices = Purchasing Price List

100* 10 = 1000

Debit Credit

Vendor 1000

Clearing acc. 1000

PurchasingPrice List =

100

Purchase Order Good Receipt PO A/P Invoice




In the Purchasing process a common scenario of how prices are set would be:Joe, the warehouse manager, issues a Purchase order of 10 portable media players. He chooses thevendor Coconut Devices and then the item - portable media player. The price per unit appears in thePurchase Order. How?

Since Coconut Devices is a vendor, his default price list as defined in his master data record is thePurchasing Price List.Therefore, in the Purchase Order, the unit price for portable media player is 100, the PurchasingPrice List from the portable media player item master data.

Joe enters a quantity of 10. The total value of the Purchase Order is 1000 (assuming there are noadditional items in the Purchase Order and that no discount or tax amounts are added).Joe e-mails the Purchase Order to the vendor.Few days later Joe receives a delivery including 10 portable media players from Coconut Devices.In SAP Business One, he copies the Purchase Order to a Goods Receipt PO.A week later, the Invoice from Coconut Devices arrives via mail and the accountant copy the GoodsReceipt PO to an A/P Invoice.Since no change was done to the price during the Copy To process, the A/P Invoice total value in 1000and these are the Credit and Debit amounts in the automatic journal entry created by the A/P Invoice.

1-31

Value Calculation – Inventory Process

100 * 10 = 1000

Item CostCalculated Value= 90


Item Cost * Quantity = Total Value90 * 4 = 360

Debit Credit

Clearing acc. 1000

Inventory acc. 1000




Debit Credit

Cost of GoodsSold acc. 360

Inventory acc. 360

Sales Quotation Sales Order Delivery A/R Invoice

Purchase Order Good Receipt PO A/P Invoice

Let us go one step back, to the Goods Receipt PO that Joe entered based on the Delivery he got fromthe vendor.Assuming the company runs perpetual inventory, an item cost value is being calculated automaticallyin each stock transaction.More details on Perpetual Inventory will be provided in the last Unit of the course.When Joe entered the Goods Receipt PO to SAP Business One, the Purchasing Price List value (100per unit) affected the unit price in the Goods Receipt PO and also the item cost value.The item cost value is calculated automatically, behind the scene, according to the valuation methodchosen for the item (Moving Average, FIFO, Standard). The calculated item cost value after the GoodsReceipt PO was 90.Joe entered a quantity of 10 portable media players. Therefore, the total value of the journal entrycreated by the Goods Receipt PO was 1000 and these are the Credit and Debit amounts registered tothe inventory default accounts.The value of the journal entry linked to the Delivery sent to the customer is 360. That is, quantity of 4items multiplied by the Item cost value at that moment (90).Remember that the total value of the Invoice based on that Delivery was 440. It was calculatedaccording to the Reseller Price List (110) that is defined as the default price list in the customer masterdata record.

1-32

The Financial Process in SAP Business One

Financial Settings

Sales andPurchasing

process

Automatic JournalEntries

Manual JournalEntries

Reconciliations

Period End Closing

General Ledger,Chart of Accounts

and Reports

A/R Invoice Payment DepositA/P Invoice Outgoing PaymentGood Receipt PO

Chart of AccountsG/L Account Determination

Let us review the steps that occur regularly in the financial process in SAP Business One (most steps, except thefinancial settings, are recurring and could happen in a different order. This is an example of a commonscenario):Financial Settings - when you implement SAP Business One you define: Chart of Accounts and default G/L

accounts to be used when transactions are created in the different business process: Sales, Purchasing, Inventoryand more. You need to make these decisions together with the client accountant.Sales and Purchasing processes - the financial consequences of the steps in the sales and purchasing processes

are Automatic journal entries and system reconciliations.Automatic Journal Entries - are posted from many documents, such as A/R and A/P invoices.Manual Journal Entries – for business transactions that are not represented in forms or documents. Theaccountant enter transactions like loan, rent, or payroll using Manual Journal Entry. The Journal Entry filecontains all the accounting transactions: automatic and manual.Reconciliations – Internal system reconciliations are created automatically:

In a Business Partners Master Data - Invoice/ Payments, Invoice/ Credit Memo;In a G/L account - Payment/ Deposit.Internal user reconciliation – for example, when an advanced payment needs to be reconcile with theInvoice.

Period End Closing – a process that transfer the balances of the Profit and Loss accounts to a Balance Sheetaccount – the retained earnings account when a fiscal year or posting period ends.

In some localizations (Italy, Spain, France, and Portugal) you can also transfer the balance sheet accountbalances from one fiscal year or period to another.There is a list of tasks required while preparing for Period-End Closing.

General Ledger, Chart of Accounts and Reports – all the previous steps affect the Journal Entry file, the accountbalances (refer to the next slides) and the financial reports. like in the examples we reviewed:

When we discussed the control accounts that link the business partner accounts to the general ledger.The Business Partner Master Data balances do not appear in the Chart of Accounts.The receivable and payable control accounts accumulate the customers and vendors transactions in theirbalances.Hence, the Chart of Accounts presents the complete financial status of the company. As well as theFinancial Reports (P&L, Balance Sheet).

Another example, is the Period End Closing – that transfer the balances of the Profit and Loss accounts to aBalance Sheet account and hence affect the Profit and Loss and the Balance Sheet results.

2-1

Unit 2: Banking Process

Contents:Outgoing and incoming payments.Payment means (cash, check, credit cards, bank transfer, BOE, payment wizard).Deposits.Clearing an account - by payments and deposits.Bank statement handling and external reconciliations.

BOE - Bill of Exchange. This option is relevant for Italy, Portugal, Spain and France and activated bydefault.

2-2

Banking Process: Unit Objectives

After completing this unit, you will be able to:List the basic steps in the banking process in a typical small businessExplain the consequences of each step on the involved G/L accountsPerform the banking process steps in SAP Business OneChoose the appropriate option of bank statement handling according to the customerneeds and localization.Perform the steps of bank statement handling and external reconciliations in SAPBusiness One.

2-3

Banking Process: Course Overview Diagram

Banking Process

Topic 1: Handling Payments

Topic 2: Managing External Reconciliations in the Bank Account

2-4

Banking Process: Business Example

You are implementing SAP Business One at a new customer, OECComputers.

Your main contact in the customer site is Maria the accountant.You ask Maria about the way they handle payments and bank statement.You then make a quick needs analysis and explain to Maria how SAP Business Onecan help her in handling and tracking the banking process in everyday work.

2-5

Handling Payments

Banking Process



2-6

Handling Payments: Topic Purpose

After completing this topic, you will be able to:List the steps of the payment process and perform them in SAP Business Oneincluding: Incoming Payments, Outgoing Payments, Deposits and the PaymentWizardExplain the consequences of each step on the involved G/L accounts.Adjust the appropriate payment scenario to the customer needs and localization. Youneed to make decisions together with the client accountant.

2-7

Handling Incoming Payments:Business Example (1)

The customers pay their debts, that is open A/R Invoices, according to agreedpayment terms: Cash Basic, Installments, Net 30, etc.Maria, the accountant at OEC Computers, deals with Incoming Payments everyafternoon:

When registering an Incoming Payment you first choose the customer and thenyou choose the A/R Invoices the customer pays. Lastly, you record the paymentmeans.During the day OEC Computers employees created Incoming Payments forcustomers who shopped in the store point of sale or called the customer servicecenter. So Maria needs to register the remaining Incoming payments and monitorthe ones that were registered during the day.

Note!In this example we use the manual payments process.You have the Payment System and the Bank Statements Processing options that enable incoming andoutgoing payments creation automatically and semi-automatically.From the manual reconciliation screen, you can also deposit cash, check and credit card payments and postjournal entries, or create payments.For more details on these options refer to next slides.

2-8


Maria enters Incoming Payments for checks received by mail.She checks the credit card accounts (Visa and Master Card) to see the amount ofcredit card Incoming Payments issued in the store point of sale and in the customerservice center during the day.She checks the Cash on Hand account to see the amount of cash IncomingPayments issued in the store point of sale.And she connects the company bank account on-line:

To see the amount of bank transfer Incoming Payments received from customers.To make sure that Visa and Master Card transferred the credit card paymentsaccording to the agreement with OEC Computers.

2-9


At the end of the day:Maria enters a Credit Card Deposit in SAP Business One to record the paymentsVisa and Master Card transferred to the company bank account.Then, she goes to the ATM located just across the street and deposits:– The money accumulated in the cash register.– The checks received today.She issues Check Deposit and Cash Deposit in SAP Business One based on theATM reference.Now, Maria can go home.

2-10

A customer pays with check.You deposit the check 2 days later.

When is the customer account being credited in SAP Business One?When the incoming payment is entered.When the check is deposited in the bank.

Reflection Question:

A/R Invoice Incoming Payment Deposit

2-11

Reflection Question:Answer

A/R Invoice Incoming Payment

Debit Credit

Customer 105

Incomeaccount 105

Debit Credit

Checkclearingaccount

105

Customer 105

Debit Credit

Checkclearingaccount

105

Bank account 105

Deposit

The customer is notinvolved in the Deposit

Journal Entry.

A customer pays with check.You deposit the check 2 days later.

When is the customer account being credited in SAP Business One?When the incoming payment is entered.When the check is deposited in the bank.

2-12

The Payment Process in SAP Business One – Sales

Debit Credit

Clearing Account:Check/ Credit card/

Cash105

Customer 105

Incoming Payment:Payment Means

Bank transfer

Incoming Payment DepositClearingAccount

BankAccount

Debit Credit

Clearing Account :Check/ Credit card/

Cash105

Bank Account 105

Incoming Payment Bank Account

Debit Credit

Bank Account 105

Customer 105

A/R Invoice

A/R Invoice

Incoming Payment:Payment Means

CheckCredit cardCash

When you issue an Incoming Payment the open invoice on the customer account is closed.You can also issue an Incoming Payment that is not based on an invoice. for example, Payment onAccount.Cash, check, and credit card payment means are posted to a clearing account.Note that the term “Clearing” is used in the US localization. In other localizations it could be:“Temporary Account” or “Suspense Account”. The instructor should use the term used in theirlocalization.When a customer pays using cash, check or credit card, you enter an Incoming Payment that generatesthe following automatic journal entry:• (The customer usually pays using one payment mean. It is, however, possible to pay using a

combination of payment means in a single payment).• Debit on a clearing account - cash on hand/ credit card/ checks received.• Credit on customer account.

- Cash: the system retrieves the cash on hand account from the Cash on Hand field on the Sales tabunder Administration Setup Financials G/L Account Determination.

- Credit Cards: the system retrieves the credit card account from the G/L Account field in thecredit card definition under Administration Setup Banking Credit Cards.

- External tools like point of sale system and authorization of credit card transactions can beintegrated into the standard process.

- Check: the system retrieves the checks received account from the Checks Received field on theSales tab under Administration Setup Financials G/L Account Determination.

- You can change the default clearing account while issuing the Incoming Payment.A Deposit document must be processed in order to transfer the funds from the clearing account to thehouse bank account and clear the clearing account.The Deposit function in SAP Business One. Banking Deposits Deposit.Bank Transfer: this payment mean does not involve a clearing account. The customer transfer thepayment directly to your house bank. Debit on the house bank account, Credit on the customeraccount.

2-13

Structure of a Payment Document

Incoming / Outgoing Payments

Open Invoices, Credit Memos, and Journal EntriesOpen Invoices, Credit Memos, and Journal Entries

Payment Document HeaderPayment Document Header

Totals, RemarksTotals, Remarks

Cancel Add in SequenceAdd Select AllDeselect All

The screens for incoming and outgoing payments are almost identical. The screen is divided into thefollowing parts:

The document header areaThe area for selecting open invoices, credit memos and journal entries, and assigning the paymentamountsThe area for entering remarks and displaying totals

To post an incoming payment, choose Banking Incoming Payments Incoming Payments.To post an outgoing payment, choose Banking Outgoing Payments Outgoing Payments.

2-14

The Payment Document Header


Cancel Add in Sequence

Code

Name

Pay to

Contact Person

No. (from Series or Manual)Posting Date

Due Date

Document Date

Vendor masterrecord

Customer masterrecord

Project

ReferenceTransaction No.

Add Select AllDeselect All

In the document header, you choose the customer or vendor code for the payment. The system thencopies the Name and the standard Contact Person from the master record.The default value for incoming payments is Customer and for outgoing payments Vendor. You cancreate both incoming and outgoing payments for Customer, Vendor, or Account.For incoming payments, the system copies the Bill to address from the business partner master recordinto the address field in the document header:For outgoing payments: the system copies the default Pay to address. You can manually choose adifferent Pay to address or the bank of the vendor. Then you can check Display Invoices WithMatching Billing Address to filter the open invoices displayed in the payment screen.You can either enter the document number manually or have the system assign it automatically out of adocument series.The system proposes the current date as the Posting Date, Due Date and Document Date.You can enter an external document number in the Reference field.You can assign the payment to a Project or to a Distribution Rule for cost accounting.When you post the document, the system automatically assigns it a Transaction Number (number ofthe journal entry) and displays it in the relevant field.

2-15

How To Determine the Payment Amount


Add Cancel Add in Sequence

Payment on Account

Display Invoices with Matching Billing Address

25

205

Open Balance 25

Total Amount Due

98RC9898*1 of 1204JE

CNININ

Doc.Type

2525251 of 1303

-50-50-501 of 1202982%1001002 of 2101

180180200*1 of 2

TotalPayment

Dis-count

BalanceDue

Total*Installm.Doc.

Payment Document HeaderPayment Document Header

Sel.

101

The system displays the open invoices and credit memos with the installment number. If you select theBP Reference Number indicator in the Form Settings, the system displays the customer/ vendorreference numbers instead of the invoice number. This option is helpful when you enter outgoingpayment and base it on the invoices number you received from the vendor.Display Invoices with Matching Billing Address - Only available when an outgoing payment is createdfor a vendor. Displays in the table only invoices with pay to address/bank details identical to theaddress/bank selected in the Pay To field.The document type field tells you the origin of the line (IN for A/R invoices, CN for A/R CreditMemos, PU for A/P invoices, PC for A/P Credit Memos).An account may contain postings that are not invoices or credit memos (for example, journal entries orpayment on account). The system only displays these transactions if you select the Display AllTransactions indicator in the Form Settings. The system displays these transactions as blue lines belowthe invoices and credit memos.An asterisk (*) after the invoice date indicates that the invoice is due. The system displays the invoiceamount and balance due (invoice amount less any partial payments or credit memos) for each invoice.If cash discount applies (according to the business partner payment terms), the system deducts the cashdiscount from the due balance and proposes the final amount for payment.To enter payments that cannot be assigned to an invoice select the Payment on Account indicator. Thesystem then lets you enter the payment amount manually. For example, when you get a payment inadvance.To select an open invoice for payment, select the checkbox for the line. You can also enter a smalleramount as partial payment by changing the Total Payment amount column.The system displays the full payment amount (sum of all selected lines in the table plus the manualentered amount) in the Total Amount Due field.

2-16

How To Specify the Payment Means

1.Determine the Payment Amount

2.Split the Payment Amount According to Payment Means

Possible Payment Means:CheckBank TransferCredit CardCash

After you determine the payment amount, you must specify the payment means for the payment. You can selectone of the following payment means: Check, Bank Transfer, Credit Card, and Cash.You can define a default account for incoming checks and cash payment means. Choose Administration

Setup Financials G/L Account Determination Sales tab General tab Checks Received andCash on Hand fields.You can define a default account for outgoing bank transfer payment means. Choose Administration Setup

Financials G/L Account Determination Purchasing tab General tab Bank Transfer field.You can copy the total amount to an amount field by choosing CTRL + B or right-click the mouse and chooseCopy Balance Due.In most cases, the payer pays the amount in full using one means of payment. However, it is possible to split theamount among several means of payment. The system takes the details on the means of payment for incomingpayments from the customer master records.You can define a maximum amount for over and underpayments. This is relevant when small differences existbetween the payment and the balance due. The process will be transparent to the user.Choose Administration Setup Financials G/L Account Determination. Choose the Sales tab to definethe G/L account to be used in case of over or under payment. Do the same on the Purchase tab.Choose Administration Setup Financials Currencies, the following four columns define the max.amount to be posted as over or under payment:Incoming Amt Diff. Allowed/ Outgoing Amt Diff. Allowed - for a specific currency, specify the maximumamount allowed for incoming/ outgoing payment differences. The field is enabled only if the amount in theIncoming/ Outgoing % Diff. Allowed field is zero, or if the field is blank.Incoming % Diff. Allowed/ Outgoing % Diff. Allowed - for a specific currency, specify the maximumpercentage allowed for incoming/ outgoing payment differences. The field is enabled only if the amount in theIncoming/ outgoing Amt Diff. Allowed field is zero, or if the field is blank. The base amount for the percentagecalculation is the total amount paid, which is the sum of the amounts entered in the Payment Means window.When you post a payment, the system reconciles the payment with the selected invoices, and closes the

transactions. If the payment was posted as Payment on Account, the invoices and the payment stay open. If apartial payment was made, the system adjusts the Balance Due appropriately.

2-17

Deposits of Cash and Checks

Cash on Hand

1 2

Bank

2

CashDeposit

Checks Rec.

1 2

Bank

2

Deposit ofChecks

Customer

1OI

OpenInvoice

Incoming PaymentPayment Means Cash

Customer

1OI

OpenInvoice

Incoming PaymentPayment Means Check

If you take cash from your cash register or checks from your check drawer and bring them to yourbank, you can use the Deposit transaction to post this transfer.

• Choose Banking Deposits Deposit and select the Cash tab to post a cash deposit. Enter thecash on hand account that represents your cash register into the G/L account field. The systemdisplays the balance in the Balance field. Enter the amount that you want to deposit into the Amountfield. Enter the G/L account number that represents your bank account into the Bank Account field.If you try to deposit an amount greater then the account balance, the system will block you.

• Choose Banking Deposits Deposit and select the Checks tab to post a check deposit. Thesystem lists all checks which are not deposited yet in the table. Highlight the checks which you wantto deposit. Enter the G/L account number that represents your bank account into the Bank Accountfield.

If you have selected the Reconcile Amounts After Deposit indicator, the system reconciles the debit andthe credit line items on the cash on hand account or the checks received account with each other.

The debit line item on the bank account is always managed as an open item. This distinguishes it fromthe line items that have already been reconciled with the bank statement belonging to this bankaccount. The reconciliation finally closes the debit line item.

2-18

Handling Outgoing Payments:Business Example

OEC Computers pays open vendor A/P Invoices, according to agreed payment terms:Cash Basic, Installments, Net 30, etc.Maria, the accountant at OEC Computers, deals with outgoing payments every morning:

She runs the Vendor Liabilities Aging report and enters today's date in the Due DateTo field to display the open A/P Invoices to be paid today.She then enters Outgoing Payments to those vendors.

OEC Computers pays using Bank Transfer or Checks according to agreement theyhave with each vendor.

Maria issues Outgoing Payments with Checks as Payment Means. She then printsthe checks that are created automatically and sends them via mail.She connects to the bank account and transmits Bank Transfers to the vendorsonline.She then issues Outgoing Payments in SAP Business One with Bank Transfer asPayment Means to document those online Bank Transfers.

Note!In this example we use the manual payments process.You have the Payment System and the Bank Statements Processing options that enable incoming andoutgoing payments creation automatically and semi-automatically.From the manual reconciliation screen, you can also post journal entries, or create payments.For more details on these options refer to next slides.

2-19

The Payment Process in SAP Business One –Purchasing

Outgoing PaymentBank Account/Cash account

Outgoing Payment: PaymentMeans

CheckCredit CardCashBank Transfer

Debit Credit

Bank Account 202

Vendor 202

A/P Invoice

Note that the system does not involve a clearing accounts for manual outgoing payments for credit card, checksand bank transfers. Instead, the credit posting is done directly on the bank account.

An interim account can always be manually inserted in the G/L account field in the Payment Means. Then, whenthe payment is reduced from the bank, an entry should be entered to debit the interim account and credit thebank account.

The payment wizard can be used to automatically generate payments against the clearing account.

If you want to use clearing accounts automatically, you can use the Bank Statement Processing functionality(refer to the next slides) which can be set up to automatically post the transfer between the clearing and bankaccounts.The same is true for the Cash and Bank add-on which is relevant for some localizations. Note that Cash andBank is not available if the Bank Statement Processing functionality has been switched on.

Postings for Outgoing Payments:

Cash: Debit on vendor account, credit on cash on hand account or the bank account number.

Because most companies have multiple cash registers with one assigned cash on hand account each, you mustmanually enter the correct cash on hand account number.

Credit Card: Debit on vendor account, credit on bank account.You must manually enter the bank account number.

Check: Debit on vendor account, credit on bank account.You must manually enter the bank account number.

Bank Transfer: Debit on vendor account, credit on bank account.The system retrieves the bank account from the Bank Transfer field on the Purchase tab under Administration

Setup Financials G/L Account Determination.

2-20

Exercise – Incoming Payments and Deposits

2-21

House BankAccount

The Payment Process in SAP Business One –Bank Account Reconciliation

Deposit

Deposit

Outgoing Payment

Deposit

Outgoing Payment

Bank Transfer

3 options for externalreconciliation:

You can create paymentdocuments while you reconcile

the bank statement with thebank G/L account in SAP

Business One.

BankStatement

Outgoing Payment

Incoming Payments, Outgoing Payments and Deposits post journal entries to the house bank account.You need to reconcile those transactions with the Bank Statement and adjust where needed.The Bank Statement serves as a legally binding notification instrument from the bank to its customers.In SAP Business One you have three options for external reconciliation (For more details on each optionrefer to next slides):

Manual Reconciliation - from this screen you can create adjustments to close any discrepanices andbring the difference down to 0. For example, you can deposit cash, check and credit card paymentsthat appear on the printed bank statement. You can also post journal entries, or create payments.Reconciliation.Bank Statement Processing - With this option, you manually enter a bank statement and reconcilethe G/L account and at the same time post bank transfer payments.

2-22

The Payment Process in SAP Business One –Business Partner

A/R Invoice Incoming Payment

Debit Credit

Customer 105Income account 105

Debit Credit


Customer 105

Outgoing Payment

Debit Credit

Bank Account 202

Vendor 202

A/P Invoice

Debit Credit

Vendor 202Expense /

Clearing account 202

InternalReconciliation

InternalReconciliation

When you post a payment, the system reconciles the payment with the selected invoices, and closes thetransactions. If the payment was posted as Payment on Account, the invoices and the payment stayopen. If a partial payment was made, the system adjusts the Balance Due appropriately.More details on internal reconciliations in business partners (system and user) will be provided in Unit4 Financial Periods Process.

2-23

The Payment Process in SAP Business One –Payment Wizard

Incoming Payments:Bank Transfer

Bank Account

Payment Wizard

Outgoing Payments:Bank TransferChecks

The Payment Wizard enables you to create outgoing and incoming payments in batches for banktransfers, checks and bills of exchange. The payments are created according to your selection criteriaand payment methods.Outgoing: check or bank transfer, incoming: only bank transferThe Payment Wizard runs cover A/P and A/R documents and transactions that are not fully paid,credited, or reconciled and un-reconciled/allocated payments on account.If the created payments are bank transfer payments or direct debit payments, the Payment Wizardcreates the payment files in the correct country-specific.The Payment Engine or other 3rd party add-on is required to create the correct files for the bank.

2-24

The Payment Wizard (1)

Selection Criteria

Execute

Save

Load

SavedPayment

Runs

Recommendations

DocumentParameters

Business PartnersSelection Criteria

GeneralParameters

Payment RunSel.

Payment Method –Selection Criteria

The Payment Wizard enables you to create outgoing and incoming payments in batches for bank transfers,checks and bills of exchange. The payments are created according to your selection criteria and paymentmethods.The Payment Wizard runs cover A/P and A/R documents and transactions that are not fully paid, credited, orreconciled and un-reconciled/allocated payments on account.Each run of the payment wizard is identified by a payment run name and the date of the payment run.When starting the payment wizard, you specify several selection criteria:

General parameters, such as the date of the next planned payment run, type (outgoing or incoming), paymentmeans (check or bank transfer), and document series which are used to create the payment documents.The business partners that the system checks for due invoices.Selection criteria for the documents that the system includes.The payment methods that the system uses.Enhancements in 8.8 release –- Added range for Due date criteria (tolerance days are still taken into account).- Added filter criteria Document date.- Enhanced processing of saved runs in locked periods.

Based on these selection criteria the system creates a recommendation report or a list of suggested payments.You can accept or reject the recommendations. You can save the recommendations and proceed at a later date,or you can execute the payments. The button Non-Included Trans. creates a list of all open items that could notbe included in the payment run.To run the payment wizard, choose Banking Payment Wizard.You should define defaults values for the payment wizard. Choose Administration Setup BankingPayment Run Defaults. This data is used by default in every payment run.

2-25

The Payment Wizard (2)

00000150900 12131400 67291500 11

Deutsche Bank

To

The printed text must not be modified or crossed out.Acc. No.X X X X

€ - 400,-- Four*Hundred -Check

Printing

Payment File

ReportPrinting

DocumentPrinting

BankTransferChecks

Payment documents

$

© SAP 2007 / Page 25

DocumentParameters

Business PartnersSelection Criteria

GeneralParameters

Selection Criteria

Payment RunSel.

Payment Method –Selection Criteria

Recommendations

When you execute the payments, the system automatically creates the payment documents for youraccepted recommendations.

A payment usually includes the amounts of several invoices if you did not specify differently in thebusiness partner master record (select Single payment indicator on the Payment System tab). Thesystem always compares the cash discount that is currently valid with the cash discount that is to bevalid at the date of the next payment run minus the number of tolerance days.

If the created payments are bank transfer payments or direct debit payments, the Payment Wizardcreates the payment files in the correct country-specific format. If you need to create or adapt fileformats you can use the Format Definition add-on. This SAP Business One add-on is a graphic toolthat lets you define and modify incoming bank statement formats.

For more details on Bank File Formats and Creating Bank Files with the Payment Wizard, refer tothe appendix.

If the created payments are check payments, they can print directly from the system under BankingDocument Printing or Banking Outgoing Payments Checks for Payment to print single checks.After the check is printed, the system assigns the check numbers. Once the process is complete, use theBanking Check number confirmation to confirm the numbers assigned.

2-26

Payment Methods as Main Control Instrument

Validation Options

Outgoing

Incoming

Type Payment Means

House Bankand Account

AP Invoice

Definition

G/L Account

Payment Method

Business Partner

0000015090012131400 67291500 11

Deutsche Bank

To

The printed text must not be modified or crossed out.Acc. No.X X X X

€ -400,

-

- Four*Hundred -

With the payment method, you control the entire payment process.

Choose Administration Setup Banking Payment Methods to define and maintain payment methods.

In the definition of a payment method, you define the following:

Type of payment and payment means (outgoing: check or bank transfer, incoming: only bank transfer).

House bank and the bank account that should usually receive or issue the payment made with this paymentmethod. In the definition of the house bank, a G/L account and a G/L interim account (optional) is mapped tothe bank account.

Validation checks that the system is to carry out before using this payment method, as well as amountrestrictions.

Postings in relation with G/L interim accounts.

In the master records of the business partners, you must specify which payment methods you want to use witheach business partner. In vendor master records of the vendors, you can specify payment methods with the typeoutgoing. In the master records of the customers, you can specify payment methods with the type incoming.

You can define a default payment method to assign to new Business Partners’ creation. Choose AdministrationSystem Initialization General Settings BP tab.

From the payment methods listed in the master records of the business partners, the system automaticallychooses one, based on the settings in the Payment run. If you want to use a specific payment method for a certaininvoice, you can also directly enter the payment method there.

If you want to use a different house bank for a certain business partner other than one specified in the paymentmethod, you can enter the house bank directly in the master record for the business partner.

In the master records of the business partners, you can specify if you want to block payments. A payment blockcan also be made on invoice level.

2-27

Exercise – Payment Wizard (Optional)

2-28

Managing External Reconciliations in the BankAccount

Banking Process



2-29

Managing External Reconciliations in the BankAccount: Topic Purpose

After completing this topic, you will be able to:Explain the options for Reconciling externally a bank G/L account.Choose the appropriate option of bank statement handling according to the customerneeds and localization. You need to make decisions together with the clientaccountant.Perform the steps of bank statement handling and external reconciliations in SAPBusiness One.

2-30

Managing External Reconciliations in the BankAccount: Business Example

Maria, the accountant at OEC Computers, has just received by mail a printed BankStatement from the bank.Maria asks you what is the most effective way for her to enter this Bank Statement inSAP Business One.And how to reconcile the transactions the bank recorded for OEC Computers, with thetransaction she recorded for the bank G/L account in SAP Business One.You should take into consideration that OEC Computers pays and is paid using allpayment means (check and cash deposits, checks for payments as well as banktransfer).

2-31

External Reconciliations

External BankStatement

20003000

ExternalReconciliation

House Bank Account

Debit Credit2000

3000

Incoming Payments, Outgoing Payments and Deposits post journal entries to the house bank account.You need to reconcile those transactions with the Bank Statement and adjust where needed.You do not reconcile these open items until you receive the bank statement after the bank has actuallymade the payment.When you perform an external reconciliation, you reconcile the open items of a bank G/L account inSAP Business One with the open items in an external account statement. In most cases, the accountstatement is received from a bank and the account to be reconciled is the associated bank account. Thestatement, however, can also be received from a business partner that wants to reconcile the businesspartner account in your books with its own account.In SAP Business One you have three options for external reconciliation.

2-32

Externalstatementtransactions

Options for External Reconciliation

External Bank Statement

Printed statementending balance

ManualAutomaticSemi-Automatic

Open transactions inG/L account

Open transactions inG/L account

BankStatement* Available for several localizations

* Reconciles the G/L account and at the sametime posts bank transfer payments.

* ANZ, Canada, South Africa, UK & USA* Option to deposit cash, check and credit

card payments and post journal entries,or create payments.

* All Localizations* Option to post journal entries.

* Austria, Belgium, Brazil, China, Cyprus,Czech Republic, Denmark, Finland,France, Germany, Hungary, India, IrishRepublic, Italy, Japan, Korea,Netherlands, Norway, Poland, Russia,Singapore, Slovakia, Spain, Sweden,Switzerland, and United Kingdom

ManualReconciliation

Reconciliation

Bank StatementProcessing

House Bank Account

In SAP Business One you have three options for external reconciliation:Manual Reconciliation (supported in ANZ, Canada, South Africa, UK & USA) : With this option,you enter the ending date and balance from your printed bank statement. The system displays opentransactions for the bank G/L account. You manually match them to the printed statement and clear thetransactions from the account. The system tracks the difference between the statement ending balanceand the cleared items from the G/L account. The system only allows you to reconcile the account whenthis difference is 0. From the manual reconciliation screen, you can create adjustments to close anydiscrepanices and bring the difference down to 0. For example, you can deposit cash, check and creditcard payments that appear on the printed bank statement. You can also post journal entries, or createpayments. The system keeps track of the statement balance for the next reconciliation. To use ManualReconciliation, choose Banking Bank Statements and External Reconciliations ManualReconciliation.Reconciliation (supported in all localizations): With this option, you first import, or manually type thebank statement transactions into the system using the Process External Bank Statement function. To useReconciliation, choose Banking Bank Statements and External Reconciliations Reconciliation.The system displays side-by-side the open transactions from the G/L account in SAP Business One andthe imported or typed transaction from the bank statement. You can choose a reconciliation type:Manual, Automatic, or Semi-Automatic. These work in a very similar manner to the internalreconciliation types.Bank Statement Processing (supported in Austria, Belgium, Brazil, China, Cyprus, CzechRepublic, Denmark, Finland, France, Germany, Hungary, India, Irish Republic, Italy, Japan,Korea, Netherlands, Norway, Poland, Russia, Singapore, Slovakia, Spain, Sweden, Switzerland,and United Kingdom): With this option, you manually enter a bank statement and reconcile the G/Laccount and at the same time post payments (the BTHF add-on is required to import bank file of aspecific format which can be defined using the File Formatting Tool add-on). Choose Banking BankStatements and External Reconciliations Bank Statement Processing.

2-33

Bank Statement Processing – BSP

Bank Statement Processing automates the handling of bank statement transactions.It is designed for businesses that intensively use direct Bank Transfer for Outgoing and IncomingPayments.

BankStatement


Bank Statement Processing:Enables you to generate incoming and outgoing payments:

Payment Handling – On Account, Partially or Fully Reconciled.Payment from CustomersPayment to Suppliers – directly or via an Interim Account (Payment Wizard)Payments with Exchange Rate Differences, Small Difference, Cash DiscountsPayment of Multiple DocumentsBills of Exchange - Country-Specific: Belgium, Chile, France, Italy, Portugal, SpainPayment to Account:– Salaries– Sundry Expenses with Tax – e.g. Gas Expenses– Bank handling charges and interest payments

Perform internal reconciliation and identify which invoices have been paid.Match externally between the payment in SAP Business One side and the bank side according to pre-definedmatching criteria. Perform external reconciliation of transactions already posted in SAP Business One, for example,by manual payments or the payment wizardCash/Check Deposit to a Bank Interim AccountBank statement reportsFor detailed information on Bank Statement Processing and the Bank Transaction Handling Facility (BTHF) Add-onrefer to the Bank Statement Processing – BSP landing page in the Channel Partners Portal.You can also find useful information on Bank Statement Processing settings and working procedures in the OnlineHelp

2-34

The key to the BSP functionality:Question

The highlighted row is one row out of many imported automatically from the bank. It representsbank transfer payment.The non highlighted rows below represent existing invoices in SAP Business OneHow does SAP Business One “know “which documents to apply to which payment?

2-35

The key to the BSP functionality

The key to the BSP functionality is the setup:To use bank statement processing you must define the correct system settingsfor ensuring that automation occurs as required.The settings you specify should complement the way the company works withbank statements and payment processing.If you follow the setup guidelines, then the functionality should greatly improveand speed up the flow of tasks associated with bank statement processing.It is important to emphasize that the efficiency of the bank statement processingis directly related to the accuracy of the system settings as relevant to thebusiness

To use Bank Statement processing, choose Administration System Initialization Company DetailsBasic Initialization tab, and select Install Bank Statement Processing. You can do this at any time.

Note:

Once you have activated this functionality, the checkbox is disabled and cannot be deselected. ThePayment Engine for incoming payments and the Cash and Bank Add-on are then no longer available. It isnot recommended to work with the other external reconciliation options: Manual Reconciliation, ProcessExternal Bank Statement.

2-36

The BSP from the Customer Point of View

BankStatement

Import/manually enterbank statement

edit existing (draft)bank statement

View finalized bankstatements

Perform internal andexternal

reconciliations

The end user:

SAP Business One:

BankStatement

After SAP Business One has been configured, the customer can use bank statement processing:

The customer can automatically import or manually enter bank statements to perform internal andexternal reconciliations using the Bank Statement Details window.He can edit existing (draft) bank statementsView finalized bank statements

SAP Business One creates automatically:Payments and accounting transactionsInternal reconciliationExternal reconciliation

2-37

Demo – Options for External Reconciliation

From the following slides, choose the option/s that suits your localization

2-38


Records are automatically created

Demo - Manual Reconciliation (1)

External Bank Statement House Bank Account

ProcessExternal Bank

Statement


* Option to deposit cash, check and creditcard payments and post journal entries,or create payments.

Open transactionsin G/L account

Manual Reconciliation – This function enables you to verify and reconcile the transactions recordedin SAP Business One against the balance received from the bank and to create adjustments if required.In localizations that use the Manual Reconciliation function, the Process External Bank Statementmenu option is not displayed in the main menu.The Process External Bank Statement option is not recommended to use since the ManualReconciliation option creates a reconciled record in the Process External Bank Statement window(OBNK table).Let us see how an external reconciliation is made. Go to Banking Bank Statements and ExternalReconciliation Manual reconciliation. The External Bank Reconciliation - Selection Criteriawindow opens.Use this window to specify the parameters for the external bank reconciliation. In the Account Codefield, you can choose the bank account for which you would like to process the external bankreconciliation.Under the bank’s statement title, you can see fields related to the actual bank statement.The Last Balance field displays the balance as you recorded it the last time you performed the externalreconciliation.Let’s say you have received the statement for your bank updated for today. Instead of detailing all thetransactions appearing in the statement, you simply type the ending balance of the statement, accordingto a certain date.Let us say you received an external bank statement for this bank, with an ending balance of XXX. Thebank statement is updated for today, let us say, April 20th. Choose OK to open the ReconciliationBank Statement window.The table displays the open (non-reconciled) transactions as recorded in your books. That is,transactions recorded in Business One.

2-39


Demo - Manual Reconciliation (2)

Records are automatically created


ProcessExternal Bank

Statement


* Option to deposit cash, check and creditcard payments and post journal entries,or create payments.


In the Statement Number fields, you can type the number of the bank statement you have received from your bank. The LastStatement Balance is the balance calculated automatically by the system.Click the Display drop down menu to select one of the following options: All, Cleared, Uncleared.• Cleared – select to display the transactions chosen to be cleared in this event of reconciliation.• Once you reconcile the selected transactions they will not appear in this window anymore, unless you cancel the

reconciliation.• To cancel reconciliations go to Banking Bank Statements and External Reconciliation Manage Previous External

Reconciliations.The Type column displays the transaction type. DP stands for deposit.The Payment column - displays the amount on the debit side in the transaction.The Deposit column - displays the amount on the credit side in the transaction.You can add columns to the table by using the Form Settings option.Let us choose to clear two transactions. Under the Cleared column, select the boxes for each transaction you would like toclear with the current ending balance. You can see that the Cleared Book Balance field is updated according to the selectedrows. The Difference field is updated respectively.You can see that there’s a difference of X GBP (not more than 10) between the cleared transactions and the ending balance.In this case, we can create adjustments. Choose Adjustments to open this window.You can choose to create documents from within this window. You can create journal entries, incoming payments, outgoingpayments, checks for payment or deposits. In this case, we know that the X GBP difference is due to a certain fee that thebank charged the company. This can be reflected in a journal entry, so we leave the journal entry’s option chosen and chooseOK.The journal entry window opens, and allows us to create a journal entry for clearing this difference.Type the required amount, select an offsetting account, and add the journal entry.You can see that in the table, the adjustment journal entry was added automatically and selected as cleared. The difference isnow zero.It is possible to choose Save to save your preferences in this window before making the actual reconciliation. This allows youto check your transactions and the bank’s transactions again, to open the window again and reconcile after you are certainthat your selections are correct.Since we are sure that our selection is correct, we can choose Reconcile. The reconciliation has ended successfully.A single record was now recorded in the Process External Bank Statement window. However, in localizations that use theManual Reconciliation function, the Process External Bank Statement menu option is not displayed in the main menu. Forthis demonstration, we will now display it, using the Form Settings icon of the main menu window and open it.Choose the bank account and you can see that the Process External Bank Statement window displays a row with the amountwe have just reconciled for this bank account.Since records are automatically created in this window, in localizations that use Manual Reconciliation, using this window aswell, will cause a duplicity in the process, therefore, it should not be used.

2-40

Demo – Reconciliation (1)

ManualAutomatic

Semi-Automatic

* Option to post journal entries.

Reconciliation



Process ExternalBank Statement

transactions

External Reconciliation – Banking Bank Statements and External Reconciliation Process External BankStatement. The Process External Bank Statement window displays the transactions recorded by your bank. Youcan enter information manually or automatically import from a file.These transactions should be reconciled with the transactions recorded in your books in SAP Business One.In European localizations it is possible to import the external bank statement automatically using the PaymentEngine Add-on and perform bank reconciliation using the Cash and Bank function (Payment Engine is an SAPBusiness One add-on used to import and process bank statements. It consists of the following two programs:Import External Bank Statements and Cash and Bank Book).Let us enter few rows manually:• The first row represents a deposit you made to the bank. Enter a credit amount XXX GBP (make sure it

matches a deposit recorded in SAP Business One).• The second row is for a fee charged by the bank for this deposit, and it’s on the debit side, for the amount of

5.99 GBP.• Now let us see how we reconcile these two transactions:The reconciliation is performed using the Reconciliation window. Banking Bank Statements and ExternalReconciliation Reconciliation.The External Reconciliation – Selection Criteria window opens.Select how the system should process the external bank statement: for a G/L Account or a Business Partner.After selecting, you can choose the relevant G/L account or business partner. Let us choose the bank account.You can perform Manual, Automatic, or Semi-Automatic external reconciliation.For automatic and semi-automatic external reconciliations you need to define some parameters so the system“knows” how to reconcile the bank transactions recorded in your books against the transactions recorded by yourbank.With the Manual option you perform the reconciliation so you only need to define the Due Date To field. Thismeans that all transactions whose due date is earlier than or identical to the displayed date will be included in thereconciliation. The current date is displayed be default.We will demonstrate the Manual option. We click the Reconcile button.

2-41

Demo – Reconciliation (2)

ManualAutomatic

Semi-Automatic


* Option to post journal entries.

Process ExternalBank Statement

transactions

Reconciliation


Process ExternalBank Statementtransactions

The External Reconciliation window displays the bank transactions recorded in your books in SAPBusiness One (on the left) against the transactions recorded by your bank (on the right). Reconcilebetween matching transactions and, if required, perform balancing transactions to match your data withthe bank’s data.In the Books side, find the deposit that was recorded in SAP Business One. On the right side, we havethe open transactions in the external bank statement. Locate the row representing the deposit.Since we have two transactions with identical amounts in the book side and in the external statementside, we can reconcile them. Double-click the rows to move them to the bottom tables. You can seethat there is no difference, since the amounts are equal.Now, in the external statement side double-click the row recorded for the fee. This row has nomatching transaction on the books side. It was not recorded in SAP Business One since it was chargedby the bank.Next, click Reconciliation. The system displays the message: Reconciliation is not balanced. Createbalancing transaction? Choose OK to open the Journal Entry window. Here you can see that the bankaccount with the amount of the fee is already displayed. Now simply select an offsetting account tocomplete the journal entry. Click Add.The rows are reconciled.Now let us go back to the Process External Bank Statement window and select our bank account. Youcan see that the Reconciled column displays the external reconciliation number for the two rows. Thismeans that the two rows in the external bank statement are now reconciled. Reconciled rows cannot becancelled or modified, unless the reconciliation is cancelled.To cancel reconciliations go to Banking Bank Statements and External Reconciliation ManagePrevious External Reconciliations.

2-42

Demo – Bank Statement Processing (BSP)

BankStatement


2-43

Exercise – Options for External Reconciliation

Choose the option/s that suits your localization.

2-44

Review Question

Which option would you recommend Maria to use?And what if OEC Computers were located in Germany/ UK/ your localization?

2-45

Banking: Unit Summary

Main Terms:Incoming Payments.Outgoing payments.Deposits.Invoice is due (*).Payment on Account.Partial Payment.Payment MeansPayment MethodClearing Account.Payment Wizard.External Reconciliation – 3 options:

Manual ReconciliationReconciliationBank Statement Processing (BSP)

3-1

Unit 3: Financial Process

Contents:Manage the Chart of Accounts.Post a Journal Entry:

Enter manual journal entryFrom a journal voucherUsing a posting templateAs a recurring posting

3-2

Financial Process: Unit Objectives

After completing this unit, you will be able to:Set up a Chart of Accounts adapted to the company typeDiscuss the Chart of Accounts structureDiscuss the effect of the standard processes on the Chart of AccountsManage the Chart of AccountsExplain the ways to post journal entriesPost a journal entry in SAP Business One.

3-3

Financial Process: Course Overview Diagram

Financial Process

Topic 1: Manage the Chart of Accounts

Topic 2: Post a Journal Entry

3-4

Financial Process: Business Example


Maria the accountant shows you some financial reports she issued in their legacysystem and tells you that when looking at these reports she cannot see the overallfinancial status of the company.You ask Maria what is exactly the problem and you find out that the order of theaccounts and their balances summary in the reports make them ambiguous.You tell Maria about the Chart of Accounts structure in SAP Business One thataffects the Financial Reports structure.You then discuss with Maria the options for entering manual journal entries.You show her the different posting tools that can help her in entering those entriescorrectly.

3-5

Manage the Chart of Accounts

Financial Process



3-6

Manage the Chart of Accounts: Topic Purpose

After completing this topic, you will be able to:Adapt a Chart of Accounts for a businessAccording to accounting conventions:

Discuss the Chart of Accounts structureDiscuss the effect of the standard processes on the Chart of Accounts

Manage the Chart of Accounts

3-7

Manage the Chart of Accounts:Business Example


Maria, the accountant, tells you that moving to SAP Business One is a goodopportunity for her to organize the company accounts structure.You show Maria the pre-defined Chart of Account templates in SAP Business One.You tell her that she can use this template as the basis for her Chart of Accounts andadjust it before go live.Maria says that this structure will help her in presenting the financial reports in a clearand structured way.You discuss with Maria the effect of the sales and purchasing processes on the chartof accounts and as a result on the financial reports.Maria has chosen a Chart of Account template and now, you show her how to adjustthe accounts: add, remove and update.

3-8

Reflection Question:The Chart of Accounts

Control Account Debit Credit



Income account Income account 100

A/R Invoice

Control AccountAccounts Receivable =

The Business Partner Master Data balancesdo not appear in the Chart of Accounts.The receivable and payable control accountsaccumulate the customer and vendortransactions in their balances.Hence, the Chart of Accounts presents thecomplete financial status of the company, aswell as the Financial Reports (P&L, BalanceSheet).

How are the Business Partner Master Data balances presented in the Chart of Accounts?

We discussed the control accounts topic in unit 1: SAP Business One Standard Financial Processes.

3-9

The Chart of Accounts

Chart OfAccounts

The chart of accounts is an index of all G/L accounts used by yourbusiness.

Every G/L account has:An account codeAn account descriptionAnd other information that determines the functions of the G/L account.

To access the chart of accounts, select Financials Chart of Accounts.

3-10

The Financial Process in SAP Business One

Financial Settings

Sales andPurchasing

process

Automatic JournalEntries

Manual JournalEntries

Reconciliations

Period End Closing

General Ledger,Chart of Accounts

and Reports

A/R Invoice Payment DepositA/P Invoice Outgoing PaymentGood Receipt PO

Chart of AccountsG/L Account Determination

Let us return to the steps that occur regularly in the financial process in SAP Business One (most steps,except the financial settings, are recurring and could happen in a different order. This is an example ofa common scenario):

We have introduced this process in the first Unit: SAP Business One Standard Financial Processes. Wewill now focus on the Chart of Accounts which is involved in the first and last steps of the process.

Financial Settings - when you implement SAP Business One you define:

Chart of Accounts

Default G/L accounts to be used when transactions are created in the different business process:Sales, Purchasing, Inventory and more.

General Ledger, Chart of Accounts and Reports – all steps affect the Journal Entry file, the accountbalances and the financial reports.

For example, the control accounts that link the business partner sub-ledger accounts to thegeneral ledger.

Another example, is the Period End Closing – that transfer the balances of the Profit and Lossaccounts to a Balance Sheet account and hence affect the Profit and Loss and the Balance Sheetresults.

3-11

Define Valid Legal Chart of Accounts

You have 3 options for defining a Chart of Accounts:1. Select a pre-defined Chart of Account template.2. Define your own Chart of Accounts.3. Import the chart of accounts data from a legacy system.Defining the entire chart of accounts is a long, complex procedure.You can use one of the existing standard charts of accounts and adapting it to thecompany’s needs.Although using one of the existing standard chart of accounts will suffice in manysituations, some organizations should take this opportunity to determine what the chart ofaccount structure should look like to accommodate their needs.You need to make decisions about the chart of accounts together with the clientaccountant.

Discuss the options conceptually – the practice of choosing a pre-defined Chart of Accounts templatewill be done in TB1200 course.

You have 3 options for defining a Chart of Account:

Select a pre-defined Chart of Account template.

Select a valid legal chart of accounts.

Note! once you have started to work with the company database you cannot choose a differentChart of Accounts template. You can however add, update or remove accounts in the Chart ofAccounts.

Define your own Chart of Accounts by selecting User Defined option.

Import the chart of accounts data from your legacy system using the Data Transfer Workbench(DTW) tool.

The DTW as a tool for importing accounts will be discussed in TB1200.

3-12

BalanceSheet

Chart of Accounts Structurein Association with Financial Reports

Balance SheetAccounts

Accounts PayableAccount

RevenueAccount

PeriodEnd

Closing

Profit andLoss

Statement

Financial Reports

TrialBalance

Profit and LossAccounts

Level 1Assets

Liabilities

Cap. + Res.

Turnover

Cost of Sales

Operating C.

Non-Operating

Tax + Extr.

Bank account

Account Type

Gen

eral

Ledg

er

The Chart of Accounts is organized by drawers and levels.Let us look at this example of Chart of Accounts (the chart of accounts varies according to the company’s localization).The organization of the chart of accounts follows GAAP (Generally Accepted Accounting Principles) in which there is aseparate “drawer” for accounts representing: Assets, Liabilities, Equity (Capital and Reserves), Revenues (Turnover), Cost ofSales, Expenses (Operation Costs), Financing (Non-Operating Income and Expenditure), and Other Revenues and Expenses(Taxation and Extraordinary Items). These drawers, which have been defined by SAP and cannot be changed, organize youraccounts by level in a logical fashion appropriate to your financial accounting and reporting processes.In the General Ledger, we distinguish between Balance Sheet Accounts and Income Statement Accounts, also called Profitand Loss Accounts.Balance Sheet Accounts:

The first 3 drawers: Assets, Liabilities, Equity (Capital and Reserves) hold the Balance Sheet Accounts, such as the SalesTax account and the Accounts Payable Account.The bookkeeping balance of these accounts is kept from one fiscal year to the next.The Balance Sheet Accounts – reflect the monitory value of the company - stock, assets, debt, etc.

Profit and Loss Accounts:The last 5 drawers: Revenues (Turnover), Cost of Sales, Expenses (Operation Costs), Financing (Non-Operating Incomeand Expenditure), and Other Revenues and Expenses (Taxation and Extraordinary Items) hold the Profit and LossAccounts, such as the Income Accounts. Note that in some localizations, the lower drawers are not all profit and lossaccount drawers.The bookkeeping balance of these accounts has to be cleared at the end of each fiscal year – this is the Period End Closingprocess (will be discussed in Unit 4: Financial Periods Process).The Profit and Loss Accounts - reflect the changes in the company value, such as: sell stock – cost of goods sold, increaserevenues.

Reports:Financial reporting requirements drive most of the initial settings and configuration decisions.The different financial reports run on the account balances relevant to a selected date range and present them according totheir drawer, level and type:

The Balance Sheet - summarizes the value of the business assets liabilities, and owner’s equity accounts.The Trial Balance - details for each account: beginning balance for a particular period, all of the debits and credits, andthe ending balance.Profit and Loss Statement – after the end of the fiscal year, the balances of the expense accounts will be subtractedfrom the balances of the revenue accounts to come up with the profit or the loss for the fiscal year.

3-13

Financial Reports

Balance Sheet Accounts Profit and Loss Accounts

AssetAccounts

LiabilityAccounts

RevenueAccounts

ExpenseAccounts

Balance Sheet Profit & Loss Statement

Revenue./. Expenses

= Profit/Loss

EquityAssets Liabilities

EquityAccounts

The profit or loss will either increase or decrease the equity on the balance sheet.

3-14

Reflection Question:Balance Sheet Accounts

Debit Credit

Assets

Liabilities

Equity

In Unit 1: SAP Business One Standard Financial Processes, wediscussed the fact that you can predict an account’s typical balanceaccording to its activity type.

Following this and after reviewing the automatic transactions createdin SAP Business One, choose Debit or Credit for each drawer of theBalance Sheet accounts.

3-15

Reflection Question: Balance Sheet AccountsAnswer

Debit Credit

Assets +

Liabilities +

Equity +

3-16

Levels in the Chart of Accounts

FixedAssets

CurrentAssets

...

TangibleAssets

IntangibleAssets

Land& Buildings

Plant &Machinery

FormationExpenses

Patents, andso on

FreeholdLand

Buildings

...

...

...

...

Title

ActiveAccount

Level 2 Level 3 Level 4 Level 5

Gen

eral

Led

ger

Level 1Assets

Liabilities

Cap. + Res.

Turnover

Cost of Sales

Operating C.

Non-Operating

Tax + Extr.

A chart of accounts arranges a company's general ledger accounts in a hierarchical structure. The toplevel in the structure (level 1) consists of sections or groups for different type of accounts (assets,liabilities, capital and reserves, turnover, and so on). The number of account groups depends on thelocalization that was selected when the company was created and cannot be modified by the user.

The system displays the section as a cabinet drawer (see figure). Each drawer has a section title, whichyou cannot change. The system displays lower-level titles in blue and normal active accounts in black.Accounts that you have entered in the G/L Account Determination (default accounts) are displayed ingreen.

Levels 2 through 4 can contain either active accounts or titles that combine several active accounts.Level 5 only contains active accounts.

Because only active accounts can be posted to in SAP Business One, it is a good practice to have allyour active accounts at the same level.In reports, a title account summarizes all the balances of each active account below it.

3-17

Demo – Manage the Chart of Accounts

We will demonstrate the two functions for maintaining the chart of accounts:Choose Financials Chart of Accounts to:

View the chart of accounts.Change the properties of an account.

Tip: to view and change some of the account properties choose the Accounts Details button.Add a new G/L account to an existing title.

Tip: to add a new account you must switch to Add mode (Data Add).All changes in the definition of an account are logged under Tools Change Log….

Choose Financials Edit Chart of Accounts to:Add a new titleDelete an account.

Tip: you can only delete an account that has no postings.Move title and accounts within the structure of the chart of accounts.

3-18

Demo - G/L Account Properties and AccountDetails in the Chart of Accounts

BalanceConfidentialExternal CodeAccount TypeAccount Details

Code for ExportingDefault VAT groupActive or On HoldRelevant to budgetAlternative Account Name

When you select an account in the Chart of Accounts, the system displays information for the account,including the balance. You can navigate using the orange arrow to the line item display of the account.In the line item display, the system displays the debit values in black and the credit values in green andin parentheses.In the chart of accounts display, you can mark an account as Confidential. Only users with GeneralAuthorization to confidential accounts can see and use confidential accounts.In the External Code field you can enter an alternative code for the account. The alternative code canbe used by external programs that you integrate with SAP Business One.In the Account Type field, you define a Profit and Loss account as revenue account (Sales) or expenseaccount (Expenditure). All other accounts should have the account type other.

Accounts that you mark as Cash Accounts appear as cash accounts in the Cash Flow report.Generally, all your bank accounts should be defined as cash accounts.Accounts that you mark as Control Accounts can be assigned to business partners.

If you choose Account Details, you can enter additional information about the account:You can define an Alternative Account Name for the account. This can be useful when yourcompany works in different languages.You can set a G/L account as Active or On Hold for a certain period of timeYou can set a default VAT group (or tax code) for the account to be used by default when creatingmanual journal entry.If you mark the account as Relevant to Budget, and you have defined a budget, the system will applya check before posting to the account.Information about Account Segmentation in the Appendix.

3-19

Tax Account in the Tax group

The G/L Account and the Standard FinancialProcesses in SAP Business One – Recap



Account Type

Sales

Expenditure

Other

Default Accounts in Items

A/R Invoice

Automatic Journal Entries

ControlAccount Debit Credit



Incomeaccount

Incomeaccount 100

Control Account – AccountsReceivable in Customers

G/L Account Determination

3-20

Exercise – Manage the Chart of Accounts

3-21

Post a Journal Entry

Financial Process



3-22

Post a Journal Entry: Topic Purpose

After completing this topic, you will be able to:Explain the ways to post journal entriesPost a journal entry in SAP Business One

3-23

Post a Journal Entry: Business Example


Maria, the accountant, asks you how she can record business transactions that donot have a document in SAP Business One.You ask Maria about the type of transactions she is looking for.Maria mentions that for very small expenses she prefers using manual journalentries rather than using the A/P Invoice and the Outgoing Payment documents.She also tells you about the rent payment OEC Computers pays on a monthlybasis.In addition, Maria says that at the end of the year she records the annual bonusamount for OEC Computers’ employees.You tell Maria that she can use the Journal Entry function. Moreover, you can helpher in defining several templates that will help her to record the manual journalentries correctly.

3-24

SetDocumentSettings

Journal Entry

ManualJournalEntries

Journal Entries file

SAP BusinessOne

Document

AutomaticJournalEntries

A/R Invoice Incoming Payment Deposit

A/P Invoice Outgoing PaymentGood Receipt PO

In SAP Business One, a journal entry is automatically posted from many documents, such as A/R andA/P invoices. Additionally, you can manually post a journal entry directly to a G/L account or to abusiness partner subledger account.

All journal entries are posted to one file in SAP Business One – the Journal Entries file.

You can set various defaults for journal entries.

You can also change some document settings for an individual journal entry.

3-25

Origin Documents

A/R InvoicesIN

A/P InvoicesPU

JournalEntries

JEJournal Entries

Referenceto Origin Document

Type and OriginDocument

Number

All journal entries refer to the type and number of the origin document (for example, IN for customerinvoices) in case it was created as a result of adding another document. The origin documents ofmanual journal entries are the journal entries themselves. For this reason, they refer to themselves andare of type JE (journal entry). Most journal entries refers to other document types (for example, IN forcustomer invoices or PU for AP invoices).

The Transaction Journal Report shows all the journal entries of a certain origin type in chronologicalorder, sorted by transaction number. From here, you can go directly to the origin document for theposting. To run the Transaction Journal Report, choose Financials Financial ReportsAccounting Transaction Journal Report or choose the icon on the upper tool bar.The Document Journal report is a similar report. Here you can use more options to select and tailor theoutput. To run the Document Journal, choose Financials Financial Reports AccountingDocument Journal.The General Ledger report provides a view of the selected general ledger and business partneraccounts and lists all line items that you have posted to the account. To run the General Ledger report,choose Financials Financial Reports Accounting General Ledger.

3-26

Demo - Journal Entry

To post a manual journal entry, choose Financials Journal Entry.Note:

using Document Settings. Choose Administration System Initialization Document Settings andchoose Journal Entry on the Per Document tab.

You can also use Form Settings to change some document settings for an individual journal entry. Youcan also show and hide fields from the rows, using Form Settings. For example, you can show theDistribution Rule field if you want to allocate the amount from a row to a profit center.

3-27

Journal Entry Form Fields:Document Header Data

Journal Entry

Add Cancel Cancel Template

Expanded Editing Mode for a Line Item

Display FC Display SC

Document Header Data

G/L Acct/BP Name Debit CreditG/L Acct/BP Code1000 Expenses 100,001775 Bank 100,00

The screen for entering journal entries manually is divided into three areas: document header data,extended editing mode for an item, and the items table.

Header:

In automatic journal entries created by the documents in SAP Business One, the fields are filledautomatically from the document fields. In manual journal entries you set the values:

The system automatically enters a number in the document header. This number is incrementedwith every transaction. You can define numbering series for journal entries on the DocumentNumbering screen, under the Administration System initialization Document Numbering.The three dates in the header default to the current system date but you can change them:

Posting Date. This date determines the posting period, and therefore the fiscal period for financialreporting. You can post to an earlier or later date if the posting period is Unlocked for posting.

Due Date. The date the transaction is due.

Document Date. The date used for tax reporting purposes.

You can use the Ref. 1 and Ref. 2 fields to enter references to associated actual documents.

You can also classify the document using a transaction code, for example, as an accrual/deferraldocument, depreciation document, or value adjustment document. Choose Administration Setup

Financials Transaction Codes to maintain the transaction codes. The system copies thedescription of the transaction code to the Details field.

3-28

Journal Entry Form Fields:Expanded Editing Mode for a Line Item

Journal Entry

Add Cancel Cancel Template

Expanded Editing Mode for a Line Item

Line Items Table

Display FC Display SC

Document Header Data

G/L Acct/BP Name Debit CreditG/L Acct/BP Code

Form Settings

1000 Expenses 100,001775 Bank 100,00

You can show or hide the expand editing mode. The mode always refers to the row that is currentlyselected and displays all the item fields for you to enter the relevant data. The Ref. 1, Ref. 2, Project,and Details fields are usually filled with the content of the fields from the header area.

Using Form Settings, you can define which columns show in the line items table. Furthermore, youcan store values in the settings that the system uses as default values when you enter a journal entry.

In the line, place the cursor in the G/L Acct/BP Code field and press Tab to display the accounts list, orCTL + Tab to display the Business Partners Master Data list. Alternatively, you can search for anaccount or a business partner using the G/L Acct/BP Name field.

After choosing the account or the business partner, enter an amount in debit or credit.

You can enter multiple lines with debit or credit amounts. In every line you add SAP Business One willrecommend a balancing amount which you can update.

Once the journal entry is completed and balanced choose Add.

3-29

Reverse Transactions

Account 1

2050

Account 2

2050

Account 1

2050

Account 2

2050

Account 1

2050

Account 2

2050

2050 2050

2050 20502050 2050

-2050 -2050

Incorrect Posting

0 0 0 0

2050

20500

0

Standard Reverse Transaction

Reverse Transactions with NegativeAmounts

Increase in Totals

Reset of Totals

0

0

Users can make input errors. As a result, the journal entry created may contain incorrect information.To provide an audit of the correction, the user must first reverse the journal entry in error, and thencapture the document correctly.You can specify whether reversal transactions are performed:

As standard reverse transactionsAs reverse transactions with negative amounts

The standard reverse transaction causes the system to post the debit in error as a credit and the creditin error as a debit. This corrects the balance of the accounts. However, the standard reverse transactioncauses an additional increase in the totals on the debit and credit sides, which might be misleading.The reverse transaction with negative amounts causes the system to post the debit in error as anegative debit and the credit in error as a negative credit. This not only corrects the balance of theaccounts but also the totals.It depends on the country whether standard reverse transactions or reverse transactions with negativeamounts are required. Choose Administration System Initialization Company Details and selectthe Use Negative Amount for Reverse Transaction field on the Basic Initialization tab to switch on thereverse transaction with negative amounts. This is relevant for automatic and manual journal entries.Canceling transactions –

For most documents you have a canceling document. For Example, you issue an A/R Credit Memoto cancel an A/R Invoice. This document will create a canceling transaction automatically.For manual journal entries - you locate the journal entry you wish to cancel and choose Cancelfrom the Data menu. You approve the system message, enter any necessary changes and add thecanceling journal entry. In the Remarks of the cancelling journal entry you will have ‘Reversal’ andthe number of the journal entry you cancelled.The reverse method will be the standard one or the negative amount method if you defined it in theCompany Details window, under the Use Negative Amount for Reverse Transaction field.

3-30

Exercises – Enter Manual Journal Entries

3-31

Posting Tools

You can post a Journal Entry by:Entering a manual journal entry like we have just seen in the previous slides.Using a posting templateAs a recurring posting.From a journal voucher.

3-32

Journal Entry

Template Type: PercentageTemplate: Utility

Posting Template with Percentages

Add CancelAdd Cancel CancelTemplate

100Public serviceV550

75Electricity6321

25Utilities6320

Credit%Debit%G/L Account/BPName

G/L Account/BP No.

Code: Utility Description: Utility Bills

You can create posting templates for journal entries that have a very similar structure. Thesetemplates can contain account numbers but you can also just specify an account description in a lineitem if you do not yet know which exact account will be used for this line item.

Instead of fixed amounts, only percentages are entered here. These percentages indicate how the totalamount is distributed among the line items.

The illustration shows an example of how you can allocate out a utility expense, like the electric bill, toits component expenses at a specific percentage rate.

The posting template is stored under a code and with a description. Choose Financials PostingTemplates to enter and maintain posting templates.

When you enter a journal entry manually, choose Percentage in the Template Type field and enter thetemplate code in the Template field or press tab and choose it from a list.

Enter an amount in one of the line items and the template will allocate the amounts to the other linesbased on the percentage rate.

3-33

Recurring Postings

1000Girobank Account161000

1000Property Rent620000

CreditDebitG/L Account/BPName

G/L Account/BP No.

Code: Rent Description: Rental Payment

Frequency: On 1

Next Execution: 10/01/10

DailyWeeklyMonthlyQuarterlyHalf YearlyAnnuallyOne Time

Not Executed YetTemplate

FrequencyList For Manual Journal Entries

Template Type: RecurringPosting

Inactive

Valid to

09/30/14

Monthly

SAP Business One features a recurring postings function for similar, fixed amount journal entriescreated on a regular basis. Choose Financials Recurring Postings to enter and maintain recurringpostings.Recurring postings use a template that is stored with a code and a description. In this template, youdefine (among other things) the frequency in which the journal entry is supposed to be created and untilwhen the recurring posting is valid. The possible entries in the Frequency field include:

Daily, Weekly, Monthly, Quarterly, Half Yearly, Annually: You must also specify the nextexecution date for these entries.One time: Although a one-time recurring posting seems a bit odd, it serves a special purpose. Withthis you can schedule a journal entry for a specific date.Template: Journal entries that you need repeatedly but not on a regular basis can be created as thistype. You can access these templates from the manual journal entry. To do so, you must specifyRecurring Posting in the Template Type field.Not executed yet: If you do not need the recurring posting at present, you can turn it off with thisentry.

In the Valid To field, you can enter a date until which the recurring posting is valid and will beexecuted by the system.The system duplicates the original recurring posting (instance 0) every time the execution date arrives.Once you use this instance and add it to the system, it will be deleted.You can display a list of all the recurring postings in the system. You can then adjust these postingsand confirm them. You can also configure the system so that the execution list is displayedautomatically in the execution date as soon as you log on. Choose Administration SystemInitialization General Settings and select the Display Recurring Postings on Execution indicator onthe Services tab to activate this service for your user.You can add recurring postings to the cash flow, which appear in green in the report.

3-34

Post a Journal Voucher: Business Example

Maria tells you that every now and then, a student intern that works in OECComputers, helps her in recording manual journal entries to the accounting system.She is happy to get the assistance but wants to be able to review the journal entriesthe student is entering before they are registered permanently to the journal entriesfile.You tell Maria about the Journal Voucher option.

3-35

JournalEntries File

Journal Vouchers

Create JournalVoucher

Correct andUpdate

Entries inJournalVoucher

JournalEntries File

Entries inJournalVoucher

Journal Voucher (Folder ofJournal Entry Drafts)

SAP Business One offers a two-stage procedure for creating journal entries. You can create the journalentries as drafts first, correct and post them later.

When the user is creating a journal voucher it is used for storing several journal entry drafts. You canchange journal voucher as long as they have not been posted yet. Then, you can access the journalvoucher, make any necessary corrections, and post the entire journal voucher. You do not have to posteach journal entry individually. If you do want to post the journal entries individually, however, youmust create a separate journal voucher for each journal entry draft.

You can save an unbalanced journal vouchers as long as it is in the draft mode.

To create, change, and post journal vouchers, choose Financials Journal Vouchers.

You can remove a journal voucher or delete an entry from a journal voucher, as long as they have notbeen posted yet. Choose the Data menu or, right-click the journal voucher row.

3-36

Exercises – Posting Tools

3-37

Financial Process: Unit Summary

Main Terms:Chart of Accounts.

Chart of Accounts templateChart of Accounts Structure in Association with Financial ReportsBalance Sheet accounts, Profit and Loss accounts

The Journal Entries file:Automatic journal entriesManual journal entryJournal vouchersPosting templatesRecurring postings

4-1

Unit 4: Posting Periods Process

Contents:Process overviewDefining periods – highlightsPost transactions to periodsInternal Reconciliation Process - monitor and perform internal reconciliationPeriod-End Closing - at the month end vs. at year end

4-2

Posting Periods Process: Unit Objectives

After completing this unit, you will be able to:Discuss the process of defining, managing and closing periods.Utilize the process of internal reconciliation in G/L accounts and business partners(system and user).Review system reconciliations.Perform internal reconciliation (manual).Prepare for Period-End Closing.

Perform Period-End Closing.

4-3

Posting Periods Process: Course OverviewDiagram

Posting Periods Process

Topic 1: Process Overview

Topic 2: Take a Look at Defining Periods

Topic 3: Internal Reconciliation Process

Topic 4: Period-End Closing

4-4

Process Overview






4-5

Process Overview: Topic Purpose

After completing this topic, you will be able to:Discuss the process of:

DefiningManagingClosing periods.

For additional information on working with Posting Periods refer to the How-To Guides:

How To Work with Multiple Open Posting Periods in 8.8.

Tips for Year End Closing.

4-6

Process Overview:Business Example (1)


You explain to Maria, the accountant, that a mandatory step in creating the companydatabase is defining the company Posting Periods:

The Main Posting Period - the Fiscal Year, which usually corresponds to thecalendar year.The Sub-Periods in the fiscal year.

You both discuss the financial processes in OEC Computers. The company createsthe annual financial statement once a year. However, they need twelve postingperiods for their internal controlling.You create a new company database and define the Fiscal Year as the calendaryear and the sub-periods as Months.You define settings that relate to posting periods.Maria asks what she needs to do in order to record a certain document or a journalentry to a posting period or sub-period.You tell her that SAP Business One determines automatically which posting periodthe transaction belongs to based on the transaction’s posting date.

4-7

Process Overview:Business Example (2)

Since OEC Computers creates the annual financial statement once a year. They willuse the twelve posting periods for their internal controlling.They will not run the Period-End Closing process at the end of each month, theywill do it at the end of the main Posting Period - the Fiscal Year.There are many tasks they do at month end. You discuss those tasks, for example -sending debtor statements for outstanding debts.You also tell Maria about the Internal Reconciliation Process and how it can helpher in managing the business partner accounts at the end of each month.You discuss the steps Maria will have to take before Year-End Closing.

4-8

*Optional

Posting Periods – Process Overview

Fiscal Year: 2010

Settings Additional settings

PeriodEndTasks:

Year EndClosing

PeriodEndClosing

YearEndTasks

ChangePeriodStatus

ChangePeriodStatus

Posting date

Sub-period

Sub-Periods: Months2010-012010-022010-03…….

SettingsPeriod End/

Year End

ClosingOperational

The steps in the Posting Periods Process:Define the Main Posting Period - the Fiscal Year.Define the Sub-Periods in the fiscal year: Year/ Quarters/ Months/ Days.Note! Once you have created a posting period you cannot remove it from the system; however you can change the postingdate range.Define settings relate to posting periods: Period Indicator, Document Numbering, G/L account determination.In everyday work, enter documents and manual journal entries with a Posting Date that will be registered automatically tothe appropriate sub-period.Sub-periods allows the user to control posting into them – so postings to each month can be controlled.The Period End Closing process is typically done at the end of a financial period which is typically a year in length.You can, however, close a Sub-Period using the Period-End Closing window. This action will zero all profit and lossaccount balances to the retained earnings account.There are many tasks done at month end and in our example can be considered Period End tasks. For example – reviewand perform internal reconciliation, send debtor statements for outstanding debts and print financial reports.These tasks are not related to preparing and submitting accounts but are instead related to ongoing business management.

You have the option to close or inactivate the Sub-Period status by locking it using the Period Status filed in the PostingPeriod window.In the Posting Periods window you have the option to automatically assign the status Closing Period to periods that havealready ended.At the end of the year you perform all the tasks necessary to Year End Closing, such as record adjusting entries receivedfrom accountants and other reporting entities.You close the year using the Period-End Closing window. You choose the fiscal year and the corresponding Sub-Periods.If you have already closed Sub-Periods during the year, Close the last period of the fiscal year.The key purpose of the Period-End Closing is to prepare the accounts for submission to the authorities and therefore involvesthe re-setting of the P&L account to zero so that the next period can begin again collecting P&L data that is relevant to it.You then close or inactivate the Sub-Posting Periods in the fiscal year by locking them using the Period Status field inthe Posting Period window.

4-9

Reflection Question:Posting Periods

Let us discuss an example of a company that closes a period on a quarterlybasis:

A delivery note with a large amount of items was posted on March 31st.

The A/R Invoice for this delivery was issued on April 2nd.Would that be a problem in the Profit and Loss report for the first quarter?

4-10

Take a Look at Defining Periods






4-11

Take a Look at Defining Periods:Topic Purpose

After completing this topic, you will be able to:Discuss the tasks for defining periods.

4-12

Take a Look at Defining Periods:Business Example

You ask Maria, the accountant, how she wants to define the company Postingperiods:

You both discuss the financial processes in OEC Computers. The company createsthe annual financial statement once a year. However, they need twelve postingperiods for their internal controlling.Maria decides to create a calendar year as the main posting period (the FiscalYear) and define Months for sub-periods.You create a new company database and define the periods.You define settings that relate to posting periods: Period Indicator, DocumentNumbering, G/L Account Determination.

Considerations when defining posting periods:

Legal reporting.

Business consolidation.

It is also important to mention that one main objective of creating posting periods is to analyze thefinancial performance of a company between periods. For example, compare the current accountingperiod with the previous period of the same year, or the same period of last year. SAP Business Oneprovides different reports for this purpose: Balance Sheet Comparison, Trial Balance Comparison,Profit and Loss Statement Comparison. Choose Financials Financial Reports Comparison.

4-13

Defining Posting Periods

1

23

4

Quarters

12

3

4

567

8

9

10

1112

Months Days

Year

Fiscal Year

1

When you create a new company database, you create the posting periods for the first fiscal year.Posting periods split the fiscal year into sub-periods. Sub-Periods are created automatically by SAPBusiness One in the fiscal year. The available sub-periods are:

Year (one sub-period)

Quarters (four sub-periods)

Months (twelve sub-periods)

Days (any number of sub-periods)

Using this information, the system automatically creates the corresponding number of posting periods.You can change these periods, if necessary.

The first posting period must be defined at the time the company database is created. Afterwards, to setup new posting periods, go to:

Administration System Initialization Posting Periods.From here you can update the generated periods (such as date ranges) and create new ones (bychoosing New Period). You can also set or change the start of the fiscal year.

You can create posting periods for future fiscal years at any time.

4-14

Posting Periods Caveats

Bear in mind the following important caveats:The beginning of the fiscal year can only be thefirst of the month.Periods Order - it is recommended to create theposting periods from the oldest and up. Considerthe oldest data you would like to migrate todetermine the first period.You cannot have overlapping posting periods.G/L account determination is saved by periodand is copied from the previous period to the next.You can change the G/L account determinationbefore starting to work with a new period.You need to make decisions together with theclient accountant.

Note!

The practice of how to create a new company will be covered in TB1200.

4-15

Internal Reconciliation Process






4-16

Internal Reconciliation Process:Topic Purpose

After completing this topic, you will be able to:Utilize the process of internal reconciliation in G/L accounts and business partners(system and user).Review system reconciliationsPerform internal reconciliation (manual)

4-17

Internal Reconciliation Process:Business Example

Maria asks you about the Internal Reconciliation Process. Sheremembers you told her that, among other processes, it relates to Period-End Closing:Maria is happy to hear that most internal reconciliations are performed automaticallyby SAP Business One these are the System Reconciliations.You give Maria examples of the automatic reconciliations:

In the Business Partners Master Data accounts when an Incoming Payments isbased on an A/R Invoice (or a Credit Memo on an A/R Invoice).

In clearing G/L Accounts when you deposit a check received by an IncomingPayment.You tell Maria that SAP Business One also performs Partial System Reconciliationsif, for example, a customer partially pays an A/R Invoice.However, there will be cases where Maria will perform internal reconciliations herself– these are the User Reconciliations.For example, when OEC Computers pays a vendor in advance and receives the A/PInvoice later on, Maria will have to internally reconcile the Vendor Master Data andmatch the Payment with the A/P Invoice transactions.

4-18

Reflection Question:Internal Reconciliation Process

When Maria looks at the vendor’s account balance, it reflects theadvanced Outgoing Payment and the A/P Invoice transactions.Then why is it important for Maria to reconcile the vendor master datainternally?

4-19

Internal Reconciliation Process:System Reconciliation - Full Reconciliation

Outgoing Payment based on an A/PInvoice (or invoices)

Debit Credit

Bank Account 202

Vendor 202

A/P Invoice

Debit Credit

Vendor 202Expense / Clearing

account 202Automatic Internal

Reconciliationin the Vendor Master Data

* Could be multiple A/P Invoices thatare fully paid by the same Outgoing

Payment

1

2

2

When you post a payment for a customer or vendor, the system reconciles the payment with theselected invoice (or invoices), and closes the transactions.Relevant for a credit memo too.Internal reconciliation refers to the matching and clearing of open credit items to open debit itemswithin an account (therefore internal). This is necessary for accounts where a business process is notregarded as fully complete until each credit amount has a corresponding debit amount:

For customer accounts, a receivable (debit) must be followed by an incoming payment (credit).For vendor accounts, a liability (credit) must be followed by an outgoing payment (debit).

For payments made with the Payment Wizard or Bank Statement Processing, the system automaticallyproposes (and sometimes automatically matches) payments with invoices or credit memos based oncriteria that you supply, such as due date and amount.

4-20

Internal Reconciliation Process:System Reconciliation - Partial Reconciliation

Outgoing Payment based on an A/P Invoice

Debit Credit

Bank Account 100

Vendor 100

A/P Invoice

Debit Credit

Vendor 202

Expense /Clearing account 202

Automatic Partial InternalReconciliation

in the Vendor Master Data

Balance Due:Credit = 102

Balance Due in theVendors LiabilitiesAging Report

1

2

2

When issuing manual Incoming or Outgoing Payments, you can also partially reconcile an openinvoice or a payment if the payment amount does not match.If a partial payment was made, the system adjusts the Balance Due appropriately.When the remaining balance on the invoice will be paid the invoice will be fully reconciled and theBalance Due will become zero.

4-21

Selected Origin Posting Date Amount Balance Due Amount to Reconcile

IN 10.07 1000.00 1000.00 1000.00

IN 17.08 2000.00 2000.00 1500.00

RC 24.08 (1000.00) (1000.00) (1000.00)

RC 24.08 (1500.00) (1500.00) (1500.00)

IN 01.09 3000.00 (3000.00)

Internal Reconciliation Process:User Reconciliation – Manual Type:

Business Partner AccountIn this example, Customer Master Data

Manual Internal Reconciliation in the Customer Master Data

0.00

If the payment was posted as Payment on Account (that is you did not select any invoices) the paymentand the invoices stay open (unreconciled).This can happen when the customer pays you on account according to an agreement you have and youpost the invoices when the actual deal happens, or when you forgot to select the invoices.In these cases you need to reconcile the account with the Reconciliation function – UserReconciliation.To perform an internal reconciliation for a business partner, choose Business Partners InternalReconciliations Reconciliation. Note: you can also access internal reconciliation from the AccountBalance in the business partner master data if you have not selected Display Account BalancesGrouped by Control Accounts in the General Settings.To perform an internal reconciliation for a G/L account, choose Financials InternalReconciliations Reconciliation.When you internally reconcile a business partner or G/L account, you can choose a reconciliation type.If you choose the reconciliation type Manual:

The system displays all transactions for the account that are open on the current date. If desired, youcan change the date to see open transactions for a different date.

4-22

Internal Reconciliation Process:User Reconciliation

User Reconciliation: G/L Account

If your company uses the perpetual inventory system you usually reconcile theAllocation account that is being credited when you issue a Goods Receipt POand debited in an A/P Invoice.You can perform user reconciliation in this account (and in general) using one ofthe three reconciliation types:

ManualAutomaticSemi-automatic

A/P InvoiceGood Receipt PO

Go to Financials Internal Reconciliation Reconciliation.

For information on Automatic and Semi-Automatic User Internal Reconciliation types refer to theappendix.

4-23

Demo - Internal Reconciliation Process:User Reconciliation - Manual

When you internally reconcile a business partner or G/L account, you can choose a reconciliation type.If you choose the reconciliation type Manual:

The system displays all transactions for the account that are open on the current date. If desired, youcan change the date to see open transactions for a different date.You manually select matching debits and credits. When the total of all the credit items selected forreconciliation matches the total of all the selected debit items, you can perform the reconciliation bychoosing Reconcile.If the total of the selected credit items does not match that of the debit items, you can either:

Partially reconcile one of the transactions by changing the Amount to Reconcile for the transactionCreate a journal entry to post the difference as an adjustment that results in the selectedtransactions becoming reconciled. Note: for business partner reconciliation you can also create anincoming or outgoing payment as an adjustment.

You can manually reconcile one G/L account at a time. You can manually reconcile one businesspartner account at a time, or you can reconcile across multiple business partner accounts (forexample, a business partner that is both a vendor and a customer).

Journal Entries posted by the reconciliation process have the origin “JR”. Journal entries are postedwhen the system processes cash discounts, exchange rate differences, deferred tax, and withholdingtax.Note: use the SHIFT and double click combination on the Amount column header to sort by absolutevalues.

4-24

Internal Reconciliation Process – Terminology

Internal Reconciliation:System Reconciliations Statuses:

FullPartial

User Reconciliations Types:ManualAutomaticSemi-automatic

User reconciliation statuses:Fully reconciled:– Fully Closes transactions– Creates a journal entry to post the difference as an adjustment that results in the selected

transactions becoming reconciled.– Note: for business partner reconciliation you can also create an incoming or outgoing payment

as an adjustment.Partially reconciled: of one (or more) of the transactions by changing the Amount to Reconcilefor the transaction

4-25

Manage Previous Reconciliations

Account

2000 50003000 2000

Account

2000 50003000 2000

Cancel Reconciliation

The system assigns a unique reconciliation number to each completed internal reconciliation(manual, automatic, and semi-automatic). The system also saves and assigns a unique number tosystem reconciliations, for example, reconciliations during payment processing.The Manage Previous Reconciliations function allows you to review or cancel a user reconciliation.You can select reconciliations by account, reconciliation date, and reconciliation number, and thencancel them individually. This function does not allow you to reverse reconciliation postings. Thepostings still exist even though the reconciliation has been canceled. If you want to reverse thesepostings, you must reverse them in the general ledger in the usual way by choosing Data Cancel inthe journal entry display.To cancel a user reconciliation, choose either:

Business Partners Internal Reconciliations Manage Previous ReconciliationsFinancials Internal Reconciliations Manage Previous Reconciliations

4-26

Exercise - Internal Reconciliation Process

4-27

Period-End Closing






4-28

Period-End Closing:Topic Purpose

After completing this topic, you will be able to:Prepare for Period-End ClosingPerform Period-End Closing

You need to make decisions together with the client accountant.

4-29

Period-End Closing:Business Example

Let us go back to the business example we discussed in the first topic of theunit – the Process Overview:

Since OEC Computers creates the annual financial statement once a year. Theywill use the twelve posting periods for their internal controlling.

They will not run the Period-End Closing process at the end of each month,they will do it at the end of the main Posting Period - the Fiscal Year.

However, there are many tasks they do at month end - Period End Tasks. Forexample – internal reconciliation and sending debtor statements for outstandingdebts.

You discuss the steps Maria will have to take before Year-End Closing.

4-30

Move all P&L accountbalances to the Retained

Earnings account and zerothe P&L accounts

Period-End Closing: at the Month End vs. at YearEnd

*Optional

PeriodEndTasks:

Year EndClosing

PeriodEndClosing

Year EndTasks

ChangePeriodStatus toLocked

ChangePeriodStatus toLocked

Period End Tasks and Year End Tasks: SAP Business One supports such activities in a variety of ways.It is possible to carry forward the balances of Balance Sheet accounts and Business Partners using the Period-End Closing window for thefollowing localizations: Austria, Belgium, Chile, Costa Rica, Czech Republic, France, Guatemala, Hungary, Italy, Mexico, Portugal, Slovakia, andSpain.

Change thePeriod Statusto ClosingPeriod

Change toClosingPeriod

The Period End Closing process is typically done at the end of a financial period which is typically a year inlength.You can, however, close a Sub-Period using the Period-End Closing window. This action will zero all profitand loss account balances to the retained earnings account.Changing the Period Status to Closing Period - to prevent users from creating documents for the previousfiscal year, you can change the status of the period you are about to close to Closing Period. This means thatonly authorized users can post data, documents, and transactions.

There are many tasks done at month end and in our example can be considered Period End tasks. Forexample – review and perform internal reconciliation, sending debtor statements for outstanding debts andprint Financial Reports. These tasks are not related to preparing and submitting accounts but are insteadrelated to ongoing business management.

You have the option to close or inactivate the Sub-Period status by locking it using the Period Status field inthe Posting Period window.In the Posting Periods window you have the option to automatically assign the status Closing Period toperiods that have already ended.At the end of the year you perform all the tasks necessary to Year End Closing, such as record adjustingentries received from accountants and other reporting entities.You close the year using the same window: the Period-End Closing window. You choose the fiscal year andthe corresponding Sub-Periods.If you already closed Sub-Periods during the year, Close the last period of the fiscal year.The key purpose of the Period-End Closing is to prepare the accounts for submission to the authorities andtherefore involves the re-setting of the P&L account to zero so that the next period can begin again collectingP&L data that is relevant to it.You then close or inactivate the Sub-Posting Periods in the fiscal year by locking them using the PeriodStatus field in the Posting Period window.

4-31

Reflection Question:Period-End Tasks (1)

Let us go back to the example of a company that closes a period on aquarterly basis:

A delivery note with a large amount of items was posted on March 31st.

The A/R Invoice for this delivery was issued on April 2nd.We discussed the effects of this scenario on the periodic financial reports.Let us see the journal entries including the involved accounts, of the documentsthat were issued in different periods: the Delivery and the A/R Invoice based onthat delivery.

4-32

Reflection Question:Period-End Tasks (2)

Effects on the P&L Accounts:

Delivery A/R Invoice

Debit Credit


Inventory acc. 35600

Debit Credit

Customer 44000

Incomeaccount 44000

Period 1 Period 2

Delivery - the costs of the good sold causes anegative effect on profitability in period 1.

A/R Invoice - the revenue are booked to period 2.

Reflects the periodic Financial Reports: If the business is closing periods and reports on aquarterly basis, it shows a ‘loss’ for period 1 and a ‘gain’ in period 2.

Therefore, one of the Period-End Tasks will be:To ensure you invoice all deliveries in the same period.

4-33

Prepare for Period-End Closing:Period End Tasks

Here are more examples for Period-End Tasks :Make sure that all transactions for the period were posted properly, includingadjustments and accruals.Make sure all Journal Vouchers are posted.Internal Reconciliation of Allocation and Expense Clearing Accounts.Tax and legal reports for the local authorities.Print:

Trial Balance (a balance of each account and a current status).Vendor Liabilities Aging and Customer Receivables Aging reports to reconcilereceivable accounts with the G/LInventory Audit report to reconcile inventory with the G/LFinancial Statements

Make a backup of your database and put it in an off-site storage location

Internal Reconciliation of Allocation and Expense Clearing Accounts: perform the reconciliationregularly at the end of the month; otherwise, you have a high number of transactions to reconcile atthe end of the year. To simplify the process, you can run automatic reconciliations.

4-34

Prepare for Year-End Closing:Year End Tasks

Here are some examples for Year-End Tasks :Post final transactions for the period in all modulesPost any final adjusting entries in the G/LClose the last period of the fiscal yearPrint a final detailed Trial BalancePrint Financial StatementsSet up a new fiscal year (if not done already).Backup – to save the status of the previous fiscal year.Post Doubtful Debts – refer to the next slidesPost exchange rate differences, conversion differencesSee additional tasks in the appendix–

Adjustments with Automatic ReversalsDeferrals with Automatic Reversals

Refer to the Tips for Year End Closing How-To Guide.

Backup - It is not always possible to reconstruct a report backdated to the cut-off date in SAP BusinessOne. Therefore, we strongly recommend that once you have entered and completed all transactions forthe previous fiscal year, and before entering any transactions for the new fiscal year, you back up yourproduction database. The backup saves the status of the previous fiscal year.Exchange rate differences, conversion differences – will be discussed in unit 6.

4-35

Account Clearing Before Period Closing – BusinessExample:

Period endprocess

Validatetransactions

Manualjournal entries

Performcross checks

Match balanceswith sub-ledger

Printfinancial reports &sub-Ledger reports

Internal reconciliation

Validate automatic journal entries on a regular basis to ensure correct transactions

Create accruals and provisions (like doubtful debts), periodic entries and corrections

Some cross-checks to match the taxes to the sales and purchasing. Validate ‘suspenseaccounts’ and high risk accounts like price & exchange rate difference accounts

Ensure the internal and external reconciliations are done.

Match the account receivables accounts with the aging reportsMatch the inventory accounts with the inventory audit report

Print the trial balance, P&L statement together with relevant sub-ledger reports(aging, inventory audit report, etc….)

Here is an example of the tasks list a controller performs as part of the period end closing process:Validate transactions: following the acquaintance of the controller with the company processes, hecan validate automatic transactions. It could be a random check in defined time intervals.Manual journal entries: details on doubtful debts in the next slide.Perform cross checks/ Match balances with sub-ledger: the matching a controller does betweenthe financial reports and other reports before closing a period to validate correctness:

Comparing the balance of the Account Receivables accounts in the Balance Sheet with the AgingReports summary for the selected period.Comparing the balance of the inventory accounts in the Balance Sheet with the Inventory Auditreport.A controller will also match the tax account balances with the Profit and Loss balances accordingto the company’s localization and industry rules.

4-36

Doubtful Debts

Due Date ofInvoice

Time+ x Days+ y Days

+ z DaysAdjustments forDoubtful Debts

(Control Account)

250

250

Transfer toDoubtful Debts

(Expense Account)

Customer

1000

250

4% 5%3%

In some localizations it is handled this way:If a customer does not pay its liabilities after a certain number of days after the due date, it may be thatthe customer is not able to pay. In this case a part of its liabilities is considered to be doubtful debts.This part increases over time because it becomes more and more unlikely that it will finally pay itsliabilities.If you define the numbers of days after the due date and the doubtful debt percentages in the system,the system supports you in calculating and posting the doubtful debts. To define the doubtful debts,choose Administration Setup Financials Doubtful Debts.The system calculates and displays the doubtful debts if you run the Customer Receivables Agingreport. The calculated doubtful debts are displayed in the last column of the report result.To post the doubtful debts to the control account for doubtful debts, select the doubtful debts that youwant to post in the report result and choose Go To Journal Entry.

The system opens a journal entry and creates a first line item. This line item posts the amount ofdoubtful debts on the credit side of the customer account and simultaneously to the credit side of thecontrol account for doubtful debts. This account is an adjustment account to the normal accountsreceivables account.You must enter the second line item, which posts the doubtful debts to the debit side of an expenseaccount.

The Customer Receivables Aging report bases its calculation on the full amount of the invoices ,or itcan be calculated for the amount of a specific invoice. Therefore, you can use the automatic reversal toreverse this posting at the first day of the new period, depending on the company financial policy.We will discuss in details the Customer Receivables Aging report and the Dunning process in Unit 5:Controlling Reports.

4-37

Perform Period-End Closing

And now perform the Period-End Closing:Run the period-end closing routine to close the fiscal year :

Zero all Profit and Loss account balances to the Retained Earnings account (a BalanceSheet account Capital and Reserves drawer), that now contains the total brought forwardcumulated profit.

Adjust the Balance Sheet accounts.Close or inactivate the period by locking it using the posting period window.

Move all P&L account balances to theRetained Earnings account and zero the

P&L accounts

Period-End Closing

Change Periods Status to Locked

The key purpose of the Period-End Closing is to prepare the accounts for submission to the authoritiesand therefore involves the re-setting of the P&L account to zero so that the next period can begin againcollecting P&L data that is relevant to it.You then close or inactivate the Sub-Posting Periods in the fiscal year by locking them using thePeriod Status field in the Posting Period window.

4-38

Period-End Closing Utility

Accept and PostProposal

Proposal

Water ExpenseAccount Balance

Debit Credit

Water Expense Account 11500

Period-End Closing Account 11500

Posting Date: December 31st

Debit Credit

Period-End Closing Account 11500

Retained Earning Account 11500

Posting Date: January 1st

Period-End Closing period

Following posting period

Automatic Journal Entries:

At the end of a period (month, quarter, or year), you must transfer the balances of the P&L accounts toa retained earnings account.Choose Administration Utilities Period-End Closing to run Period-End Closing.With the Period-End Closing function, you can choose P&L accounts and periods, and specify aretained earnings and period-end closing accounts.When you execute the period-end closing, the system generates a list of proposals for closing entries.You can accept each proposal individually.After you accept the proposals, the system transfers the account balances from the Expense and theRevenue accounts to the Period-End Closing account on the same day (the last day of the period).This sets the accounts balances to zero.At the same time but with the first day of the following posting period as posting date, the systemtransfers the balances form the Period-End Closing account to the Retained Earnings account (thePeriod-End Closing is a clearing account).Two transactions are created for each account and two journal entries are automatically created toreflect those transactions.Now, the Retained Earnings account, which is a Balance Sheet account, contains the total broughtforward cumulated profit.Journal Entries posted by the Period-End Closing Utility have the origin “BC”.Note that you can store the results initially as a report and then post them at a later stage.If you make postings after entering the balances carried forward, you need to repeat the period-end closing routine to include these subsequent postings.

4-39

Demo - Period-End Closing

Administration Utilities Period-End Closing .Choose all P/L accounts choose the periods in the fiscal year until today.Choose the Retained Earning and the Period End Closing accounts.Choose 2 P&L accounts Enter a Document Date and a Due Date Review the Remarks field tobe registered in the created journal entries.Execute the report.Review the 2 journal entries created for one of the accountsReview the account balance in the Chart of Accounts.

4-40

Exercise - Period-End Closing

4-41

Posting Period Status

Locked

Closing Period Currentperiod -Unlocked

12

3

4

567

8

9

10

1112

Previous fiscal year

12

3

4

567

8

9

10

1112

Current fiscal year

Locked or Unlocked

When a posting period is Unlocked, anyone can post transactions with a posting date that falls withinthe period start and end.At end of a posting period, after all business transactions belonging to that period have been posted tothe system, you can lock the period so that no additional postings can be made.Choose Administration System Initialization Posting Periods, and then click the orangenavigation arrow for the period you want to lock. Change the period status from Unlocked to Locked.As well as Unlocked and Locked, you can set the period status to:

Unlocked Except Sales. If a period has this status, you can post any document or journal entry to theperiod except for documents from the Sales A/R menu.Closing Period. If a period has this status, only authorized people can post transactions to the period.The authorization “Period Status: Closing Period” is set using Administration SystemInitialization Authorizations General Authorizations. You can have the system automaticallychange the status to Closing Period by selecting the checkbox on the posting periods screen.

As seen in the figure, during the first periods of the new fiscal year you may need to make postings forthe year-end closing of the previous fiscal year. In this case, the last period of the old year has thestatus “Closing Period”.

4-42

Reflection Question:Period-End Closing and the Financial Reports (1)

What would be the influence of the Period-End Closing on FinancialReports such as Balance Sheet and Profit and Loss?

4-43

Reflection Question:Period-End Closing and the Financial Reports (2)

Balance Sheet –When issuing the report while in the following posting period - the totalbrought forward cumulated profit (or loss) will be reflected in the RetainedEarnings account balance (refer to the dates in the automatic journal entriescreated by the Period-End Closing utility).

Profit and Loss –For previous periods – SAP Business One allows you to issue the report forprevious periods with the expense and revenue account balances before thePeriod-End Closing.For the following posting period – The period begins again collecting P&L datathat is relevant to it the expense and revenue account balances will not showthe previous period balances allowing you to issue a clean report.

The financial reports in SAP Business One include options for filtering closing adjustments andbalances:

Balance Sheet and Trial Balance options:Add Closing BalancesIgnore Adjustments

Profit and Loss Statement option:Ignore Adjustments

4-44

Main Terms:Posting Periods:

Main Posting Period - the Fiscal Year.Sub-Periods in the fiscal year.

Period-End Closing process:Period End ClosingYear End ClosingPeriod StatusProfit and Loss account balances; Retained Earnings account

Internal Reconciliation ProcessSystem Reconciliations Statuses:– Full– Partial

User Reconciliations Types:– Manual– Automatic– Semi-automatic

User reconciliation statuses:– Full– Partial

Period-End Closing: Unit Summary

5-1

Unit 5: Controlling Reports

Contents:We will discuss the reports in their financial accounting context:

Financial ReportsCash management reportsCompany analysis and planning

5-2

Controlling Reports: Unit Objectives

After completing this unit, you will be able to:Discuss the effect of standard processes in SAP Business One on controlling reports.Decide when to use each report.Interpret typical report data.

5-3

Controlling Reports: Course Overview Diagram

Controlling Reports

Topic 1: Financial Reports

Topic 2: Cash Management Reports

Topic 3: Company Analysis and Planning

5-4

Controlling Reports: Business Example


Your main contact at the customer site is Maria the accountant.You have almost completed the system setup and you are now discussing somecontrolling tools that Maria will use periodically.You give Maria some guidelines regarding the purpose and the outcome of eachreport.The reports will help Maria to see the big picture of the business and to controlfinancial processes internally and externally.

5-5

Financial Reports

Controlling Reports




5-6

Financial Reports: Topic Purpose

After completing this topic, you will be able to:Discuss the effect of standard processes in SAP Business One on Financial Reports:

Balance SheetTrial BalanceProfit and Loss

Describe when to use each report.Interpret typical report data.

5-7

Financial Reports:Business Example

You review the Financial Reports with Maria:Maria mentions that you discussed the influence of the Period-End Closing on theFinancial Reports: Balance Sheet and Profit and Loss.This is because you usually issue the Financial Reports at the last day of eachfinancial year/ period to get the financial status of the company.You demonstrate to Maria the financial reports in SAP Business One.You then discuss the matching a controller does between the financial reports andother reports before closing a period.

Run day of the Financial Reports – the company usually gets last year related documents after theend of the financial year/ period. Therefore, they also issue the reports for the closing period, duringthe following period.The matching a controller does between the financial reports and other reports before closing aperiod - this was already mentioned in unit 4: Posting Periods Process:

Comparing the balance of the Account Receivables accounts in the Balance Sheet with the AgingReports summary for the selected period.Comparing the balance of the inventory accounts in the Balance Sheet with the Inventory Auditreport.A controller will also match the tax account balances with the Profit and loss balances according tothe company’s localization and industry rules.

5-8

Financial Reports:Question

Balance Sheet:

Assets:Fixed Assets: 10.04%Current Assets: 89.96%

Total Assets: 100%

From a financial controller’s point of view –What are the consequences of this result on the financial status of the company?Where is the money invested?

At the end of the year you issue the Balance Sheet report.You present the report in a summarized form.For the Assets Drawer you see the following result:

5-9

Chart of Accounts Structurein Association with Financial Reports


AccountsPayable Account

IncomeAccount

PeriodEnd

Closing

BalanceSheet

Profit andLoss

Statement

Financial Reports

TrialBalance


Gen

eral

Ledg

er

Level 1Assets

Liabilities

Cap. + Res.

Turnover

Cost of Sales

Operating C.

Non-Operating

Tax + Extr.

Bank account

Account Type

Let us go back to the Chart of Accounts Structure in association with Financial Reports. We discussed this topicin the Financial Process unit, in the Manage the Chart of Accounts topic.We said that in the General Ledger, we distinguish between Balance Sheet Accounts and Income StatementAccounts, also called Profit and Loss Accounts. Let us look at this example of Chart of Accounts (the chart ofaccounts varies according to the company’s localization):Balance Sheet Accounts:

The first 3 drawers: Assets, Liabilities, Equity (Capital and Reserves) hold the Balance Sheet Accounts, suchas the Sales Tax account, the bank account and the Accounts Payable Account.The bookkeeping balance of these accounts is kept from one fiscal year to the next.The Balance Sheet Accounts – reflect the monitory value of the company - stock, assets, debt, etc.

Profit and Loss Accounts:The last 5 drawers: Revenues (Turnover), Cost of Sales, Expenses (Operation Costs), Financing (Non-Operating Income and Expenditure), and Other Revenues and Expenses (Taxation and Extraordinary Items)hold the Profit and Loss Accounts, such as the Income Accounts. Note that in some localizations, the lowerdrawers are not all profit and loss account drawers.The bookkeeping balance of the Profit and Los accounts has to be cleared at the end of each fiscal year – thisis the Period End Closing.The Profit and Loss Accounts - reflect the changes in the company value, such as: sell stock – cost of goodssold, increase revenues.

Financial Reports:The different Reports run on the account balances relevant to a selected date/ date range and present themaccording to their drawer, level and type. Mostly issued at the last day of each financial year/ period.Choose Financials Financial Reports Financial and then Balance Sheet or Trial Balance or Profit andLoss Statement to generate these financial reports.You can create comparison reports that compare the figures from a specific company or fiscal year with those ofa different company or fiscal year. Choose Financials Financial Reports Comparison.

5-10

Balance Sheet

Dates Up to a certain date

Drawers/ TypeAll Balance Sheet Accounts:Assets, liabilities, and owner’s equity accounts

Calculation

Run on the account balances of the Balance Sheet accounts andsummarizes their values:

Total Assets = Total Liabilities + Equity.Also: Relative percentage of each balance in the company’s assets,liabilities, and equity set. Each first-level title (drawer) equals 100 %,and its related titles and active G/L accounts display their relativepercentage.

Example of documents andaccounts affecting the report

A/R Invoice - Accounts receivables, Sales tax account.Outgoing Payment - Bank account.Good Receipt PO - Inventory account

The Balance Sheet presents the financial position of a business, the company’s value.

5-11

Trial Balance

Dates Selected period

Drawers/ TypeSelection from:All accounts (Profit and Loss and Balance Sheet)All business partners master data.

Calculation

For each account: total debit and credit amounts, and the endingbalance = debit amount – credit amount + opening balance amount.For the entire report: if the trial balance includes all the accounts in acomplete period, the debit and credit side totals must be equal. Totalreport balance = 0 (the same as in each and every journal entry).


A/P Invoice - Vendor, Accounts Payable account, Expense/ Clearing/Inventory account, Output Tax account.

The Trial Balance displays a summary of all accounts and/or business partner balances.Can comprise a particular cross section.

5-12

Profit and Loss Statement

Dates Selected period

Drawers/ TypeAll Profit and Loss Accounts:The last 5 drawers: Revenues, Cost of Sales, Expenses, Financing, andOther Revenues and Expenses

CalculationThe balances of the Expense accounts will be subtracted from the balancesof the Revenue accounts to come up with the profit or the loss for thefiscal year/ selected period.


A/R Invoice - Income account.A/P Invoice - Expense account.

The Profit and Loss Statement shows the profit (or loss) of your business for the fiscalyear/ selected period. It explains the change in the company’s value.

5-13

Financial Reports:Reflection Question

Total Assets = Total Liabilities + Equity.

How is the calculation balanced if the report considers only the Balance Sheet accounts?

The Balance Sheet calculation is:

5-14

Financial Reports

Balance Sheet Accounts Profit and Loss Accounts

AssetAccounts

LiabilityAccounts

RevenueAccounts

ExpenseAccounts

Balance Sheet Profit & Loss Statement

Revenue./. Expenses

= Profit/Loss

EquityAssets Liabilities

EquityAccounts

The profit or loss will either increase or decrease the equity on the balance sheet.

5-15

Exercise - Financial Reports

5-16

Cash Management Reports

Controlling Reports




5-17

Cash Management Reports: Topic Purpose

After completing this topic, you will be able to:Discuss the effect of standard processes in SAP Business One on monetary reports.Describe when to use each report.Interpret typical report data.

5-18

Cash Management Reports:Business Example

Maria tells you that controlling the customer receivables status and minimizingpayment time is a crucial task for her:You tell Maria that SAP Business One provides her with the tools to control customerreceivables.You discuss the Customer Receivables Aging Report and the Dunning process thatenable active tracking of open A/R Invoices.You also discuss the Cash Flow that helps you forecast the monetary status of thecompany.

5-19

Cash Management Reports:Question 1

OEC Computers invests in a new product and applies for a loan from the bank.What report would the bank ask for before approving the loan?Does the bank need to see a past status of the company or a forecast?

5-20

Cash Flow Report

Cash flow is a forecast report –The report provides information about the liquidity of your business that is beyond the scope of aProfit and Loss Statement.It displays the Balance Sheet Accounts which reflect the monitory value of the company.

Cash

Credit Card Vouchers

Checks Received

Customer Liabilities

Payables to Vendors

Totals and Balances (Per Time Interval) of:

The cash flow provides information on the liquidity of your company. The cash flow report in SAPBusiness One lists the totals and balances of the following accounts for the selected interval:

Accounts that represent cash holdingsAccounts that expect a cash flow in the future (incoming and outgoing)

5-21

Cash Flow Report in SAP Business One

Due Date Security Level Document Account Debit Credit

Cash Accounts Payment to vendor(Bank transfer) House Bank 5,000

Credit/ Checks Incoming Payment Credit CardClearing acc. 10,000

CustomerLiabilities A/R Invoice Customer acc. 2,000

Debts toVendors A/P Invoice Vendor 3,000

To:Today + 5 days

Cumulative Balance:Today + 5 days 4,000

The Cash Flow runs on:Open transactions – not reconciled (with the option to Display Fully Reconciled Postings).The transaction Due Date.

The Cash Flow is displayed according to:The level of probability that the transaction will turn to cash (incoming and outgoing).Time Intervals.

Today

Today + 3

Today + 4days

Today + 5days

The probability that a cash flow can be expected varies considerably. For this reason, the systemassigns the balances to various security levels. Security here means the level of certainty with whichan account balance is relevant to the cash flow. The following security levels exist:

Cash (all cash accounts are assigned to this level. You define an account as cash account in theChart of Accounts G/L Account Properties).Credit card vouchers (all accounts for credit card vouchers are assigned to this level)Checks received (the check clearing account is assigned to this level)Customer Liabilities (all customer accounts are assigned to this level)Payables to Vendors (all vendor accounts are assigned to this level)

Postings that you have not yet made when the report is compiled can be included manually andassigned to a security level. Furthermore, you can decide if you want to include recurring postings orjournal vouchers into consideration.

Choose Financials Financial Reports Financial Cash Flow to run the cash flow report.

5-22

The Sales process affects the cash status of the business.How can OEC Computers improve the Cash Flow Results?What kind of options does a company have to optimize their cash flow?

Background: although a company is profitable, it can go bankrupt due tocash flow problems. Keeping a positive cash flow is therefore important.

How can they ensure that a timely invoice is generated to enhance positivecash flow?


5-23

Customer Receivables Aging Report

Define Payment Terms for your customers that influencesales documents due date and expected payments, CashFlow, Aging report and Dunning:

Default payment terms for customers and vendors inSystem InitializationPayment terms in the Business Partner Master DataPayment terms in documents (Due Date field)

The Customer Receivables Aging report is the monetarycontroller of the Sales-A/R module. This report shows allthe money owed to a company and how long it has beenowed.This is a key report for managing the company’s cash flowas well as evaluating the credit quality of customers.

To generate this report, select Business Partners Business Partner Reports Aging CustomerReceivables Aging.

5-24

Aging Reports

Customer Receivables Aging

Business Partner Document Due Date Balance Due FutureRemit

Aging Intervals

0-30 31-45 46-75 76-100

Funtech A/R Invoice 1,000 1,000

A/R Invoice 20,000 20,000

A/R Invoice 500 500

A/R Invoice 750 750

Surf O’bello A/R Invoice 3,100 3,100

A/R Invoice 1,500 1,500

Microchips A/R Invoice 270 270

A/R Invoice 4,700 4,700

A/R Invoice 11,000 11,000

The money owed to a company and howlong it has been owed

42,820 11,000 4,600 24,700 2,250 270

100% 25.68% 10.74% 57.68% 5.25% 0.63%

Aging Date

SAP Business One is shipped with two reports for monitoring the due dates for open customerreceivables and vendor liabilities:

Customer Receivables Aging

Vendor Liabilities Aging

Both reports allow you to restrict the information to certain business partner accounts. You can specify an agingdate after which the due dates are to be calculated. You can also specify interval in days, months or periodsafter which items that are overdue are to be grouped. In 8.8 release you have a flexible definition of intervalin days (see example in the slide). You can display the report by posting date or due date. Both reports includeexpandable list with all BP and documents allowing you to drill down to the details in one screen (new displayin 8.8 release).

You can run the Customer Receivable Aging report from either Financials Financial Reports AccountingAging or from Business Partners Business Partner Reports Aging.

You can run the Vendor Liabilities Aging report from either Financials Financial Reports AccountingAging or from Business Partner Reports Aging.

You can also post a doubtful debt provision journal entry from the Customer Receivables Aging report. To setup doubtful debt provision, choose Administration Setup Financials Doubtful Debts. We discussed thedoubtful debt option in unit 4: Posting Periods Process.

More Enhancements in 8.8:

Group By Customer/Vendor or Group by Sales Employee/Buyer option.

New option: “Ignore Future Remit“ checkbox. When this option is selected, the future remit amount issubtracted from the balance due amount.More columns in the report.

5-25

What proactive steps can OEC Computers take to improve the Cash FlowResults?What kind of options does a company have to ensure timely payments?How can they prevent “bad debts”?


5-26

Dunning Process

A complementary tool to enhance a positive cash flow will be to send debtorstatements for outstanding debts.For this purpose you need to configure the Dunning System.

Dunning System setup:Prior to running the Dunning Wizard you must setup the Dunning Levels and Dunning Terms in thecompany:Go to Administration Setup Business Partners.Each customer must be assigned with a dunning term.It is possible to setup a default dunning term for new customers on the Administration SystemInitialization General Settings BP tab.For details on the Dunning Wizard and Dunning Terms refer to the appendix.For more information on the Dunning Process refer to the how-To guide: How to Set Up anAutomated Dunning Process.

5-27

Exercise – Aging Reports and Dunning

5-28

Company Analysis and Planning

Controlling Reports




5-29

Company Analysis and Planning:Topic Purpose

After completing this topic, you will be able to:Discuss the effect of standard processes in SAP Business One on company analysisand planning reports.Describe when to use each report.Interpret typical report data.

5-30

Company Analysis and Planning:Business Example

Maria says that in previous years they ended the fiscal year with much moreexpenses than expected:OEC Computers would like to be able to plan their expenses for a fiscal year and trackthem during the year.They also want to track profit and loss:

Internally, by department.And at the project level.

Reports that provide financial analysis of cost planning and profitability inside thecompany:

BudgetProjectCost Accounting

You need to make decisions about Budget, Projects, and Cost Accounting definitions together with theclient accountant.

5-31

Budget - Question

When the company decides on an annual expense budget, what kind of datais being considered?What can be a good reference for this kind of forecast?

5-32

Budget Management

The Budget module helps you manage and track companyexpenses.

The purpose of budgeting is to provide a forecast of revenuesand expenditures i.e. to construct a model of how our businessmight perform if certain strategies, events and plans are to becarried out.This way, the actual financial operation of the business can bemeasured against the forecast.In SAP Business One a budget is based on the data you enter,which specifies the maximum amount that can be allocated to aparticular G/L account.You can block the creation of transactions for G/L accountsthat exceed their budget limit.

In the course of routine work, the application checks the debit side of G/L accounts for which a budgethas been defined. If the budget is exceeded, the application either issues a warning or blocks the action,depending on the chosen setting.

Note! the budget functionality works with calendar months only.

For more information on initializing and working with budget refer to the How To Manage Budgets inRelease 8.8 guide.

5-33

Budget Management and thePerpetual Inventory system

If your company manages a perpetual inventory system, you canuse the Purchase Accounts Posting System. This option includesthe recording of expense accounts in journal entries created bypurchasing documents that affect the inventory valuation.You can use the budget functionality to control these purchaseaccounts, thus monitoring your expenses in real time.This functionality can be used where the purchase accounting option isenabled. Starting from 8.8 version Purchase Accounting is availablefor all localizations.

To activate the Purchase Accounts Posting System, from SAP Business One Main Menu, chooseAdministration System Initialization Company Details Basic Initialization tab and select theUse Purchase Accounts Posting System checkbox.Once journal entries have been made, this setting cannot be modified.

5-34

Defining Budget Settings

Steps to activate the budget functionality:1. First, the budget functionality has to be initialized in your company.

You can manage your budget on an annual or monthly basis.You have the option to Mark all P&L accounts as budgetaccounts.

2. Define Budget Distribution Methods.Budget Distribution Methods allow you to automatically divide thebudget amount among the months of year.Note: budget distribution methods are not relevant for working withan annual budget.

Budget Initialization - Administration System Initialization General Settings, and on theBudget tab select the Budget Initialization checkbox.

You have the option to Mark all P&L accounts as budget accounts.Choose Yes. As a result the Relevant to Budget checkbox is selected in all your profit-and-loss G/Laccounts.

NoteYou can find this checkbox in Financials Chart of Accounts Account Details pushbutton.You can manually select non profit-and-loss G/L accounts to be relevant to the budget by selectingthe Relevant to Budget checkbox for each G/L account.

If the Purchase Order, Goods Receipt POs, and Accounting checkboxes are selected, the applicationperforms a check for deviation from the budget during the generation of purchase orders, goods receiptPOs, and A/P invoices.

Budget Distribution Methods - choose Financials Budget Setup Budget DistributionMethods.

5-35

Account100000

Account200000

Account300000

Account400000

Account500000

OptimisticScenario

Use Budget Scenarios

Main Scenario

PessimisticScenario

Note that during routine work,deviation from the budget ischecked against the mainbudget scenario only.The other scenarios are usedfor budget reports!

3. Budget scenarios are used mainly for displaying budget reports. Using a scenario, you createa prognosis of a particular situation for the company's budget and obtain important informationabout what the budgetary balance would be according to the selected scenario.

Scenarios are used to create a prognosis of a particular situation in the company's budget and to obtainimportant information about what the budgetary balance would be according to the selected scenario.For example: an optimistic scenario versus a pessimistic scenario.When you set up a new company, the application provides a default scenario called Main Budget. Thisscenario cannot be altered.Note that in the course of routine work, deviation from the budget is checked against the mainbudget only. The other scenarios are used only for budget reports!The Import Budget Scenario function lets you import budget data from a company to the companywith which you are currently working, and duplicate a budget scenario in the same company, for thesame fiscal year or for the next fiscal year.Note! make sure during the operation that the G/L account codes in the source company match those inthe target company.The Copy Budget Scenario function lets you copy budget data from a budget scenario into a targetbudget scenario in the same company for the same fiscal year or for the next fiscal year.From the SAP Business One Main Menu, choose Financials Budget Setup Budget Scenarios.

5-36

Defining Budget Amounts

4. After you have defined budget scenarios, it is now time to definebudget amounts.

5. Now the budget is defined for the selected accounts, enabling you to perform ananalysis by comparing the defined budget with the actual business activity.

Defining a budget - From the SAP Business One Main Menu, choose Financials Budget SetupBudget.In the Scenario field, choose the scenario for which you want to define a budget.

In the Local Debit / Credit column specify an amount in local currency for each G/L account.

Note that:

You can define budget amounts only for G/L accounts which are defined as Relevant to Budgetin the Chart of Accounts.

You can specify an amount in local currency for each G/L account

SAP Business One checks the budget for deviations against the debit side. Thus, alerts are onlytriggered for accounts with a budgeted amount in the Debit column.

You can use the Credit field for sales accounts to set revenue targets which you can track with thebudget report.

5-37

Budget:Getting Down to Work

In the course of routine work, when you create a transaction against an expense G/L accountwhich is Relevant to Budget, a check for deviation from the main budget scenario is executed,and if the budget is exceeded, an alert is issued.In the Authorization window, under the Financials module, there is a Budget clause in which youcan define authorizations for users to confirm budget deviation in case a G/L account exceeds thebudget and an alert is displayed (according to the definition under General Settings Budget tabpage).The Budget Report enables you to display the company’s budget data according to yourrequirements.This report analyzes the business activities that occur during a defined period, with reference to aselected budget scenario.Company Budget Reports: The standard company reports can be displayed along with thebudget data.You can run the budget reports according to a preferred budget scenario.

Financials Financial Reports Budget Reports Budget Report.Reports Financials Budget Reports Balance Sheet/Trial Balance/Profit and Loss StatementBudget Reports.

5-38

Cost Accounting:Business Example

Assuming your company is divided to departments:SalesSupportServiceAnd Accounting

In this example, the Sales department brings more revenuesthan the other departments.On the other hand they have a lot of expenses: travel, hotel,dinner, conferences, advertising, bonuses etc.As the accountant of the company, how could you know thebottom line for each department? How can you issue a Profitand Loss report for a department?

5-39

Cost Accounting:Profit Centers and Sort Codes

Support

Center_z

Sales Service Accounting

Admin

OEC Computers

Sort Code

To use the cost accounting functions in SAP Business One, you must define the cost centers ordepartments in your company as profit centers. You can then compile a profit and loss statement foreach profit center in every period.You can combine your profit centers into groups by using a sort code.

Choose Financials Cost Accounting Profit Centers to define and maintain profit centers.The system automatically creates a center zero profit center (Center_z) that collects the costs andrevenues that cannot be clearly distributed to other profit centers because not enough information isavailable. The Center_z profit center can also record costs that are not to be reported in internal costaccounting. For example, if you want to show only 80% of your rental expenses as costs, you canassign the remaining 20% to Center_z.The Center Z is used when defining distribution rules

5-40

Cost Accounting:Distribution Rules

684220Employees

2002001000500Area

100000100PC 3

010000100PC 2

001000100PC 1

PC 3PC 2PC 1Center_zTotalProfit Center

Dist. Rule

DistributionRules forDIRECTCosts andRevenues

DistributionRules forINDIRECTCosts andRevenues

Distribution rules define how the costs or revenues posted for an account are distributed to theprofit centers.When you create a profit center, the system automatically creates a distribution rule with thesame name. This rule (which cannot be changed) is configured so that the system posts all the costs orrevenues to the relevant profit center. In other words, the system does not split the amounts. You canuse these distribution rules for direct costs and revenues, which you can assign uniquely and in full toa specific profit center.

For example, in OEC Computers, company car expenses are assigned directly to the “service” profitcenter since only technicians hold a company car.

You cannot assign indirect costs and revenues directly to a profit center. Instead, you allocatethem to one or more profit centers using a distribution rule. In the distribution rule, you specifyhow the amount is to be allocated amongst the profit centers. You can allocate by percentage orratio, for example, you can distribute heating costs to the profit centers in accordance with the size ofthe heated areas. Similarly, you can distribute voluntary employee benefits among the number ofemployees.If you cannot define the total allocation (because you do not have enough information at the time),the system allocates any unassigned costs or revenues to the Center_z profit center. When you havethe information you need, you can change the distribution rule so that the system corrects thedistribution accordingly.Choose Financials Cost Accounting Distribution Rules to define and maintain distributionrules.Choose Financials Cost Accounting Table of Profit Centers and Distribution Rules to displaythe allocations for distribution rules.

5-41

Cost Accounting: Link Between General Ledgerand Cost Accounting

Heating Costs

Distribution RuleX area

Profit Center 1 Profit Center 2 Profit Center 3

Journal Entry

1000Heating CostsDistr. Rule area

Journal Entry

1000Heating CostsDistr. Rule area

For costs to be included in cost accounting, you can either:Include a distribution rule in a journal entry row or marketing document row. Use FormSettings to display the distribution rule field (in journal entries) or profit center field (in marketingdocuments). For journal entries, use Expand Editing Mode to enter a distribution rule for the row.Post a journal entry or marketing document to a G/L account that is linked to a distribution rule.You can only link accounts with the account type Sales or Expenditure in the chart of accounts.

To link an account to a distribution rule, choose Chart of Accounts.You can use the Profit Center report to display an overview of the posted costs and revenues. ChooseFinancials Cost Accounting Profit Center Report.You can produce some standard reports for a specific profit center, for example, Profit and LossStatement, Trial Balance, Budget Report.

5-42

Projects - Question

What do you expect from “project based accounting”?

5-43

Projects in SAP Business One

AccountingDocuments

Project:....

OriginalDocuments

Project:....

Project A Project B

Trial Report -Budget Report

P&L BudgetReport

P&L

TransactionReport

GeneralLedger

TrialReport -BudgetReport

P&L

TransactionReport

GeneralLedger

Trial Report -Budget Report

P&LBudgetReport

Trial Report -BudgetReport

You can use projects in SAP Business One to monitor your company's larger key projects and theireconomic success. To do so, you first define projects in the system. Choose Administration Setup

Financials Projects. You can then enter these directly in the relevant line items or the journalentry or marketing document.You can also enter projects in general ledger accounts or business partners. The relevant project is thenautomatically entered in the documents you post to these accounts.The Transaction Report by Projects lists all postings that you have made for a selected project. ChooseFinancials Financial Reports Accounting Transaction Report by Projects.You can produce many standard reports for a specific project, for example, Profit and Loss Statement,Trial Balance, Budget Report.

5-44

Exercise - Cost Accounting + Projects

5-45

Controlling Reports: Unit Summary

Main Terms:Financial Reports:

Balance SheetTrial BalanceProfit and LossFinancial Report Templates

Cash Management Reports:Cash FlowCustomer Receivables Aging ReportDunning

Company Analysis and Planning:BudgetProjectCost Accounting:– Profit Centers– Distribution Rules

6-1

Unit 6: Financial Accounting Initialization

Contents:Tax system.Currencies.Perpetual inventory/ non-perpetual inventory system.

6-2

Financial Accounting Initialization:Unit Objectives

After completing this unit, you will be able to:Set up definitions in the implementation process.Explain the consequences of each definition on the financial accounting process.Give examples of some processes in SAP Business One.You need to make decisions about these definitions together with the client

accountant.

6-3

Financial Accounting Initialization:Course Overview Diagram

Financial Accounting Initialization

Topic 1: Tax System

Topic 2: Currencies

Topic 3: Perpetual Inventory/ Non-Perpetual Inventory System

6-4

Financial Accounting Initialization:Business Example


Your main contact at the customer site is Maria the accountant.You and Maria will work together to set cross-company definitions:

Tax system.Currencies.Perpetual inventory/ non-perpetual inventory system.

The setup begins when initializing the company and continues in defining theBusiness Partner Master Data records and the Items.Those definitions are reflected in the:

Sales, purchasing and inventory documents and transactions.Automatic journal entries created by documents.Company reports.

You discuss those definitions with Maria to see how to implement them in OECComputers.

6-5

Tax System


Topic 1: Tax System

Topic 2: Currencies


6-6

Tax System: Topic Purpose

After completing this topic, you will be able to:Define the tax system according to your localization.Explain the consequences of the tax system defined in your company onthe financial accounting process.Give examples of some tax issues in SAP Business One.

6-7

Tax System:Business Example

You discuss the tax definition with Maria, the accountant:You explain to Maria that in order to issue A/R and A/P Invoices, sheneeds to define some initial settings.Maria is happy to hear that when you both created a new database inSAP Business One, a set of Incoming and Outgoing Tax Groupswas defined automatically according to the UK localization you chose.

The tax system is determined according to the localization you choose for the company database.

In the next slides we will discuss 2 main tax systems.

6-8

Tax Process - Europe

Setup - Tax Groups

Tax Group

Business Partner Master Date-Tax Liable/Exempt/ EU

Item Master Data - Tax Group:Sales/ Purchasing

A/R A/P Invoice -Tax Group:in the document row

Automatic Journal Entry - VAT row

Tax Report –Output/Input tax groups

To ensure that the system uses the correct tax group in the documents, you have to properly define the tax settings on the Taxtab within the Accounting tab in your business partner master records.Setup – Tax Groups - SAP Business One provides predefined tax groups for each supported locality to be used by yourcompany for purchasing, sales, and payments. Each tax group should be connected to a G/L account to be used automaticallyin the journal entries created by documents containing this group. Administration Setup Financials Tax TaxGroupsBusiness Partner Master Date - Tax Liable/Exempt/ EU –Domestic customers

If the customer is tax liable enter Liable in the Tax Status field. Keep the Tax Group field blank. If you enter a documentfor this customer, the system copies the output tax group from the Sales Data tab of the item master record into thedocument.If the customer is tax exempt enter Exempt in the Tax Status field. The Tax Group field then disappears. If you enter adocument for this customer, the system uses the standard output tax group with 0% tax rate into the document, forexample, A0.

Domestic vendorsIf the vendor is tax liable enter Liable in the Tax Status field. Keep the Tax Group field blank. If you enter a documentfor this vendor, the system copies the input tax group from the Purchasing Data tab of the item master record into thedocument.If the vendor is tax exempt enter Exempt in the Tax Status field. The Tax Group field then disappears. If you enter adocument for this vendor, the system uses the standard input tax group with 0% tax rate into the document.

If you enter a tax group in the business partner master record, this tax group would overwrite the tax group from the itemmaster record. This is usually not desired for domestic business partners. Therefore, you should keep the Tax Group fieldin the master record of domestic business partners empty.For Service Type Invoices, if there is no tax group defined in the business partner master data, SAP Business One uses thedefault tax group defined in Administration Setup Financials G/L Account Determination Sales/ Purchasingtab Tax sub-tab Purchasing/ Sales tax group (Service) field.The system then automatically calculates the tax for each row in the document and summarizes the total document taxamount in the document footer area.An additional line(s) is created in the automatic journal entry of the document. This line(s) posts the tax amount to the correcttax account.Use the Tax Report to display documents and manual journal entries that include tax amounts sorted by tax code.

6-9

Sales Tax Process - US

Setup - Sales Tax Codes

County2%

State6%

City1%

Tax Jurisdictions:

Sales Tax Code

9%Business Partner Master Date-Tax Liable/Exempt

Sales Tax Code:Customer – Ship to AddressVendor – Tax Code defined for theWarehouse receiving the goods

A/R A/P Invoice -Sales Tax Code:in the document row

Automatic Journal Entry:Row for each jurisdiction

Tax Jurisdiction Report –According to Tax Codes or JurisdictionCodes.

Item Master Data – Tax Liable:Yes/ No

Setup - Sales Tax Codes –The first step is to define the Jurisdiction types as required by the tax authorities. Administration SetupFinancials Tax > Sales Tax Jurisdiction Types. The system contains the three necessary jurisdiction types: State,County, and City.Next you need to define rates for sales tax jurisdictions. Administration Setup Financials Tax Sales TaxJurisdictions. Select the required jurisdiction and then choose OK. In this window you also define the G/L Accounts to beused automatically in the journal entries created by documents containing this tax jurisdiction (in the Sales Tax Code).For the State Jurisdiction SAP Business One provide the list of states.You need to define the other Jurisdictions you work with (For example, County and City).The final step is to setup the Sales Tax Codes that combine the tax rate for each Tax Jurisdiction - city, county, state, andso on, using the predefined Jurisdictions rates. Administration Setup Financials Tax Sales Tax Codes.The tax codes will calculate the correct tax rate for a specific location by the jurisdiction rates included in it.

The Sales Tax Code is used automatically to calculate the sales tax amount in sales and purchasing documents.The total sales tax amount charged is calculated as follows:

For each item SAP Business One checks if it is Tax Liable. If so, it calculates a sales tax amount for the item rowaccording to the tax code and the quantity.

The Tax Code in Sales documents is determined based on the default Ship to Address of the customer in the BusinessPartner Master Record. You can select a different Ship to Address defined for the customer, while issuing thedocument.The tax code in Purchasing documents is determined based on the selected warehouse: Administration SetupInventory Warehouses General tab Tax Code field.

For Service Type A/P Invoices, the tax code is based on the default tax code of the company: Administration > SystemInitialization > Company Details > Accounting Data tab Tax Code field.

The System summarizes the total document tax amount in the document footer area.In the automatic journal entry of the document, a row is created for each tax jurisdiction included in the Tax Code . Eachrow posts the tax amount to the correct tax account.Tax Jurisdiction Report - this report summarizes sales tax collected from sales and purchasing invoices for a specified periodof time (typically quarterly or monthly). You can display the report according to Tax Codes or Jurisdiction Codes.

The Jurisdiction Codes display gives you the amount to be paid to each legal authority.

6-10

Tax System:Question

How was this topic handled in implementation projects you wereinvolved in?

6-11

Currencies


Topic 1: Tax System

Topic 2: Currencies


6-12

Currencies: Topic Purpose

After completing this topic, you will be able to:Set up the definition of currencies in the implementation process.Explain the consequences of the currencies defined in yourcompany on the financial accounting process.Give examples of some currency issues in SAP Business One.

6-13

Currencies:Business Example

You discuss the currencies definition with Maria:Maria says that most of their customers are located in the UK.However few customers and vendors they work with are located in the US.You tell Maria about the working methods with currencies in SAP Business One.

6-14

Currencies:Reflection Question

OEC Computers is pricing some of their items in US Dollars for UKcustomers.What will be the currency of the A/R Invoice total amount?What will be the currency in the automatic journal entry created by theA/R Invoice?

6-15

Company Level – Local and System Currencies

SAPBW

mySAPBusiness

SuiteCurrency:

USD

SAPBusiness

One

Local Currency:EUR

System Currency:USD

SAPBusiness

One

Local Currency:USD

System Currency:USD

SAPBusiness

One

Local Currency:JPY

System Currency:USD

MicrosoftExcel

SAP Business One can handle accounting in two parallel currencies: the local currency and the systemcurrency.

The Local Currency is the currency in which the company is legally required to keep its books. In ourexample, British Pound.

The System Currency may be a different currency than the local currency and is especially useful forsubsidiaries of global companies whose head office uses a different currency than the subsidiaries (forexample, EUR (€) in the subsidiary and USD ($) in the head office). In this case, the systemautomatically calculates all postings in the local currency and manages an additional account balancein the system currency. This makes it easier to have aggregated reporting on all the subsidiaries andallows for better integration with the system of the head office. For example, you could export thefinancial data in system currency from the SAP Business One systems of the subsidiaries to the SAPBusiness Suite or the SAP Business Information Warehouse of the head office. Alternatively, financialconsolidation can be done with Microsoft Excel or any other product based on the financial data insystem currency.

In our example, OEC Computers is a local company and does not have a reporting requirement inanother currency. Therefore you set the system currency to your local currency - British Pound.

Choose Administration System Initialization Company Details to define the local currency andthe system currency on the Basic Initialization tab.

Note that you cannot change the Local or the System Currency once you have started to work withthe database.

In some financial and accounting reports you have the Revaluation option, that enables you torevaluate report results according to three pre-defined methods. Note that the revaluation is for displaypurposes only and does not affect the postings values.

6-16

Account Currencies

Currencies forEntering JournalEntries

Currencies of theAccount Balance

Account Currency= Local Currency

Local Currency Local CurrencySystem Currency

Account Currency= Specific Foreign

Currency

Local CurrencySpecified ForeignCurrency

Local CurrencySystem CurrencySpecified ForeignCurrency

Account Currency= All Currencies

Local CurrencyAny Foreign Currency

Local CurrencySystem Currency

Each Business Partner Master Data record and each G/L Account needs to have an account currencydefinition:• The system sets the Local Currency as the default currency for all Business Partner Master Data records.• You can define a default currency for new G/L accounts using the Default Account Currency field on the

Basic Initialization tab under Administration System Initialization Company Details.In our example, most vendors and customers in OEC Computers will be defined as British Pound (LocalCurrency). The vendors and customers from the US will be defined in USD (Specific ForeignCurrency). The company Bank Account will be defined as All Currencies since it needs to register journalentries and documents in more than one specific Foreign Currency (e.g. bank transfers).The table in the slide details the options for entering Journal Entries and viewing the Account Balance for eachoption of the Account Currency – Local, Foreign and All Currencies:

If you define the Local Currency in the Currency field, you can enter journal entries in the local currencyand the system manages the account balance in the local currency and the system currency in parallel.If you define any specific foreign currency in the Currency field, you can enter journal entries in thespecified foreign currency or the local currency. The system then manages the account balance in thespecified foreign currency, the local currency, and the system currency in parallel.If you define All currencies in the Currency field, you can post journal entries to this account or businesspartner in any currency. The system, however, manages the account balance only in the local and systemcurrencies. In other words, it does not manage the balance in the currencies in which the items were entered.For All Currencies accounts, you can only conduct external bank reconciliations in the local currency. Takethis fact into account when working with multi currency accounts.

At any point, you can change an account currency to be All-Currencies, but you will not be able to change itback once you update.The G/L Accounts and Business Partners report produces a list of all accounts, including their name, accountgroup, and balances. To run the G/L Accounts and Business Partners report, choose Financials FinancialReports Accounting G/L Accounts and Business Partners.

6-17

Define Currencies - Summary

CompanyLevel

Local Currency and the System Currency.

AccountCurrency

Options - Local Currency, specific Foreign Currency, All CurrenciesBusiness Partner Master Data record - Local Currency is the default currency for allBusiness Partner Master Data records.G/L Account - You can define a default currency for new G/L accounts.At any point, you can change an account/ BP currency to be All Currencies, but you willnot be able to change it back once you update.

Currencies -SetupWindow

Enter a code of up to three characters for the currency, for example, USD, EUR. You willuse this code in the pricing fields, document amounts and journal entries.

Pricelist You can enter a Unit Price in any Foreign Currency defined in the Currencies – Setupwindow. SAP Business One will convert the total row value and the total document valueto the BP Currency/ Local Currency/ System Currency.

ExchangeRates andIndexesWindow

This window lets you define, either manually or automatically exchange rates for the foreigncurrencies defined in the Currencies - Setup window.

Company Level - choose Administration System Initialization Company Details to define theLocal Currency and the System Currency on the Basic Initialization tab.

Account Currency G/L Account: you can define a default currency for new G/L accounts usingthe Default Account Currency field on the Basic Initialization tab under Administration SystemInitialization Company Details.Currencies - Setup Window: Administration Setup Financials Currencies. Specify thecurrency name as well. This name appears in the dropdown boxes of various windows pertaining tocurrency.

Pricelist Unit Price: Inventory Item Master Data choose a price list Unit price field.

Exchange Rates and Indexes Window - Administration Exchange Rates and Indexes. If you donot enter a value for a specific day, the Exchange Rates and Indexes window will popup when youcreate a document involving a foreign currency. For example, when you choose a foreign currencybusiness partner or an item with a foreign currency unit price.

6-18

Value Calculation in Marketing Documents:Business Example

A/P Invoice

Business partner’s currency = foreign currency USD

Unit price inforeign currencyUSD

Unit price in localcurrency

Posting date: xx/yy/zzzz

Exchange rate

Total row value

Total documentvalue

Total row value

BPCurrencyUSD

Row rate

This is an example of value calculation for a foreign currency business partner:The business partner’s currency sets the document default currency (USD in our example).Once the posting date is set SAP Business One takes the exchange rate of the selected currencyfrom the Exchange Rates and Indexes window.You can manually update the rate in the document.

The system saves the row rate for currencies that are different from the local currency.The unit price in the local currency is divided/ multiplied by the exchange rate. The result is thenmultiplied by the quantity to present the total row value in the business partner’s currency.- Note! There is a setting which determines the display of exchange rates in SAP Business One. This

setting affects the calculation that you use to enter the exchange rates in the Exchange Rates andIndexes window. Choose Administration System Initialization General SettingsDisplay tab Exchange Rate Posting field.

Select Direct to display the exchange rate according to the foreign currency.Select Indirect to display the exchange rate according to the local currency.This setting is updated per company, for all users, after the next logon, but cannot be changed after

transactions are recorded in the company. The exchange rate values are always saved in the systemaccording to the direct rate. The indirect rate is for display use only.

The total document value, in this example, is also presented in the business partner’s currency.Note! you can choose to display the total row and the total document values in local or systemcurrency using the drop down menu in the document header.In the journal entry created by the document, the exchange rate is applied on the credit and debitamounts in BP currency and come up to the credit and debit amounts in the local currency.System currency: is calculated by applying the exchange rate to the local currency posted value.

6-19

Row Exchange Rate for Prices:Draw Document Wizard

Draw Document Wizard

Row Ex, Rate for Prices

Use Row Exchange Rate from Base DocumentUse Document and Row Exchange Rate from Base DocumentUse Current Exchange Rate from the Exchange Rate Table

Draw all data (Freight and Withholding Tax)Customize

A/R Invoice A/P InvoiceGood Receipt PODelivery

The exchange rate of a foreign currency can change daily. This affects documents you create for aforeign business partner, or prices you manage in a foreign currency for local business partners. SAPBusiness One supports this scenario:When you create a sales or purchasing document based on existing documents (Copy From), SAPBusiness One opens the Draw Document Wizard window where you can define factors that affect thetarget document you create.Some fields in the Draw Document Wizard handle the exchange rate differences:

Use Row Exchange Rate from Base Document.Use Document and Row Exchange Rate from Base Document - New option in 8.8.Use Current Exchange Rate from the Exchange Rate Table.

6-20

Posting Exchange Rate Differences

Foreign VendorOutgoing Payments

20 LC

Exchange Rate Differences

40 LC

20 LC

20 LC

40 LC

Rate: 0.5Rate: 0.25

10 FC10 FC10 FC

LC: Local CurrencyFC: Foreign Currency

Invoice inForeign

CurrencyPayment

Exchange rate fluctuations can cause exchange rate differences when you pay invoices in foreigncurrencies:

The figure shows an A/P invoice which has been issued by a foreign vendor in foreign currency. Atthe posting day of the invoice the exchange rate was 0.5. The system converts the 10 units foreigncurrency into 20 units local currency and posts both values in parallel on the credit side of thevendor account.At the time when you post the payment for this invoice the exchange rate has changed to 0.25. 10units in foreign currency are now equal to 40 units in local currency. Compared to the value at thetime of the invoice there is an exchange rate difference of 20 units local currency. When you post thepayment the system automatically posts this exchange rate difference to an exchange rate differenceaccount.

The system posts the exchange rate differences as expense or revenue to the accounts that you haveentered in the Realized Exchange Diff. Gain field and the Realized Exchange Diff. Loss field on theSales tab and the Purchase tab under Administration Setup Financials G/L AccountDetermination.

6-21

Exchange Rate Differences, ConversionDifferences at Period End Closing

Account in Foreign Currency

10 LC

Exchange RateDifferences

10 LC 200 LC 100 FC

190 LC 100 FC

Valuated Balance

Valuation

or

Proposals fromDifference Postings

RejectProposal

Accept and PostProposal

LC: Local CurrencyFC: Foreign Currency

Non-Valuated Bal.

Business partner accounts and general ledger accounts that you manage in a foreign currencypost an account balance in the respective foreign currency and an account balance in the localcurrency. The balance in the local currency comprises the foreign currency items that were translatedusing the exchange rate in the exchange rates table at the posting date or the tax date. In other words,the balance is based on past exchange rates. At period-end closing, therefore, you have to valuatethe foreign currency account balance with the exchange rate on the closing key date.Choose Financials Exchange Rate Differences for this purpose. When you execute the function,the system generates a list of proposals for difference postings. You can then accept or reject eachproposal individually.You can select foreign exchange accounts and a foreign currency, as well as specify an execution date.The system defaults the exchange rate differences accounts defined in the Realized Exchange Diff.Gain field and the Realized Exchange Diff. Loss field on the Sales tab and the Purchase tab underAdministration Setup Financials G/L Account Determination.You can enter a future date in the Auto. Reverse field. This enables you to reverse this postingautomatically in the future.In addition to the local currency, the system also manages your data in the system currency in parallel.If your company's local currency is different from the system currency, exchange rate differences canarise. The system can clear these differences automatically. This is carried out using the ConversionDifferences function under Financials Conversion Differences in the same way as the exchangerate differences.

6-22

Exercise - Currencies

Issue an A/R invoice for a foreign currency customer.Review the currency calculation in the:

Unit Price fieldTotal row amountTotal document amountThe automatic Journal EntryThe customer Account Balance

Issue an A/R invoice for a local customer.For the item/s in the invoice, enter the unit price in foreign currency.Review the calculation in the:

Unit Price fieldTotal row amountTotal document amountThe automatic Journal Entry

Create a Credit Memo for the first A/R invoice.In the Draw Document Wizard, review the options in the Row Exchange Rate for Prices section.

6-23

Perpetual Inventory/ Non-PerpetualInventory System


Topic 1: Tax System

Topic 2: Currencies


6-24

Perpetual Inventory/ Non-Perpetual InventorySystem: Topic Purpose

After completing this topic, you will be able to:Define Perpetual Inventory/ Non-Perpetual Inventory System in theimplementation process.Explain the consequences of the inventory system defined in yourcompany on the financial accounting process.Give examples of Perpetual Inventory/ Non-Perpetual InventorySystem in SAP Business One.

For more information on Inventory Systems refer to the How-To Guides:

How to Set Up and Manage a Perpetual Inventory in 8.8

How to Set Up and Manage a Non-Perpetual Inventory in 8.8

6-25

Inventory System:Business Example

You discuss the inventory system definition with Maria:Maria says that most of their inventory valuation is calculatedaccording to Moving Average .She asks you what the best way is to set up the system so that allitems are handled by moving average and the values calculatedautomatically.Maria says she wants to minimize any manual corrections in theInventory valuation.You set up a Perpetual Inventory System.

6-26

Perpetual / Non-Perpetual Inventory System:Reflection Question

What is the difference between perpetual/ non-perpetual inventorysystems?What is commonly used in your localization?What is the calculation for Moving Average?

6-27

Perpetual Inventory orNon-Perpetual Inventory System

According to local legal settings - control the inventory valuation:Define a perpetual inventory system that automatically controlsstock value and affects the financial system.Or: use a non-perpetual inventory system in which sales,purchasing, inventory, and production transactions create inventorytransactions and affect the inventory levels but do not generateinventory related monetary entries directly into the general ledger.

A perpetual inventory system reflects the value of inventory postings in terms of monetary transactionsin the accounting system. These monetary transactions are carried out when items defined as inventoryitems are received or released from stock.

6-28

Perpetual Inventory System - Example forMonetary Value of Inventory Postings

Inventory Account Balance

InventoryItem

Delivery

Inventory Transactions

Good Receipt PO

An Inventory item is linked to an inventory account that has a certain value from previous transactions.As you purchase this item, the balance of the inventory account increases.When you sell this item, the balance of the inventory account decreases.In the next slides we will review some concepts of a perpetual inventory system. Some of the topicswere already discussed in TB1000.

6-29

Perpetual Inventory System - G/L AccountDetermination

Set G/L Accounts by Warehouse

Set G/L Accounts by Item Group

Set G/L Accounts by Item Level

# WH Code WH Name Accounts Types

1 01 General Warehouse

2 02 Drop Shipment

3 03 Consignation

Accounts fromWarehouse Definition



2 02 Drop Shipment

3 03 Consignation

Accounts fromItem Group Definition



2 02 Drop Shipment

3 03 Consignation

Accounts EnteredManually

In the Item Master Data you define the G/L Accounts to be involved in the monetary transactions (wediscussed this issue in details in TB1000):To simplify the account determination, in every item master record you can specify that theaccounts are retrieved from a higher level:

Warehouse level: In this case the system automatically retrieves the accounts from the warehousedefinition. To maintain the accounts in the warehouse definition, choose Administration SetupInventory Warehouses and choose the Accounting tab.Item group level: In this case the system automatically retrieves the accounts from the item groupdefinition. To maintain the accounts in the item group definition, choose Administration Setup

Inventory Item Groups and choose the Accounting tab.Item Level – any G/L accounts that you define at the item level

Choose the default G/L method for new items: Administration System Initialization GeneralSettings Inventory tab Items Set G/L Accounts By field.You can define default accounts under Administration Setup Financials G/L AccountDetermination. These values are defaulted for all levels (warehouse level, item group level, and itemlevel).

6-30

Perpetual Inventory System – Valuation Methods

Moving Average Price

First In – First Out (FIFO)

Standard Price

SAP Business One provides the following three valuationmethods for calculating the inventory value:

Moving average – Calculates the average cost for the item ineach sales, purchasing, inventory, and production transaction.

FIFO – Calculates the inventory value by the FIFO (first in firstout) method. This means that goods purchased first (orproduced first) are sold first, regardless of the actual goodsflow.

Standard – Calculates the inventory value by a fixed price, whichis then used for all transactions

€ € € € €

FIFO –Each inventory receipt transaction creates a layer of quantities linked to costs. A FIFO layer isdefined as the quantity of an item in a warehouse with a particular cost value.Each inventory release transaction uses quantities and their corresponding costs from the first openlayer or layers.

You can set a default valuation method per item group, in Administration Setup InventoryItem Groups General tab Default Valuation Method field. An item you assign to this groupwill automatically receive this valuation method.You can specify the default valuation method for newly added item groups. Choose Administration

System Initialization Company Details Basic Initialization tab Item Groups ValuationMethod field.You can define whether the system calculates one inventory pricing for all warehouses or a separateown inventory pricing for each warehouse. Choose Administration System InitializationCompany Details on the Basic Initialization tab with the Manage Item Cost per Warehousecheckbox.

6-31

FIFO - Example

The item cost is calculated as the cost of the oldest unit on hand.The item cost is managed by layers for each item.

Purchasing

Purchase 5 Units for 100 eachInventory Value = 500

Purchasing

Purchase 5 Units for 200 eachInventory Value = 1500

Sales

Sell 7 for sales price of 300Total COGS = 900 (5X100+2X200) New Inventory Value 600

Each inventory receipt transaction creates a "layer" of quantities linked to costs.Each inventory release transaction uses quantities and their corresponding costs from the first openlayers.

6-32

Standard Cost - Example

The unit cost is determined manually when you setup the item. Variances that occur due toa different purchase price are recorded to a variance account, and the unit cost is notaffected.

Purchasing

Set manually unit cost to100Purchase 5 Units for 100 each. Inventory Value = 500

Purchasing

Purchase 5 Units for 200 eachCurrent Unit cost = 100 New Inventory Value = 1000 (Variance

of 500)

Sales

Sell 7 for sales price of 300Current Unit cost = 100 Total COGS = 700New Inventory value 300

6-33

Moving Average - Example

The item cost is calculated by dividing the total inventory value by the on-hand quantity.

Purchasing

Purchase 5 Units for 100 eachUnit cost = 100 Inventory Value = 500

Purchasing

Purchase 5 Units for 200 eachCurrent Unit cost = 150 New Inventory Value = 1500

Sales

Sell 7 for sales price of 300Current Unit cost = 150 Total COGS = 1050New Inventory value 450

6-34

Perpetual Inventory System – Definitions andUpdates:

You should determine a perpetual inventory system during basic initialization, before posting anytransactions.If selected, each transaction of inventory items is reflected also in the inventory related G/L accounts.When you use a perpetual inventory system, SAP Business One lets you do the following:

Specify the default valuation method for newly added item groups.Specify a default valuation method per item group.Specify the default G/L method for new items.Manage the three valuation methods in the same company.Select a certain valuation method and/ or G/L method for each item individually.

Update the valuation method of your items globally.Update the calculated item cost for each item, if required.

Determine a perpetual inventory system – Administration System Initialization CompanyDetails Basic Initialization tab Use Perpetual Inventory option.Note: after the first inventory transaction is posted, this option is disabled, and its status cannot bechanged.Updating Valuation Methods:• SAP Business One lets you change the valuation method of an item. However, that is possible only

as long as the item is not linked to any open documents and its in-stock quantity is zero.• Use the Inventory Valuation Method and the Update Valuation Method windows to update the

valuation method of your items.• You can change the valuation method manually for each item separately using the Item Master

Data window.Update the calculated item cost for each item - go to Inventory Inventory TransactionsInventory Revaluation to revaluate inventory values.

6-35

Use this report to make comparisons between the accounting view (inventory balance accounts) andthe logistics view (inventory value displayed by the audit report). The report explains the valuechanges in inventory accounts.This report does not recalculate the item cost but displays the information from the database. Inaddition, only inventory related transactions are displayed in the report. Transactions with non-inventory items or drop-ship warehouses are not displayed.

Inventory Audit Report

Generating Inventory Audit Reports:The Inventory Audit report provides an audit trail for the posted inventorytransactions in the chart of accounts.

Note:The Inventory Audit report is available only for companies using the perpetual inventory system.To create what-if scenarios, use the Inventory Valuation Simulation report.

6-36

Value Calculation – Inventory ProcessReminder from Unit 1: Standard Financial Processes




100 * 10 = 1000

Purchase OrderGood Receipt PO

Debit Credit


Inventory acc. 360

Item CostCalculated Value= 90

A/P Invoice


Sales Quotation Sales OrderDelivery

A/R Invoice

Item Cost * Quantity = Total Value90 * 4 = 360

Debit Credit

Clearing acc. 1000

Inventory acc. 1000

Let us go back to the Goods Receipt PO that Joe entered based on the Delivery he got from thevendor.Assuming the company runs perpetual inventory, an item cost value is being calculated automaticallyin each stock transaction.When Joe entered the Goods Receipt PO to SAP Business One, the Purchasing Price List value (100per unit) affected the unit price in the Goods Receipt PO and also the item cost value.The item cost value is calculated automatically, behind the scene, according to the valuation methodchosen for the item (Moving Average, FIFO, Standard). The calculated item cost value after theGoods Receipt PO was 90.Joe entered a quantity of 10 portable media players. Therefore, the total value of the journal entrycreated by the Goods Receipt PO was 1000 and these are the Credit and Debit amounts registered tothe inventory default accounts.The value of the journal entry linked to the Delivery sent to the customer is 360. That is, quantity of 4items multiplied by the Item cost value at that moment (90).Remember that the total value of the Invoice based on that Delivery was 440. It was calculatedaccording to the Reseller Price List (110) that is defined as the default price list in the customer masterdata record.

6-37

Exercise - Perpetual Inventory System

6-38

Non-Perpetual Inventory System

In SAP Business One, the Inventory Valuation report is central to the non-perpetual inventory system. To calculate the value of inventory at any giventime, you need to run the Inventory Valuation report. This report lets youobtain an up-to-date valuation of the existing inventory and to create what-ifscenarios.

A non perpetual inventory system is an inventory management system in which costs ofinventories are not maintained on a constant basis:

In a non-perpetual inventory system, sales, purchasing, inventory, and production transactions, whichreflect the inventory levels, do not generate inventory related monetary entries directly into thegeneral ledger.

Therefore, the inventory value of a company is not revalued on every inventory release or receipt.Instead, the inventory account balance is updated by manual journal entry once in every accountingperiod or after a physical inventory count.

You must set up a non-perpetual inventory system during the basic initialization of the company,before any transactions have been posted. Once transactions have been posted, you cannot change theinventory system used for that company.

Note: the following countries have a non-perpetual inventory system as their default inventorymanagement system: Germany, Israel, Italy, Panama, South Africa, and Switzerland. In the Italylocalization, while working with a non-perpetual inventory system, you can also work with purchaseaccounts posting system.

6-39

Financial Accounting Initialization:Unit Summary

Main Terms:Tax System :

Tax Process – Europe Tax Groups.Tax Process – US Tax Codes, Jurisdictions.

Currencies:Company Level:– Local Currency– System Currency

BP and G/L Account Currency:– Local Currency– Specific Foreign Currency– All Currencies

Perpetual Inventory/ Non-Perpetual Inventory System:Inventory postingsMonetary transactionsThe three valuation methods for calculating the inventory value:– Moving Average– Standard– FIFO

2-1

Manual Payments - Exercises

Unit: BankingTopic: Incoming Payments

At the conclusion of this exercise, you will be able to:

Post incoming payments manually using different payment means

You can use manual payments to post payments for a single customer orvendor.

1-1 Incoming Payment (using cash payment means)

1-1-1 Create an A/R Invoice.Create an A/R invoice for any domestic customer, for example,C20000. To make sure that discount is not applied for promptpayment, change the Due Date and select a date that is over one monthin the past (this is for the exercise only). Leave the Posting Date astoday.

Select any item. Add the invoice and ignore the warning messageabout the due date.

1-1-2 Post an incoming cash payment.The customer pays the invoice in cash. Post an incoming paymentusing the cash payment means.

1-1-3 Check the Posting.Check the journal entry posted by the payment.

2-2

1-2 Incoming Payment with Cash Discount (using check payment means)

1-2-1 Create an A/R Invoice with Cash DiscountCreate an A/R invoice for any domestic customer. Post this invoicewith a payment term that allows cash discount.Tip: To check the payment terms for a customer, click the orangenavigation arrow on the Payment Terms field. If the Cash Discountfield is blank, select a cash discount from the dropdown list. To see theterms for the cash discount, click the orange navigation arrow.

1-2-2 Post an incoming check payment.The customer pays the invoice amount less the discount using a check.Post the payment using the check payment means.

1-2-3 Check the Posting.Check the journal entry to see if the cash discount was applied.

1-3 Partial Incoming Payment (using cash payment means)The customer pays part of his debt on an open A/R Invoice.

1-3-1 Create an A/R InvoiceCreate an A/R invoice for any domestic customer, for example,C20000. Change the Due Date and select a date that is over one monthin the past. Leave the Posting Date as today.

Select any item. Add the invoice and ignore the warning messageabout the due date.

1-3-2 Post partial incoming paymentThe customer has cash flow problems and cannot pay the invoice infull. Select the invoice and post an incoming payment with cashpayment means for part of the invoice amount.

1-3-3 Post an incoming cash payment for the remaining invoice sumThe customer pays the remaining sum of the invoice in cash. Select theinvoice and post an incoming payment. Tip: Use CTRL+B to enter theremaining balance in the payment means window.

2-3

1-3-4 Check the customer Account BalanceCheck the customer’s account balance to see if the invoice has beencompletely reconciled.

2-5

Manual Payments - Solutions

Unit: BankingTopic: Incoming Payments

1-1 Incoming Payment (using cash payment means)

1-1-1 Create an A/R Invoice

Choose Sales – A/R A/R Invoice.

Field Name or Data Type Values

Posting Date <Today's date>

Due Date < Past date >

Post this invoice to any customer with any item.Ignore the warning message about the due date.

1-1-2 Post an incoming cash payment.

Choose Banking Incoming Payments Incoming Payments.


Code <Code of the customer youused in the previous step>

Select the open invoice you posted in the previous step.

Choose Goto Payment Means, or choose the Payment Means iconfrom the menu bar. You can also right click and choose the PaymentMeans option.Choose the Cash tab.

Click in the Total field.Select CTRL + B to copy the payment amount to the Total field.

Choose OK.Choose Add and confirm your entries.

2-6

Tip:To post cash payments for one time customers who do not havea master data record, you can set up a dummy business partner.Check customer C99999 in the training database.

Note that the default cash clearing account appearsautomatically in the Payment Means window. You can choose adifferent G/L account if necessary.

1-1-3 Check the Posting.Open the incoming payment document that you just created andnavigate into the journal entry through the Transaction No. field.

1-2 Incoming Payment with Cash Discount (using check payment means)

1-2-1 Create an A/R Invoice with Cash Discount Choose Sales – A/R A/R Invoice.



Select any item (from the Contents tab).Choose the Accounting tab.

Check if the default payment term allows discounts. Tip: To check thepayment terms for a customer, click the orange navigation arrow onthe Payment Terms field. If the Cash Discount field is blank, select acash discount from the dropdown list. To see the terms for the cashdiscount, click the orange navigation arrow.

Approve the system message. Choose Update.Choose OK, then Add.

1-2-2 Post an incoming check payment.The customer pays the invoice amount less discount using a check.Choose Banking Incoming Payments Incoming Payments.




Choose Goto Payment Means.

2-7

Choose the Check tab.Press Tab to move to the Amount field in the row.

Select CTRL + B to copy the payment amount to the Amount field.Choose OK.

Choose Add and confirm your entries.

Tip:The default check clearing account appears automatically in thePayment Means window, at the top.

If the customer bank details were defined in the customermaster data, under the Payment Terms tab, it will appear as thedefault check details here.

1-2-3 Check the Posting.Open the payment document that you just created and navigate into thejournal entry through the Transaction No. field. Check the automaticcash discount posting.

1-3 Partial Incoming Payment (using cash payment means)The customer pays part of his debt on an open A/R Invoice.

1-3-1 Create an A/R InvoiceChoose Sales – A/R A/R Invoice.



Due Date <Past date >

Post this invoice to any customer with any item.Ignore the warning message about the due date.

1-3-2 Post partial incoming paymentPost a partial incoming payment paid by cash by your customer.

Choose Banking Incoming Payments Incoming Payments.




Click in the Total Payment field of the selected open item end enter anamount less than displayed.

Choose Goto Payment Means.

2-8

Choose the Cash tab.Note that the Balance Due field displays the reduced amount.

Click in the Total field.Select CTRL + B to copy the payment amount to the Total field.

Choose OK.Choose Add and confirm your entries.

1-3-3 Post an incoming cash payment for the remaining invoice sumLet us say that a few days has past and the customer pays theremaining sum of the invoice in cash.Open an incoming payment document.



Select the open invoice you posted the partial payment in the previousstep.

Note that the Balance Due field displays the open amount of theinvoice. We leave the Total Payment amount as is since the customerpays the entire debt on account of this invoice.

Choose Goto Payment Means.Choose the Cash tab.

Click in the Total field.Select CTRL + B to copy the remaining payment amount to the Totalfield.Choose OK.

Choose Add and confirm your entries.

1-3-4 Check the customer Account BalanceOpen the incoming payment document that you just created.

Choose the orange arrow to the left of the business partner code. Thisopens the business partner master data.

Choose the orange arrow to the left of the account balance amount.

Select the check box Display Unreconciled Trans. Only. Make sure theinvoice and the two partial payments are not displayed.

2-9

Deposits and Bank Statement Reconciliation -Exercises

Unit: BankingTopic: Cash and Check Deposits


Post a cash deposit

Post a check deposit

You transfer money from your cash register to your bank account. Youalso deposit the checks received from your customers to your bankaccount. This has to be reflected and controlled in the accounting system.

2-1 Post cash deposit.You have 2000 in your cash on hand (or the petty cash) which you received ascash payments. You pay this into your bank. Post this transaction as a deposit.

2-2 Post checks deposit.You have a check received from one of your customers. Post this transactionas a deposit.

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Deposits and Bank Statement Reconciliation - Solutions

Unit: BankingTopic: Cash and Check Deposits

2-1 Post cash deposit.Choose Banking Deposits DepositChoose the Cash tab.Note that the default cash clearing account appears automatically as theaccount you deposit money from.The balance of this account appears too. This is a debit amount since youdeposit money from an account that holds some amount.You can choose different Cash Account if you deposit money fromanother account.


Bank Account <select the house bank accountto which you deposit the cash>

G/L Account <Account number of your cashon hand account>

Amount 2000

Choose Add.

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2-2 Post checks deposit.

Choose Banking Deposits DepositChoose the Checks tab.Note that Cash Checks, the checks that their Due Date is equal or untiltoday, and that are not deposited yet appear in the checks table.


Bank Account <select the house bank accountto which you deposit thechecks>

Checks Select the check you receivedfrom your customers in theIncoming Payment exercise.

Tip: you can choose multiple checks in a deposit form using CTRL +Click or Shift + Click.

Choose Add.

2-13

Payment Wizard - Exercises

Unit: BankingTopic: Payment Wizard


Use the payment wizard

To efficiently process multiple payments for multiple business partners,use the payment wizard.

Execute either task 3-1 (Check payment) or 3-2 (Bank Transfer) according toyour preferred payment method.

3-1 Outgoing Payment with Payment System – Check Payment

3-1-1 Prepare Vendor Master Record – Check Payment.Open any domestic vendor, for example, V10000, and ensure that thepayment term is – Cash Basic - and that the Check Payment methodis available for outgoing checks.Tip: To check the payment term, open the business partner masterrecord and choose the Payment Terms tab. To check the paymentmethod, choose the Payment System tab.

If you use the UK demo database:Open the Outgoing checks Payment Method – Setup window andensure that the House Bank defined for this method is Barclays Bank(house bank 1). In case a different house bank is defined, change it toBarclays Bank.Update the Payment Method.

In addition ensure that the House Bank defined for the vendor in thePayment System tab is Barclays Bank (house bank 1). In case adifferent house bank is defined, change it to Barclays Bank.

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3-1-2 Create A/P Invoice with past Due Date.Create an A/P invoice for the vendor. Post this invoice to the vendor ofthe previous step with any item. To make sure that discount is notapplied for prompt payment, change the Due Date and select a datethat is over one month in the past. Set the Posting Date as today.Add the invoice and ignore the warning messages.

3-1-3 Use the payment wizard.Use the payment wizard to pay your vendor liabilities by check.Assume that you run the payment wizard once per week.

3-2 Outgoing Payment with Payment System – Bank Transfer (optional)

3-2-1 Prepare Vendor Master Record – Bank Transfer.Open vendor V10000 and ensure that the payment term is – CashBasic - and that the Outgoing Bank Transfers (Payment MethodCode = Outgoing BT) payment method is available.Tip: To check the payment term, open the business partner masterrecord and choose the Payment Terms tab. To check the paymentmethod, choose the Payment System tab.

Make sure that the business partner bank account in the vendor masterrecord is located in the same country as the business partner.

3-2-2 Create A/P Invoice with past Due Date.Create an A/P invoice for the vendor. To make sure that discount is notapplied for prompt payment, change the Due Date and select a datethat is over one month in the past. Set the Posting Date as today.

Add the invoice and ignore the warning messages.

3-2-3 Use the payment wizard.Use the payment wizard to pay your vendor liabilities by bank transfer.Assume that you run the payment wizard once per week.

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Payment System - Solutions

Unit: BankingTopic: Payment Wizard

3-1 Outgoing Payment with Payment Wizard–Check Payment

3-1-1 Prepare Vendor Master Record.

Choose Business Partners Business Partner Master Data.Select any domestic vendor.

Choose the Payment Terms tab.Enter – Cash Basic – in the Payment Terms field.

Choose the Payment System tab.

Include the Outgoing checks payment method.

If you use the UK demo database:

Open the Outgoing checks Payment Method – Setup window andensure that the House Bank defined for this method is Barclays Bank(house bank 1). In case a different house bank is defined, change it toBarclays Bank.Update the Payment Method.

In addition ensure that the House Bank defined for the vendor in thePayment System tab is Barclays Bank (house bank 1). In case adifferent house bank is defined, change it to Barclays Bank.Update the Vendor master data.

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3-1-2 Create A/P Invoice with past Due Date.

Choose Purchasing – A/P A/P Invoice.

Field Name or Data Type ValuesPosting Date <Previous date>

Due Date <Today’s date minus 1 month>

Post this invoice to the vendor of the previous step with any item.

3-1-3 Use the payment wizard.

Choose Banking Payment Wizard.Choose Next.

Select Start New Wizard.


Posting Date <Today’s date plus sevendays>

Select Outgoing.

Select Check.Choose Next.

Choose Add.

Choose OK.

Only select the vendor to which you posted the A/P invoice in the stepbefore.

Choose Next


Due Date <Today’s date plus fortnight >

Choose Next.Select the payment method Outgoing checks.

Choose Next. The system displays the recommendation report.

Select the payments that you want to generate.

Choose Next.Choose Execute. Choose Next.

A window appears that states The Payment Wizard has been executedsuccessfully.

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Choose OK.

Check if the system has correctly created the payment documents.

Choose: Banking Outgoing Payments Outgoing Payments.Navigate to the last data record. The indicator Created by PaymentWizard is set in the outgoing payment document.

3-2 Outgoing Payment with Payment Wizard – Bank Transfer (optional)

3-2-1 Prepare Vendor Master Record – Bank Transfer.Open vendor V10000 and ensure that the – Cash Basic - payment termis entered and that the Outgoing Bank Transfers (Payment MethodCode = Outgoing BT) payment method is available.

Choose Business Partners Business Partner Master Data.Select vendor V10000.

Choose the Payment Terms tab.

Enter – Cash Basic – in the Payment Terms field.Make sure that the business partner bank account in the vendor masterrecord is located in the same country as the business partner.

Choose the Payment System tab.

Include the Outgoing BT payment method.

3-2-2 Create A/P Invoice with past Due Date.Create an A/P invoice for vendor V10000 whose due date is onemonth past. You can post this invoice into the current posting periodand just manually change the due date. Ignore the warnings that willcome up.


Field Name or Data Type ValuesVendor V10000



Post this invoice to the vendor with any item.

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3-2-3 Use the payment wizard.Use the payment wizard to pay your vendor liabilities by bank transfer.Assume that you run the payment wizard once per week.

Choose Banking Payment Wizard.

Choose Next.Select Start New Wizard.


Posting Date <Today’s date plus sevendays>

Select Outgoing.

Select Bank Transfer.Choose Next.

Choose Add.

Choose OK.

Only select the vendor V10000.

Choose Next


Due Date (Not IncludingTolerance Days)

<Today’s date plus fortnight >

Choose Next.

Select the payment method Outgoing BT.Choose Next. The system displays the recommendation report.

Select the payments that you want to generate.

Choose Next.

Choose Execute.

Choose Next.A window appears that states The Payment Wizard has been executedsuccessfully.

Choose OK.Check if the system has correctly created the payment documents.

Choose: Banking Outgoing Payments Outgoing Payments.Navigate to the last data record. The indicator Created by PaymentWizard is set in the outgoing payment document.

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Bank Statement Processing - Solutions

Unit: BankingLesson: Managing External Reconciliations in the Bank

Account - Bank Statement Processing

4-1 Select a company with Bank Statement ProcessingChoose a company where Bank Statement Processing is already installed andimplemented.

Choose Administration Choose Company.Select the database name supplied by your instructor.

Choose OK.

4-2 Define an Offsetting Account to the Bank Account for Interest AmountsDefine an offsetting account to the bank account when an interest amount isposted by the bank statement.

Choose Administration Setup Banking Bank Statement Processing Internal Bank Operation CodesDouble click the bank interest row and enter the bank interest G/LAccount code for bank transfer transactions.


G/L Account 650000 (Bank Interest Paid)

Choose Update in the Operation Details window and in the Internal BankOperation Codes window.

4-3 Create A/R Invoices with past Due DateIn order to process the incoming payments from the bank statement; you need topost A/R invoices in the system. Post these A/R invoices with a past Due Date tocustomer C20000.

4-3-1 Create two A/R invoices; each with a total invoice amount of 500.Choose any item and manually change the unit price to 500.

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Choose an exempt tax group.



Customer C20000Posting Date Today’s date

Due Date Today`s date minus 1 month

Item No. Choose any item

Unit Price 500

Tax Code X0 (exempt)

Choose Add.

Approve the system messages.

Repeat these steps with the same values to create the second A/Rinvoice.

4-3-2 Create one A/R invoice with a total invoice amount of 2,000. Chooseany item and manually change the unit price to 2,000.Choose an exempt tax group.Enter a customer reference number: 666333



Customer C20000

Posting Date Today’s date

Due Date Today`s date minus 1 month

Customer Ref. No. 666333

Item No. Choose any item

Unit Price 2,000

Tax Code X0 (exempt)

Choose Add.

Approve the system messages.

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4-4 Enter the Bank Account Statement Summary information.You receive a bank statement from your house bank “Barclays Bank”, bankcode 12345678. Select the bank details.

Choose Banking Bank Statements and External Reconciliations BankStatement Processing.


Country United Kingdom

Bank Barclays Bank

Account <Choose the account number>

4-5 Enter the bank statement details.

Choose the Create New button.

Enter the following information in the bank statement details window:


Statement No. 1

Statement Date Today’s date

Starting Balance 0

Ending Balance 2,940

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Enter the details that appear on your bank statement. Tip: Step-by-stepinstructions follow after the table.

External BankOperationCode

G/LAccount/Doc.IdentificationNo.

IncomingAmount

OutgoingAmount

BP Code

808“AccountInterest”

60

051“Bank Transfer”

Your A/RinvoiceCustomerReferenceNumber fromstep 4-3-2:666333

2,000

051“Bank Transfer”

1,000 C20000

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Step-by-Step Instructions:Enter the items in the account statement:

1st item


External Code 808

Outgoing Amt 60

2nd itemField Name or Data Type Values

External Code 051

G/L Account / Doc.Identification No.

Choose the selection list icon. Inthe screen that opens, enter thefollowing information:

DocumentIdentification

Enter yourA/R invoiceCustomerReferenceNumber fromstep 4-3-2:666333

Incoming Amt 2,000

3rd item


External Code 051

Incoming Amt 1,000

G/L Account / Doc.Identification No.

Leave blank

BP Code C20000

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4-6 Process the bank statement.Create a posting proposal and assign the two A/R invoices for 500 to theuncleared incoming amount of 1000:

Choose Posting Proposal for Uncleared Rows.

The first two items are automatically cleared and selected.

Select the column Cleared/Selected for each of the A/R invoices with an amountof 500. The system matches to the incoming amount of 1000 and sets the statusto Cleared/Selected.

4-7 Finalize the bank statement and check the G/L posting.

Choose Finalize to post the payment transactions and to reconcile the open lineitems.Approve the system message.

The bank statement detail window should switch to collapsed mode. If it doesnot, choose Collapse All.For each line in the finalized bank statement, choose the orange arrow in the G/LAccount/Doc. Identification No. field. Check that the postings in your systemmatch to the table:

Line Document posted1 Outgoing payment for 60

2 Incoming payment with the A/R invoice for 2000 selected.

3 Incoming payment with two A/R invoices for 500 selected.

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Exercises

Unit: BankingTopic: Managing External Reconciliations in the Bank

Account – Manual Reconciliation


Use the manual reconciliation function

To verify the transactions recorded in SAP Business One against thebalance received from the bank, and to create adjustments if required usethe manual reconciliation function.

5-1 Type the ending balance of the external bank statement, according to acertain date

Let us say you received an external bank statement for the bank account, with anending balance of XXX. The bank statement is updated for today.

Enter the ending balance supplied by your instructor.

5-1-1 Enter the bank statement detailsChoose the bank account code.Enter the ending balance supplied by your instructor

Enter the current date as the end date.

Choose OK to open the Reconciliation Bank Statement window.

5-2 Clear two transactions

The table displays the open transactions as recorded in your books. That is,transactions recorded in SAP Business One.

Select two transactions you would like to clear with the current ending balance.

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Your instructor will specify one Payment transaction and one Deposit transaction.

You can see that the Cleared Book Balance field is updated according to theselected rows. The Difference field is updated respectively.

5-3 Create adjustments.

You can see that there is a difference of XX between the cleared transactions andthe ending balance. In this case, we can create adjustments.

Enter a Check for Payment you know is the missing amount.

5-3-1 Choose Adjustments to open this window.

Choose Checks for Payments.Choose OK.

5-3-2 Checks for Payments.Choose a vendor.

Tip - Choose a vendor using CTRL + Tab.Choose the bank account for the credited G/L account.

In the remarks field enter: “Payment on Account”.

Enter the difference amount as the check amount.

Choose the details of the check and bank for the check created throughthis window.

5-3-3 Back to the Reconciliation Bank Statement window

See that in the table, the adjustment journal entry was added automaticallyand selected as cleared.

The difference is now zero.

5-4 Reconcile the Bank Account

Once we are sure that our selection is correct, we can reconcile the chosentransactions recorded in SAP Business One against the balance received from thebank

5-4-1 Choose Reconcile. The reconciliation has ended successfully.

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Account – Manual Reconciliation

5-1 Type the ending balance of the external bank statement, according to acertain date

Let us say you received an external bank statement for the bank account, with anending balance of XXX. The bank statement is updated for today.

Enter the ending balance supplied by your instructor.

5-1-1 Enter the bank statement detailsChoose Banking Bank Statements and External ReconciliationManual reconciliation.


Account Code 161000

Ending Balance Supplied by your instructor

End Date Today

Choose OK to open the Reconciliation Bank Statement window.

5-2 Clear two transactions

The table displays the open transactions as recorded in your books. That is,transactions recorded in SAP Business One.

Under the Cleared column, select the boxes for two transactions you would like toclear with the current ending balance.

Your instructor will specify one Payment transaction and one Deposit transaction.

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You can see that the Cleared Book Balance field is updated according to theselected rows. The Difference field is updated respectively.

5-3 Create adjustments.

You can see that there is a difference of XX between the cleared transactions andthe ending balance. In this case, we can create adjustments.Enter a Check for Payment you know is the missing amount.

5-3-1 Choose Adjustments to open this window.

Choose Checks for Payments.Choose OK.

5-3-2 Checks for Payments


To Order of Choose a vendor

Using CTRL + Tab

Credited G/L Acct 161000

Remarks Payment on Account

Amount The difference of XX

Country United Kingdom

Bank Choose a bank

Choose Add.

5-3-3 Back to the Reconciliation Bank Statement window

See that in the table, the adjustment journal entry was added automaticallyand selected as cleared.

The difference is now zero.

5-4 Reconcile the Bank Account

Once we are sure that our selection is correct, we can reconcile the chosentransactions recorded in SAP Business One against the balance received from thebank

5-4-1 Choose Reconcile. The reconciliation has ended successfully.

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Bank Statement Processing - Exercise


Account – Reconciliation


Use the reconciliation function

The reconciliation functions enable you to perform reconciliations forG/L accounts and business partners manually, automatically or using awizard. In this exercise we will practice the manual option.

6-1 Record the External Bank Statement received from the bank.You have received by mail a printed Bank Statement from your bank.

6-1-1 Note: if the Process External Bank Statement menu option is notdisplayed in the main menu, display it, using the Form Settings icon ofthe main menu window and open it.

Choose the bank account G/L Account.Enter few rows manually: Supplied by your instructor.

For each row enter: Date, Reference, Details, Credit Amount/ DebitAmount.

Choose Update.

6-2 For the bank account, reconcile the External Bank Statement transactionswith the transactions recorded in your books in SAP Business One.

6-2-1 Open the Reconciliation window.

Choose the bank account code and ensure that Manual option isselected.

Enter today date as the due date.Choose Reconcile.

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6-2-2 Reconcile externally the transactions you have just recorded in theExternal Bank Statement and if required, perform balancingtransactions to match your data with the bank’s data.

6-2-3 Create a manual journal entry as the balancing transaction to record theamount of the fee or interest.

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Account – Reconciliation

6-1 Record the External Bank Statement received from the bank.You have received by mail a printed Bank Statement from your bank.

6-1-1 Enter few rows manually:

Choose Banking - Bank Statements and External ReconciliationProcess External Bank Statement (if the menu option is not displayed inthe main menu, display it, using the Form Settings icon of the mainmenu window).


G/L Account 161000

Date Supplied by your instructor

Reference Supplied by your instructor

Details Supplied by your instructor

Credit Amount/ Debit Amount Supplied by your instructor

Repeat these steps with different values to record few more rows.Choose Update.

6-2 For the bank Account, reconcile the External Bank Statement transactionswith the transactions recorded in your books in SAP Business One.

6-2-1 Open the Reconciliation window.

Choose Banking Bank Statements and External Reconciliations Reconciliation.

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The External Reconciliation – Selection Criteria window opens.

Field Name or Data Type ValuesG/L Account 161000

Option Manual

Due Date To Today

Choose Reconcile.

6-2-2 Reconcile externally the transactions you have just recorded in theExternal Bank Statement and if required, perform balancingtransactions to match your data with the bank’s data.

The bank transactions recorded in your books in SAP Business Oneappear on the left. The transactions recorded by your bank appear onthe right.

On the right side, locate the rows you entered manually in the ProcessExternal Bank Statement window.

Double-click the rows to move them to the bottom tables.

On the Books side, find the corresponding transactions in SAP BusinessOne.Double-click the rows to move them to the bottom tables.

Make sure you select the extra row of fee or interest in the ExternalStatement side.

Click Reconciliation.

6-2-3 Create balancing transaction.

The system displays the message: Reconciliation is not balanced.Create balancing transaction? Choose OK to open the Journal Entrywindow.The bank account with the amount of the fee or interest is alreadydisplayed. Select an offsetting account to complete the journal entry.

Click Add.

The rows are reconciled.

3-1

Chart of Accounts - Exercises

Unit: FinancialsTopic: Manage the Chart of Accounts


Create, change, and delete general ledger accounts

Your company has a new house bank and you need to create abalance sheet account for it in your chart of accounts.

Your company has upgraded its Internet service. The Accountingdepartment wants to post the costs for Internet service to a newexpense account.

1-1 TransactionsWhich function do you use to change the properties for a G/L account?___________________________________________________________

Which function do you use to remove an account from your chart ofaccounts?___________________________________________________________

1-2 Create a balance sheet title and an active account.

Your company has opened a new account at the National Bank. This meansthat the Accounting department has to add this information to your existingchart of accounts.

1-2-1 Create a new title.Choose the appropriate drawer in the chart of accounts.

Add a new title account in the section of the drawer that containsbank assets. Provide a suitable account number and the nameNational Bank.

3-2

1-2-2 Define the bank G/L account.Under the new National Bank title, create an active account for theNational Bank (Domestic) with a suitable account number. Managethe account in your local currency.

1-3 Create an expense account.

The Accounting department wants to record the cost of accessing and usingthe Internet in a separate expense account.

Define an Internet expense account with the account name Internet.Choose the operating expenses (costs) drawer and add the account under asuitable expenditure title. Manage the account in your local currency. Makesure that you specify the correct account type.

1-4 Delete an account.

Select an existing asset account that has no postings. Remove the account.

Your local currency is the currency defined in the Local Currencyfield on the Basic Initialization tab under Administration SystemInitialization Company Details.

3-3

Chart of Accounts - Solutions

Unit: FinancialsTopic: Manage the Chart of Accounts

1-1 TransactionsWhich function do you use to change the properties for a G/L account?Financials Chart of Accounts

Which function do you use to remove an account from your chart ofaccounts?Financials Edit Chart of Accounts

1-2 Create a balance sheet title and an active account.

1-2-1 Create a new title.

Choose Financials Edit Chart of Accounts.Choose the Assets Drawer and choose OK.Select an existing Level 4 account in the Assets section and chooseAdd Same-Level Account.Make sure the Title radio button is selected.

Enter the account details.


G/L Account <Type a suitable number>

Account Name National Bank

G/L Account Location <You can choose from thedropdown list, or leave theexisting definition>

Choose Update to save the title.

3-4

1-2-2 Define the bank G/L account.

Choose Financials Chart of Accounts

Highlight the new National Bank title.Choose Data Add.

Enter the following data.



Name National Bank (Domestic)

Currency <Your local currency>

Choose Add.

1-3 Create an expense account.

Choose Financials Chart of Accounts.

Choose the Operating Costs drawer.

Select a suitable expenditure title under which you want to create theaccount.

Choose Data Add.

Select Active Account.



Name Internet

External Code leave blank

Currency <your local currency>

Account Type Expenditure

Choose Add.

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1-4 Delete an account.

Choose Financials Edit Chart of Accounts.Select Assets.Choose OK.

Choose an active account and right-mouse click to see the context menu.

Choose Advanced then Delete Account.

Choose Update.

Note: Prerequisites for deleting G/L accountsNo transactions have been posted to the account, including the openingbalance.

The account is not:

oDefined as a control account

o Included in G/L Account Determination

3-7

Journal Entries - Exercises

Unit: FinancialsTopic: Enter Manual Journal Entries


Post manual journal entriesReverse a posted journal entry

Most transactions recorded in the general ledger are generateddirectly from SAP Business One documents. Additionally, theaccounting department can use journal entries to make manualadjustments in the general ledger.

2-1 Post a journal entry.

You want to transfer money from a different bank account to your newaccount at the National Bank.

Post a bank transfer with a value of 10,000 to the National Bank (Domestic)G/L account that you created. Use an existing bank account as an offsettingaccount.

Enter Bank Transfer as the Reference or Remarks.

2-2 Check whether the posting have been made correctly.

2-3-1 Check the balance of the National Bank (Domestic) account.

2-3-2 Starting from the balance display for the National Bank account,navigate to the journal entry.

2-3 Reverse a journal entry.

Reverse the journal entry you made (in step 2-1) and then check what effectthis reversal has.

3-9

Journal Entries - Solutions

Unit: FinancialsTopic: Enter Manual Journal Entries

2-1 Post a journal entry.

Choose Financials Journal Entry.

Field Name or Data Type ValuesDue Date <Today's date>


Document Date <Today's date>

Remarks Bank Transfer

First Item

Field Name or Data Type ValuesG/L Acct/BP Name National Bank (Domestic)

Debit 10,000

Second Item


G/L Acct/BP Code. <any other bank account>

Credit 10,000

Choose Add to post the document.

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2-2 Check postings.2-2-1 Display balance.

Choose Financials Chart of Accounts.Select the National Bank (Domestic). The system displays thebalance in the Balance field.

2-2-2 Display the journal entry.

From the chart of accounts display, choose the orange navigationarrow to the left of the Balance amount. The system displays alltransactions posted to the account. Choose the orange navigation arrowto display the original journal entry.

2-3 Reverse a journal entry.


Using the Previous Record icon in the menu bar, display the journal entry youposted in step 2-1. You can also search for Bank Transfer in the Remarksfield.

From the menu bar, choose Data Cancel. Or right-click and chooseCancel.

Choose Yes in the Create Reversal for this Transaction? dialog box.

The reversal journal entry is displayed in the Journal Entry screen.

Choose Add.

3-11

Posting Tools - Exercises

Unit: FinancialsTopic: Posting Tools


Create a journal voucher and post as journal entries

Create and use posting templates

Create and execute recurring postings

Posting tools allow the Accounting department to:

Review a journal voucher before posting

Easily create journal entries from templates

Automatically post repetitive journal entries

3-1 Create a journal voucher.

Create a new journal voucher and enter two journal entries of your choice.

Save the journal voucher.

3-2 Change and post the saved journal voucher.

Choose the journal voucher you just created and select one of the journalentries.

Make a change to the amount in the journal entry.

Post the two journal entries.

Check whether the system entered the journal entries in the general ledger.

3-3 True or False?

3-3-1 You can add a journal entry to a journal voucher only if the items onthe credit and debit sides balance.___________________________

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3-3-2 You cannot post individual journal entries from a journal voucher tothe general ledger.___________________________

3-4 Use posting templates.You want to pay your employees an annual bonus of 15%.

3-4-1 Create a posting template that posts:- 115% of the employee’s salary to the employee’s account (liabilities)

- 100% of the employee’s salary to the appropriate salaries expenseaccount- 15% of the employee’s salary to the appropriate expenses account forbonuses

In the liabilities line, leave the field G/L Account/BP No empty. Enterthe description “Employee account” in the G/L Account/BP Namefield.

3-4-2 Use the posting template you just created to post a journal entry to paya bonus to your employee. Your employee has a master data recordwith BP Code V99001.

3-5 Execute recurring postings.

Every month, your company pays a flat-rate charge of 200 excluding VAT tovendor V20000 for maintaining your homepage.

3-5-1 Create a recurring posting which monthly posts the payables to thevendor account. In the Ref 1 field, enter the contract number 08400.The first execution date is today's date. The expenditure is recorded inthe Internet account. Choose a suitable VAT code.

3-5-2 Execute the recurring posting.

Tip: Activate the Display Recurring Postings on Executionindicator under Administration System InitializationGeneral Settings on the Services tab page to display thesepostings automatically when you log on.

3-13

Posting Tools - Solutions

Unit: FinancialsTopic: Posting Tools

3-1 Create a journal voucher.

Choose Financials Journal Vouchers.

Choose Add Entry to New Voucher.

Enter a journal entry of your choice. For example, you can post a debit for anexpense to an expenses account, and credit the same amount to your bankaccount.

Choose Add to voucher.

Enter a second journal entry of your choice. Choose Add to voucher. Close thewindow.

Update the Journal Vouchers screen.

3-2 Change and post the saved journal voucher.

Choose Financials Journal Vouchers.

Highlight the journal voucher you just created.

Double-click one of the transactions and change the data in the journalvoucher entry.

Choose Update. Choose OK.

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In the Journal Vouchers window, choose Post Voucher.

Choose Yes to the system message.

Check whether the postings have been made in the general ledger.


Choose Previous Record to display the second entry you posted to theJournal Voucher. Choose Previous Record once more to display thefirst entry you posted to the Journal Voucher.

3-3 True or False?

3-3-1 You can add a journal entry to a journal voucher only if the items onthe credit and debit sides balance.___________________________

False. You can also add journal entries to a journal voucher even ifthe credit and debit sides do not balance. You do not have to balancethe journal entries until you post the journal voucher to the generalledger.

3-3-2 You cannot post individual journal entries from a journal voucher tothe general ledger.

___________________________

True. When you post the voucher, the system posts all journal entriesin the voucher.

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3-4 Use posting templates.

3-4-1 Create a posting template.

Choose Financials Posting Templates.


Code Bonus (or other code)

Description Annual Bonus

First G/L account row

G/L Account/BP Code. <Leave blank>

G/L Account/BP Name Employee account

Credit % 115

Second G/L account row

G/L Account/BP No. <choose an expense accountfor salaries and wages>

Debit % 100

Third G/L account row

G/L Account/BP No. <Choose an expense accountfor employee bonuses>

Debit % 15

Choose Add.

3-4-2 Use the posting template.



Template Type Percentage

Template Bonus (your posting template)

Tip: Press Tab to see the list ofavailable templates.

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First line


G/L Acct/BP Code. Choose an employee account

Credit <from template>

Second line


G/L Acc./BP No. <from template>

Debit <type any amount>

Third line


G/L Acc./BP No. <from template>

Debit <from template>

When you enter the Debit amount on the second line in place of the100%, the system automatically calculates the amounts of the otherline items.

Choose Add to post the entry.

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3-5 Execute recurring postings.

3-5-1 Create recurring posting.

Choose Financials Recurring Postings.


Code Homepage

Description Homepage maintenance

Ref 1 08400

First line (expense account):


G/L Account/BP No. <choose the Internet expenseaccount you created earlier inthe Chart of Accounts unit>

Debit 200

Tax Group V2 (or other standard input taxgroup)

Note that the systemautomatically adds the tax lineto the journal entry.

Vendor item:

G/L Account/BP No. V20000 (press Ctrl+Tab to seethe list of business partners)

Credit <entered automatically whenyou click in this field thenpress Tab>


Frequency Monthly + On <today's date>

Next Execution <Today's date>

Choose Add to save the data record.

3-18

3-5-2 Execute the recurring posting.

Choose Financials Recurring Postings.

Choose Confirmation List to display the postings for execution.

Select the recurring posting you just created.

Choose Execute to post the entry.

Choose Add to the system message.

4-1

Internal Reconciliations - Exercises

Unit: Posting Periods ProcessTopic: Internal Reconciliations


Internally reconcile G/L and business partner accounts using themanual, semi-automatic, and automatic reconciliation types

Undo and correct internal reconciliations

Many accounts are used during the end-to-end process of a businesstransaction. If you have not completed a business transaction, theseaccounts contain open items. In some cases, the accounts can still containopen items even though you have completed the transaction. In this case,you have to reconcile the account.

1-1 Questions

1-1-1 What type of accounts do you have to reconcile internally?_______________________________________________________

_______________________________________________________

_______________________________________________________

1-1-2 What is the difference between system reconciliation and userreconciliation?_______________________________________________________

_______________________________________________________

_______________________________________________________

4-2

1-2 Internally reconcile a G/L account.The allocation costs account contains several open items for reconciliation.

1-2-1 Use the manual reconciliation type.Reconcile two items on the allocation cost account using the manualreconciliation type.

1-2-2 Use the semi-automatic reconciliation type.Reconcile two items on the allocation cost account using the semi-automatic reconciliation type.

1-2-3 Perform an automatic reconciliation.Let the system reconcile the remaining items automatically.

1-3 Cancel the reconciliations.

Cancel the reconciliations using the Manage Previous Reconciliations function.

1-4 Internally reconcile a business partner.

Reconcile the business partner C30000 using one or more of the reconciliationtypes.

Your database may use several allocation cost accounts. You can findthem in

The warehouse definition (Administration Setup Inventory Warehouses)

The item group definition (Administration Setup Inventory Item Groups)

Choose the Accounting tab and use the Allocation account

4-3

Internal Reconciliations - Solutions

Unit: Posting Periods ProcessTopic: Internal Reconciliations

1-1 Questions1-1-1 What type of accounts do you have to reconcile internally?

Internal reconciliations are generally required for clearing accounts,such as the Goods Receipt/Invoice Receipt account (Allocationaccount). The internal reconciliation reconciles debit items with credititems and thereby confirms that the business transaction has beencompleted. Internal reconciliations are required occasionally forbusiness partner accounts if the account was not reconciled duringpayment processing.

1-1-2 What is the difference between system reconciliation and userreconciliation?System reconciliation is performed by the system when you assign apayment to an invoice. User reconciliation is performed by the userthrough the Reconciliation function.

1-2 Internally reconcile a G/L account.

1-2-1 Use the manual reconciliation type.

Choose Financials Internal Reconciliations Reconciliation.Choose the Manual reconciliation type.


G/L Account <Account number of theallocation costs account>

Choose Reconcile.

In the window displayed, choose one pair of matching debit and credititems.

Choose Reconcile.

Choose Yes to system message.

4-4

1-2-2 Use the semi-automatic reconciliation type.

Choose Financials Internal Reconciliations Reconciliation.

Choose the Semi-automatic reconciliation type.



Choose Reconcile.

The system displays open debit and credit items side-by-side. Double-click a debit or credit item. If the system finds any matching items, itdisplays them with a ranking. Select this item and choose Reconcile.

The system now shows the next recommended item for reconciliation.At this point, do not reconcile any more items. Choose Cancel to closethe window.

Tip: if you do not agree with a recommendation, you can choose Skipor you can choose Cancel and go into Manual reconciliation.

Note: if you do not see any recommendations, try setting theparameters as follows:

Parameters Weighting Max. Deviation

Amount High

Date Medium 31

Ref. 1 High

1-2-3 Perform an automatic reconciliation.

Choose Financials Internal Reconciliations Reconciliation.



Choose the Automatic type.

Choose Reconcile.

The system automatically reconciles the remaining items (as far as thisis possible). If this is not possible, select the Variation in Days ruleand enter the number of days.

4-5

1-3 Cancel the reconciliations.

Choose Financials Internal Reconciliations Manage PreviousReconciliations.


G/L Acc. / BP Code From … <Account number of theallocation account>

G/L Acc. / BP Code to … <Account number of theallocation account>

Tip: If you do not enter anaccount number in thisfield, you will see allreconciliations, not justthe reconciliations for theaccount.

Choose OK.

The reconciliations are displayed in the upper part of the window.

Select user reconciliation.

Choose Cancel Reconciliation.

1-4 Internally reconcile a business partner.

Choose Business Partners Internal Reconciliations Reconciliation.


Business Partner C30000

Select one of the reconciliation types (Manual, Automatic or Semi-Automatic).

Choose Reconcile.Select matching debits and credits.

Proceed according to your selected reconciliation type.

Note: If you use the Manual reconciliation type, you can select multiplepayments for an invoice, or vice versa. You can also reconcile invoices andpayments that include cash discount. The Automatic and Semi-Automaticreconciliation types do not recognize cash discount.Tip: You can also access internal business partner reconciliation from thebusiness partner master data Account Balance.

4-7

Period-End Preparations - Exercises

Unit: Posting Periods ProcessTopic: Period-End Closing


Run the Period-End Closing utility

At the end of a posting period you need to clear the balances for the salesand expenditure accounts. Balances are transferred to the retainedearnings account.

2-1 Close out the Profit and Loss AccountsUse the Period-End Closing utility to close out the profit and loss accountsfor the current fiscal year, up to the end of the previous period.

2-2 Review the Posted Journal Entries.Review the journal entries that were posted to the retained earnings account.

4-9

Period-End Preparations - Solutions

Unit: Posting Periods ProcessTopic: Period-End Closing

2-1 Close out the Profit and Loss Accounts

Choose Administration Utilities Period-End Closing.Choose the fiscal year and the posting periods (up to the end of the previousperiod).

Choose the Retained Earnings account and the Period-End Closing accountfrom the chart of accounts.

Choose Execute.In the Period-End Closing screen, enter a Due Date and a Document Date,and an optional reference number.

Select the accounts you want to close out (transfer balances to retainedearnings). You can select all accounts.

Choose Execute.

2-2 Review the Posted Journal Entries.

Choose Financials Journal Entry.Choose the Previous Record icon from the top menu bar to page through thejournal entries.

5-1

Aging and Dunning - Exercises

Unit: Controlling ReportsTopic: Aging and Dunning


Generate aging reports for vendor liabilities and customerreceivables

Create reminder letters to customers using the Dunning Wizard

The accounting clerk regularly checks the open vendor liabilitiesand customer receivables, and initiates the necessary paymenttransactions.

3-1 Run the Customer Receivables Aging report.Call up the Customer Receivables Aging report to display a list of all theaccounts receivable for today's date. To make sure that the list is complete, donot enter any customer master records or time intervals. Let the systemretrieve the due date from the sales documents and structure the report inintervals of 10 days.

Note the name of a customer with open invoices, as well as the total openamount.

Customer: _________________________________

Open receivables: ____________________

5-2

3-2 Run the Vendor Liabilities Aging report.Call up the Vendor Liabilities Aging report to display a list of all the openinvoices for today's date. To make sure that the list is complete, do not enterany vendor master records or time intervals. Let the system retrieve the duedate from the sales documents and structure the report in intervals of 10 days.

Note the name of a vendor with open invoices, as well as the total openamount.

Vendor: _________________________________

Open payables: ____________________

3-3 Dunning (Optional)3-3-1 Create an A/R Invoice with past Due Date

Create an A/R invoice for any domestic customer whose due date isone month past. You can post this invoice into the current postingperiod and just manually change the due date. Ignore the warnings thatwill come up.

3-3-2 Create a Dunning TermCreate a dunning term with two dunning levels. The first one iseffective after five days and the second one is effective after 15 days.To save postage, this dunning term should send one dunning letter perbusiness partner. Enter this dunning term into the business partner towhom you posted the A/R invoice.

3-3-3 Use the Dunning WizardUse the Dunning Wizard to create a dunning letter for the customer.

5-3

Aging and Dunning - Solutions

Unit: Controlling ReportsTopic: Aging and Dunning

3-1 Run the Customer Receivables Aging report.

Choose Reports Financials Accounting Aging CustomerReceivables Aging.


Aging Date <Today's date>

Interval/Days 10, 20, 30

Choose OK.In the results window, select Age by Due Date.

Review the list of documents for the relevant customer account.

Note a customer and the customer's open balance.

3-2 Run the Vendor Liabilities Aging report.

Choose Reports Financials Accounting Aging VendorLiabilities Aging.


Aging Date <Today's date>

Interval/Days Choose your intervals

Choose OK.

In the results window, select Age by Due Date.

Review the list of documents for the relevant vendor account.

Note a vendor and the vendor's open balance.

5-4

3-3 Dunning (Optional)

3-3-1 Create an A/R Invoice with past Due Date



Posting Date <Past date>


Post this invoice to any customer with any item.

3-3-2 Create Dunning Terms

Choose Administration Setup Business Partners DunningTerms.

Choose Data Add.


Code <any, for example: TwoLevels>

Name <any, for example: TwoLevels>

Letter Format1

2Dunning Letter 01

Dunning Letter 02

Effective After (Days)

12

515

Delete the additional rows.

Select the One Letter per BP indicator.

Choose Add.

Enter this dunning term into the customer to whom you posted the A/Rinvoice. Choose Business Partners Business Partner Master Dataand select your customer. Choose the Payment Terms tab and selectyour newly defined dunning term from the Dunning Term dropdownlist.

Choose Update.

5-5

3-3-3 Use the Dunning Wizard

Choose Sales – A/R Dunning Wizard.Choose Next.Select the Start a New Wizard indicator.

Choose Next.Do not change the default values on the General Parameters form.

Choose Next.Choose Add and select your business partner.

Choose Next.Don’t change the default values on the Document Parameters form.

Choose Next.The recommendation report should show your customer and the A/Rinvoice that you just posted. The recommended dunning level is 1.

Choose Next.

Select the Print Dunning Letters and Exit indicator.Choose Finish.

Print the dunning letters to the default printer.

Note: The level 2 dunning letter will become effective 15 days afterthe level 1 dunning letter is generated.

5-7

Cost Accounting - Exercises

Unit: Controlling ReportsTopic: Cost Accounting


Create profit centers

Define distribution rules and assign them to accounts

Run profit center reports

Define and evaluate projects

Management wants the system to be able to calculate revenuesand expenditures separately for the individual departments withinthe company. Costs that you cannot directly allocate to a certainarea must be distributed according to usage.

4-1 Define profit centers.Create three profit centers with the names HR, MKT and IT. HR and ITprofit centers belong to the administration department in the organizationalhierarchy. For this reason, group the two profit centers under the same sortcode, ADM.

4-2 Create a distribution rule.You want to allocate your company’s heating costs to the individual profitcenters. Your company has agreed to distribute the costs based on the numberof radiators.

Profit Center No. of Radiators

HR 3

IT 1

MKT 2

Create a distribution rule named HeatCo with the values shown in the table.

5-8

4-3 Assign the distribution rule to an expense account.

Assign the HeatCo distribution rule to a suitable expense account in the chartof accounts.

Make sure the Account Type for the G/L account is set toExpenditure.

4-4 Allocate costs .4-4-1 Create an A/P invoice to post heating costs to the G/L expense

account. Choose any suitable vendor, for example, V50000.

4-4-2 Create a journal entry to post heating costs to the Heatco distributionrule. Tip: use Expand Editing Mode to enter the distribution rule forthe journal entry row.

4-5 Run the profit center report.Use the profit center report to check whether the posted amounts weredistributed according to the distribution rule. The report should also show thecosts for the Administration department.

4-6 Use Projects.

Your company plans to open a new store in three months time, and you needto account for expenses connected with the store opening.

4-6-1 Define a project called Store20.

4-6-2 Create an A/P invoice or a journal entry to post expenses for equippingthe new store. Use a suitable G/L expense account and enter theproject code.

4-7 Report Project Costs in a Profit & Loss Report

Run a Profit and Loss Statement for the project.Tip: Choose the Expanded button to select the project in the report.

5-9

Cost Accounting - Solutions

Unit: Controlling ReportsTopic: Cost Accounting

4-1 Define profit centers.Choose Financials Cost Accounting Profit Centers.

Field Name or Data Type ValuesProfit Center HR

Name Human Resources

Sort Code ADM

Choose Add.


Profit Center ITName IT

Sort Code ADM

Choose Add.


Profit Center MKT

Name Marketing

Sort Code -

Choose Add. .

5-10

4-2 Create a distribution rule.Choose Financials Cost Accounting Distribution Rules.


Code HeatCo

Description Heating Costs

Total 6


Center Code HR

Value 3

Center Code IT

Value 1

Center Code MKT

Value 2Choose Add.Choose Cancel.

4-3 Assign the distribution rule to an expense account.Choose Financials Chart of Accounts.

Select a suitable expense account in the chart of accounts.

Field Name or Data Type Values or Action

Distribution Rule Select indicator

Choose your distribution rule from the drop-down list. Save your settings bychoosing Update.

5-11

4-4 Allocate costs.

4-4-1 Choose Purchasing – A/P A/P Invoice.

Choose vendor V50000. Select Service in the Item/Service Type field.Select the expenses G/L account that you linked to the Heatcodistribution rule. Enter 500 as the amount.

Enter a Posting Date.Add the invoice.

4-4-2 Choose Financials Journal Entry.Post a debit amount to a different expense account (not the one youlinked to the distribution rule).

Post the offsetting entry to any vendor account. Tip: In the G/LAcct/BP Name field, press Ctrl+Tab to choose a vendor from the listof business partners.

Choose Expand Editing Mode and enter the Heatco distribution rulefor the expense row (debit row) of the journal entry.

Add the journal entry.

4-5 Run the profit center report.Choose Financials Cost Accounting Profit Center Report.

Select the Summary by Sort Code indicator.Choose OK.

4-6 Use Projects.

4-6-1 Define a project.

Choose Administration Setup Financials Projects.


Project Store20

Project name New store expenses

Choose Update.

5-12

4-6-2 Post an A/P invoice for the project.


Select any vendor. Select Service in the Item/Service Type field.

Select any expense account (not the one you linked to the distributionrule).

. Enter an amount on the item row and enter the Project Code asStore20. Tip: Use Form Settings to display the Project Code field onthe row.

Enter a Posting Date.Add the invoice.

4-7 Report Project Costs in a Profit & Loss Report

Choose Financials Financial Reports Financial Profit andLoss Statement .Choose Expanded.

Enter the project code Store20.Choose OK

Choose OK to run the report.

7-1

Unit 1 Appendix:SAP Business One Standard Financial Processes

7-2

Display of Debit and Credit

Account with Debit Balance

CreditPostings(100.00)

DebitPostings

130.00

DebitBalance

30.00

Account with Credit Balance

CreditPostings(130.00)

DebitPostings

100.00

CreditBalance-30.00

When you enter the line item display of any account (G/L account or business partner), the systemdisplays the debit and credit amounts the following way:

Debit Postings: Black amount, for example, 130.00Credit Postings: Green amount in parentheses, for example, (100.00)

The amounts are usually positive. There may be negative amounts if you selected the Use NegativeAmount for Reverse Transaction indicator under Administration System Initialization CompanyDetails on the Basic Initialization tab. These negative amounts indicate reversal postings.The balance is the difference between the sum of all credit postings and the sum of all debit postings.

If the sum of the debit postings is greater than the sum of the credit postings, there is a debitbalance.If the sum of the credit postings is greater than the sum of the debit postings, there is a creditbalance.

Usually, the system displays a credit balance with a negative sign because the credit balance representsliabilities in an asset account. If you want this type of display, make sure that the Display CreditBalance with Negative Sign indicator is selected. Choose Administration System InitializationCompany Details and the Basic Initialization tab.

7-3

Unit 2 Appendix:Banking Process

7-4

Bank Definition

Bank Definitions

Bank CountryBank Code

G/L Account

BankAccountNumber

G/L BankAccount

Business Partner

In the bank definition you assign the Bank Name and the SWIFT number to a key consisting out of country code and bankcode. The bank code is a unique identifier for a bank which is different from country to country. If you use the BankStatement Processing functionality in SAP Business One further fields (Posting Date Definition, Due Date Definition andBank Operation Code List) will be available for editing.Choose Administration Setup Banking Banks to define banks.After you complete the bank definition you can refer to the defined bank when you enter the bank details in a business partnermaster record on the payment terms tab.Banks that your company uses are defined as a house bank. Choose Administration Setup Banking House BankAccounts to define the account numbers.In the Bank Code press tab to choose the corresponding bank. Define the Branch, account number and next check number.Every bank account must be represented by a G/L account and optionally an interim account.The GL account will be used in manual outgoing payments and the payment wizard. The Interim account will be used in thepayment wizard, based on the payment method setup and in the Bank Statement Processing, where the Internal BankOperation Codes controls the posting method.It is optional to assign a Paper Type, Maximum Lines and a Template to each account number. This will determine theprinting methods of out going checks.Paper Type can be one of the 3 options:

Blank Paper is dedicated for Magnetic check printingOverflow Prenumbered Check Stock is dedicated for printing your checks on predefined check stock which is also pre-numbered. This option will print all the check pages at the same time. In case there is an overflow result in large numberof paid document, the second page and the rest of the page will be printed successively after the first page.Overflow Blank Paper this option will only print the first page of the check first. Then it will alert you that overflow exit,and allow you to replace the check stock with non pre numbered checks. At that time the system will also assign the checknumbering

The default for the company level is defined on the Administration System Initialization Print Preferences PerDocument Checks for PaymentsIf the Bank Statement Processing is in use, additional settings will be available here.

7-5

Bank

1

Vendor

1 OI

Outgoing PaymentPayment Means Bank Transfer

Customer

OI 1

Bank

1

OpenInvoice

Outgoing Payment by Bank Transfer

Enter Bank Statementwith Create Payment

Bank Statement

Debit

Bank Statement

Credit

OpenInvoice

External Reconciliationwith Bank Statement

Incoming Payment by Bank Transfer


Bank Transfer - Process

The figure shows the business transactions and postings for the bank transfer process, from the openinvoice to the bank statement.To process an outgoing payment by bank transfer, you use the Outgoing Payment transaction withthe payment means Bank Transfer or the payment wizard to generate a posting on the debit side of thevendor account and the credit side of the bank account and reconcile the open invoice. The line itemcreated for the bank account remains open until you reconcile it with the associated outflow on thebank statement using an external reconciliation.To process an incoming payment by bank transfer, you enter the line item that indicates anincoming bank transfer from your bank statement into the system when you process the bankstatement. This line item usually contains the code of the business partner and a reference to thedocument (the document number of the invoice, a payment reference, or an ISR number). If you selectthe Create Payment indicator, the system tries to find the A/R invoice to which the bank transfer lineitem refers to and automatically creates an incoming payment document for it. The line item created forthe bank account remains open until you reconcile it with the associated inflow on the bank statementusing an external reconciliation.

7-6

Bank

3

Incoming Credit Card Payments - Process

Customer

1OI

Credit Card

1 2

OpenInvoice

Incoming PaymentPayment Means

Credit Card

Deposit of CreditCard Voucher

Deferred Account

2 3

Postdated CreditVoucher Deposit

Credit


Credit

When you receive a credit card payment from a customer, you create an Incoming Payment with thepayment means Credit Card that closes the open invoice on the customer’s account and posts theamount on a credit card account. This account represents the credit voucher drawer in your cashregister. The system takes the credit card details for the transaction from the master record of thebusiness partner. Every credit voucher has a value date that specifies the date when you receive thepayment from the credit card company. Choose Administration Setup Banking Credit CardPayment to define how the system calculates this value date. This calculation is based on either thereceipt date (when using automatic submit) or the deposit date (when using manual submit). Youdefine the type of submit in the Submit Credit Voucher field on the BP tab under AdministrationSystem Initialization General Settings.If you bring the credit vouchers to the bank before the value date, the bank keeps the voucherseparately on a deferred account. Choose Banking Deposits Deposit and then the Credit Cardstab to create a journal entry that debits the deferred account and credits the credit card account. Thisdeposit can automatically reconcile the debit and credit postings on the credit card account. Theautomatic reconciliation is carried out using the Ref. 3 field, which contains the number of the creditcard voucher and the installment number.When the value date arrives, the bank cashes the credit vouchers and informs you. Choose BankingDeposits Postdated Credit Voucher Deposit to create a journal entry that debits the bank accountand credits the deferred account. The line item created for the bank account remains open until youreconcile it with the associated inflow on the bank statement using an external reconciliation.Choose Banking Incoming Payments Credit Card Management to keep track of all transactionswith incoming credit card payments. Choose Banking Incoming Payments Credit CardSummary to get an overview of the total amount of credit vouchers that you accepted each day.External tools like point of sale system and authorization of credit card transactions can be integratedinto the standard process.

7-7

Outgoing Credit Card Payment - Process

Bank Statement

Debit

Bank Account

1

Vendor

1 OI


OpenInvoice

Outgoing PaymentPayment Means Credit Card

If you have created an Outgoing Payment with the payment means Credit Card, the paymentdocument creates a journal entry that closes the open invoice on the vendor account and posts theoffsetting entry to the G/L account that represents the bank account. The line item created for the bankaccount remains open until you reconcile it with the associated outflow on the bank statement using anexternal reconciliation.

7-8

Bank File Formats

SAPBPITOPBT_CBI_DO

SAP Business OnePayment Engine

CountryCode

Area

Method

FormatName

Domesticor foreign

Payment Method

For Bank Transfer payment methods

When you choose Bank Transfer as a payment method, the system uses country-specific SAP bank fileformats. SAP Business One is delivered with a large number of country-specific SAP bank fileformats. The system uses a built-in Add-on, Payment Engine, to create or read bank files according tothe format. The Payment Engine reads the database country code and only adds the country specificformats. You must assign bank file format to each payment method for which you want to create bankfiles. Choose Administration Setup Banking Payment Methods.The following paragraphs explain the different fields within a bank file format:

SAPBP = SAP Business One Payment EngineCountry code (XX = all countries)AreaOP: Outgoing paymentsIP: Incoming paymentsIB: Incoming bank statementsMethod (not used for Incoming Bank Statements)BT: Bank TransferEC: Electronic CheckBOE: Bill of ExchangeDD: Direct DebitFormat nameIf the domestic and foreign formats have the same name, one of the following extensions is added:- DO: Domestic- FO: Foreign

7-9

Creating Bank Files with the Payment Wizard

Payment Wizard

WizardOptions

1 Payment Wizard

DifferentSelectionCriteria

Payment Wizard


3

Payment Wizard


2

4

Payment Wizard


5Payment Wizard

Recommen-dation Report

6

Payment Wizard7

SavingOptions

Payment Wizard

Documentand Report

Printing

8

Ban

k Fi

le

1. Test Run2. Production Run

Log

AccompanyingTicket

DataFile

Exec

ute

The payment wizard in SAP Business One creates outgoing payment data and automatic debit datathat is stored in the OPEX and PEX1 tables. Payment and debit documents are located in the OPEXtable, and documents that have been paid or collected are located in the PEX1 table.The payment program places status O (open) in the Status field of the OPEX table in all documents.Payment data in the OPEX table is then read by the Payment Engine which processes it into theappropriate data medium format. After the data file has been successfully created, the PaymentEngine assigns the status C (closed) to them.Payment Engine creates one file for each house bank account. Note that you must always successfullycomplete a test run before starting a production run.Payment Engine stores the following files:

Payment files for the banks.Log file.Text files for the accompanying sheet to the data medium (depends on the requirements of aparticular bank file format),

The output files are in text format (unique code). You can prevent unauthorized access to your data byrestricting authorization within the operating system.You need to define certain country-specific settings in SAP Business One. Please refer to the paymentengine documentation to learn which settings are relevant for your country.

7-10

Unit 3 Appendix:Financial Process

7-11

Account Segmentation

Account segmentation:A bookkeeping method of creating account codes based on the hierarchical structure of a business.This method is commonly used in some localizations.The implementation consultant and the user are to decide if to use it and define the account segmentsas needed.The individual segments correspond to different business units, such as company, division, region,department, group, and so forth, and to different categories, such as travel expense, box officerevenue, product line, and so forth.

The Account Segmentation window appears only if the Use Segmentation Accounts option is selectedin: Administration System Initialization Company Details Basic Initialization tab.

To access this window, choose: Administration Setup Financials Account Segmentation .

For detailed information about this topic, refer to:

SAP® Business One ...To Go.

SAP Business One Online Help.

7-12

Unit 4 Appendix:Posting Periods Process

7-13

Semi-Automatic Internal Reconciliation

Trans. No Posting Date Ref. 1 Balance Due

678 24.08 99 900.00

Trans. No Posting Date Ref. 1 Balance Due

685 21.08 641 294.00

697 31.08 12112 900.00

709 03.09 680 1200.00

Open Debits Open Credits

Rank Trans. No Posting Date Ref. 1 Balance Due Details

678 24.08 99 900.00 A/R Invoices – C7000

Rank Trans. No Posting Date Ref. 1 Balance Due Details

80 697 31.08 12112 900.00 Incoming Payments – C70000

Reconciliation Recommendations (for selected line)

If you choose the reconciliation type semi-automatic:The system displays open debits and credits from the account (debits on the left side, and credits onthe right side). You can select a single G/L account or a business partner account.When you select a debit or credit, the system proposes recommendations for that line. You canaccept a recommendation and reconcile the transaction pair, or you can skip the recommendation.The system makes proposals based on parameters that you specify. You can weight the importanceof each parameter. The parameters are:

Amount (Balance Due). You can specify a maximum deviation for matching the debit and creditamounts. Specifying a maximum deviation for the amount can lead to unbalanced reconciliationproposals. If you accept these proposals, you must manually post to a difference account.Date (posting date, due date, or document date). You can set a maximum deviation for matchingthe debit and credit dates.Reference. Note: you must skip this parameter when you reconcile business partners (invoices andpayments contain different references so will never be matched).

Based on weights of the parameters, the system calculates a rank for each reconciliation proposal.The higher the rank the better the reconciliation proposal fits your criteria. At any time, you canswitch to manual internal reconciliation type.The system cannot partially reconcile a transaction during semi-automatic reconciliation.Semi-automatic reconciliation does not apply cash discount, therefore payments with cash discountwill not be matched.Journal Entries with the origin “JR” are posted when the system reconciles transactions withunder/over payment differences, exchange rate differences, deferred tax, and withholding tax.

7-14

Automatic Internal Reconciliations

PostingDate

Amount BalanceDue

Ref 1

01.09 1000 900

01.09 1000 900

01.10 1000 900

01.11 1000 1000 12360

PostingDate

Amount BalanceDue

Ref 1

01.10 900 900

01.10 850 850

05.11 900 900

15.11 1000 1000 22360

Debits Credits

Rules for this example:Rule 1: Posting Date variation 31 daysRule 2: Ref. 1 relate to last 3 characters

If you choose the reconciliation type automatic:

The system sequences debits and credits in the account and attempts to match and reconcile debit and credititem pairs. The system matches on the Balance Due amount, not the total amount.

You can optionally specify matching rules, for example, posting date, due date, reference number, project.You can also specify a reconciliation difference and the system will match debits and credits that differ by anamount less than this difference.

If you select a date as a matching rule, you can specify the maximum variation in days. By default thisdifference is zero, which means that the dates must match.

If the system does not find any matching transactions, you receive a message that says “No data found.” If thesystem finds matches it reconciles the transactions and you get a green success message. To check whichtransactions were reconciled, you can find the saved reconciliation by choosing Business Partners InternalReconciliations Manage Previous Reconciliations (for business partner reconciliations) or FinancialsInternal Reconciliations Manage Previous Reconciliations (for G/L reconciliations).

The system cannot partially reconcile a transaction during automatic reconciliation.

Automatic reconciliation does not apply cash discount, therefore payments with cash discount will not bematched or reconciled.

You can use automatic reconciliation on a single G/L or business partner account, or on a range ofconsecutive G/L accounts or business partner codes.

Journal entries with the origin “JR” are posted when the system reconciles transactions with:

Under/over payment differences (if you specify a Reconciliation Difference)

Exchange rate differences

Deferred tax

Withholding tax

7-15

Adjustments with Automatic Reversals

Adjustment Posting with Automatic Reversal Date

Period-End Reporting at Key Date (P&L, Balance Sheet, and so on)

Reverse Adjustment Postings

Old Period New Period

Key Date

1 2 3

1

2

3

SAP Business One offers an option to automatically reverse certain journal entries. To do this, selectthe Reverse indicator and enter a reverse date into the journal entry. Choose Financials ReverseTransactions to get a list of all journal entries that are scheduled to be reversed today.One purpose of the automatic reversal is the easy reversal of adjustment postings that you made asperiod-end preparation. You can do this the following way:

You post adjustments (such as foreign currency valuation, reclassifications, value adjustments, andso on) at the last day of the old period and enter the first day of the new period as reversal date.You create the period-end reports based on the adjusted general ledger.You reverse the adjustment postings with Reverse Transactions.

Additionally, you can mark journal entries made for your closing operations by selecting theAdjustment Transactions (Period 13) indicator then you can choose whether to include them in yourfinancials reports

7-16

Deferrals with Automatic Reversals

DeferredExpenses

100 60

100

Expenses

100

Vendor

Post Invoice

Post Deferral

Reverse Deferral

60 60 60

60

Old Year

New Year

Old Year New Year

1 2 3

1

1 2 2 3

3

1

2

3

You can use automatic reversals for deferrals. Deferrals are used if you want to defer income orexpenses partly from the old fiscal year to the new fiscal year. You have to do this because some of theexpenses or income that you posted to the old year economically belong to the new fiscal year.In the example you see how an invoice for 100 is posted in the old fiscal year. The amount 60 must bedeferred to the new fiscal year:

The invoice for 100 is posted in the old fiscal year.Expenses: Debit 100; Vendor: Credit 100You want to defer 60 to the next year. To do this, you post a deferral and enter the first day of thenew fiscal year as the reversal date.Deferred expenses: Debit 60; Expenses: Credit 60This deferral leaves 40 as expenses in the old fiscal year.The system reminds you about the scheduled reversal of the deferral posting.Expenses: Debit 60; Deferred expenses: Credit 60This reversal posts 60 as expenses in the new fiscal year.

7-17

Unit 5 Appendix:Controlling Reports

7-18

Financial Report Templates

Gen

eral

Led

ger

Level 1Assets

Liabilities

Cap. + Res.

Turnover

Cost of Sales

Operating C.

Non-Operating

Tax + Extr.

Template for Balance SheetActiveAccounts

Liabilities.Cap. + Res.Profit Period

PassiveAccounts

Assets

Template for P&L

= Gross Profit*

= Operating Profit*

+ Turnover- Cost of Sales

- Operating Costs

+/- Non-Operating Inc. and Exp.= Profit after Financing Expenses*+/- Taxation and Extraordinary Items= Profit Period** Default Subtotals

The default template that specifies the structure for presenting the Financial Reports in SAP BusinessOne is the Chart of Accounts template.The account balances are presented according to their drawer, level and type.You can define your own financial report templates.For some countries SAP Business One delivers templates that you can use to create your own financialreport templates. An alternative is to copy the structure of your chart of accounts and then make anynecessary changes to it. You can use the financial report templates to compile balance sheets, profitand loss statements, and trial balance reports (totals and balances of G/L accounts and businesspartner accounts).

Balance Sheet – The system proposes the accounts in the Assets group as assets (active) accounts;the system proposes the accounts in the Liabilities group and the Capital and Reserves group asliability (passive) accounts. You can change these proposals on the highest levels of your financialreport template. The system automatically displays the profit or loss for the period (Profit Period).Profit and Loss Statement – The system proposes the accounts in all the other groups (Turnover,Cost of Sales, Operating Costs, Non-Operating Income and Expenditure, Taxation andExtraordinary Items) and offers the calculation of subtotals.Trial Balance – The financial report template can contain the accounts from all groups. It displaysthe totals of all groups but does not offer any subtotal calculation.

7-19

Editing a Financial Report Templates

Template for Balance

Liabilities.Cap. + Res.Profit Period

Assets

Template for P&L

= Gross Profit

= Operating Profit

+ Turnover- Cost of Sales

- Operating Costs

+/- Non-Operating Inc. andExp.= Profit after Financing Expenses

+/- Taxation and ExtraordinaryItems= Profit Period

Level 1

...

Creditors DueWithin One

Year

Creditors DueAfter One Year

Level 3

Bank Loans &Overdrafts

Accruals &DeferredIncome

...

Level 4

Bank LoansDue < 1 Year

Other LoansDue < 1 Year

Level 5

CurrentLiabilities

Level 2

Long TermLiabilities

OrdinaryShare Capital



Called UpShare Capital

...

Titles AccountsDummy Titles

Choose Financials Financial Report Templates to define and maintain financial report templates.Editing a financial report template is similar, but not identical to, editing a chart of accounts.

Every financial report template has exactly five levels.Levels one to four consist of only titles.The G/L accounts are all located on the fifth level.If you want the totals of the G/L accounts to be displayed on a higher level, you can make the highertitles invisible by selecting the Dummy Title indicator.You can hide G/L accounts if you don’t want them to be displayed.

In a financial report template for balance sheets, you can let the system automatically transfer accountsto the other side of the balance sheet in case the account balance is negative. To do this, select theTransfer Accounts with Negative Sign indicator and specify the place where the transferred accountshould be.In a financial report template for profit and loss statements, the system can insert a subtotal on everylevel:

Level 1 (level of account groups):Select Automatic Summary to let the system use predefined formulas for the gross profit, operatingprofit, profit after financing expenses, and profit period.All levels:You can define your own formulas. Select Totals Formula and choose Formula to enter a formulabased on the titles of the same level as the subtotal.

7-20

Exercise Financial Report Templates (Optional)

7-21

Dunning Wizard

Selection Criteria

DocumentParameters

SelectCustomers

GeneralParameters

WizardOptions

DunningLetter

Entry in the customermaster record

Save

Load

SavedPayment

RunsPr

int

You can use the Dunning Wizard to automatically print letters to your customers for their overdueinvoices. Each run of the Dunning Wizard is identified by a unique name and the date.When starting the Dunning Wizard, you specify selection criteria, including:

General parameters, such as the dunning levelsThe business partners that the system should checkSelection criteria for the documents that the system should check

The Dunning Wizard creates a recommendation report or a list of suggested dunning letters. You canaccept or reject the recommendations on customer level, dunning letter level, or invoice level. You cansave the recommendations and proceed at a later date, or you can print the dunning letters.When you print the dunning letters, the system at the same time stores the dunning level and the dateof the dunning run in the A/R invoice. It also stores the highest dunning level from the invoices in thecustomer master record.

To run the Dunning Wizard, choose Sales – A/R Dunning Wizard.To display the dunning history of customers, choose Business Partners Business Partner Reports

Dunning History Report.

7-22

Dunning Terms

Customer MasterRecord

Dunning Term

Dunning Feesand DunningInterest

DunningLetterMethod

DunningLevels

Dunning Term

Dunning Feesand DunningInterest

DunningLetterMethod

DunningLevels1

23

4

Days

With the dunning terms, you control the entire dunning process.Choose Administration Setup Business Partners Dunning Terms to define and maintaindunning terms.In the definition of a dunning term, you define the following:

The number of dunning levels, the assigned dunning letters, the days after which each dunninglevel is effective, as well as minimum amounts for each dunning level. Usually, dunning lettersbelonging to a higher level are worded in a more severe way. You can design the dunning letterswith the Print Layout Designer. Up to 10 dunning levels with different dunning letters are possible.Choose Administration Setup Business Partners Dunning Levels to define dunning levelsthat are defaulted when you create a new dunning term but that can be changed in the dunning term.The dunning fees for each dunning level, and the calculation of dunning interest.The dunning letter method, which defines if one dunning letter is sent per invoice, dunning level, orcustomer.

In the master records of the customers, you must specify which dunning terms you want to use witheach customer. you can also set a default dunning term for new customer’s creation on theAdministration System Initialization General Settings BP tab.In the master records of the customers, you can specify if you want to block dunning letters. Adunning block can also be made at the invoice level. This option blocks the issuing of dunning lettersfor the customer.

7-23

Unit 6 Appendix:Financial Accounting Initialization

7-24

Tax Processing in the European Union

Non-EUBusinessPartner

YourCompany

EUBusinessPartner

Output Tax 0%

Import Tax

Output Tax 0%

Acquisition Tax

EU Sales Report

Tax Report

1

24

3

The figure shows the tax processing within the European Union.1. Deliveries to customers in non-EU countries are tax exempt (output tax 0%).2. For goods receipts from vendors in non-EU countries, you have to pay import tax.3. Deliveries to customers in EU countries are tax exempt (output tax 0%).4. For goods receipts from vendors in EU countries, you have to post acquisition tax.

The vendor has to report the tax-exempt sales to his or her tax authorities in an EU Sales Report. Thissales list also contains the receivers of the goods. To identify the receivers, every company is assigneda VAT registration number. This number must be specified on every invoice between EU companies.The EU sales report lists all the deliveries with an EU output tax code. These deliveries are groupedaccording to country, tax number, (possibly) triangular deal number, and type of activity. ChooseFinancials Financials Reports Accounting Tax EU Sales Report.The acquisition tax is self-assessed by the customer and has to be reported to the tax authorities in thetax report. In the same report, the acquisition tax can be claimed as input tax. So, in fact, the companydoes not have to pay any taxes for the acquisition and the acquisition tax is just a tool to report the EUpurchases to the tax authorities.

7-25

Tax Settings for Foreign Business Partners

Foreign Vendors

Tax Status Tax Group Tax Group inthe Document

Foreign Customer

EU EU EU-Sales Tax* EU-Sales Tax (0%)

EU Acquisition Acquis. Tax Gr.Acquisition Tax Gr.

non-EU LiableSales Tax for Export

(0%)

non-EU Liable Import Tax Group

Business Partner Master Record

* Sales Tax Group with EU indicator

Sales Tax Exp.

Import Tax Gr.

To ensure that the system uses the correct tax group in the documents, you have to properly define thetax settings on the Tax tab within the Accounting tab in your business partner master records. Thefigure shows the correct settings for foreign business partners. We assume that your company islocated in an EU country.Foreign customers

If the customer is from an EU country, enter EU in the Tax Status field. In the Tax Group field entera tax group that is defined for EU sales tax. This tax group has a rate of 0% and must have the EUindicator selected in its definition. If you enter a document for this customer, the system copies thistax group into the document.If the customer is from a non-EU country, enter Liable in the Tax Status field. In the Tax Groupfield enter a tax group that is defined as the sales tax group for exports (usually 0%). If you enter adocument for this customer, the system copies this tax group into the document.

Foreign vendorsIf the vendor is from an EU country, enter Acquisition in the Tax Status field. In the Tax Groupfield enter a tax group that is defined as an acquisition tax group. This tax group must have theAcquisition/Reverse indicator selected in its definition. If you enter a document for this vendor, thesystem copies this tax group into the document.If the vendor is from a non-EU country, enter Liable in the Tax Status field. In the Tax Group fieldenter a tax group that is defined as a tax group for import taxes. If you enter a document for thisvendor, the system copies this tax group into the document.

The tax groups in the business partner master records always overwrite the tax group from the itemmaster record.

7-26

Acquisition Tax Posting

ExpenditureVendor

Acquisition Tax(Input Tax)

Acquisition Tax(Output Tax)

Tax Group forAcquisition

Tax

The acquisition tax group for the purchasing of tax-exempt deliveries of goods, services, andsubcontracting within the EU generates two posting lines. The system posts the acquisition tax on thecredit side of the account for output acquisition tax, and posts the same amount to the debit side of theaccount for input acquisition tax.The acquisition tax group is specially identified as such by selecting the Acquisition/Reverse indicatorand must be assigned the two acquisition tax accounts. The posting is then made automatically. Thesystem lists both tax amounts in the tax returns for tax on sales and purchases. This results in neither areceivable nor a liability for the tax authority.

7-27

Automatic Tax Line Itemsin a Manual Journal Entries

Debit Credit Tax Group TaxAmount

GrossValue

BaseAmount

G/L Account 100 V2 19 119

Tax Account 19 V2 100

Based oneach other

Defaulted from G/L Account(or entered manually)

Calculated based ontax group

Line addedautomatically

Relevant for European localizations.You can select a tax group in any G/L account line item. The system then automatically calculates thetax for this line item and creates an additional line item in the journal entry to post the tax to the correcttax account. You cannot change or delete this tax line item manually. It is purely based on the G/Laccount line through which it was created. It automatically gets deleted if you delete the G/L accountline.In the G/L account line item you can either enter the net amount in the normal Debit or Credit fields orthe gross amount in the Gross Value field. Either way, the system calculates the other value and the taxamount based on the definition of the tax group.You can also enter a Default VAT Group in the G/L account master record and specify whether theuser is allowed to change the tax group when entering a manual journal entry or not by selecting thePermit Other VAT Group indicator in the G/L Account Details.You cannot manually post to a tax account.

To set up and maintain tax rates, choose Administration Setup Financials Tax.

7-28

Document Settings: Currencies Definition WhenEntering Manual Journal Entries

There are few options for currencies conversions you can set for when you enter a manualJournal Entry:

Block Unbalanced FC Journal Entry - Disallows unbalanced foreign currency entries.Block Multiple Currency Transactions – Disallow the creation of journal entries that involve morethan one currency.Block Editing of Totals in System Currency - Prevents document amounts from being edited in thesystem currency.

Administration System Initialization Document Settings Per Document tab AccountingFields - Journal Entry.

7-1

Financial Reporting - Exercises

Unit: Controlling ReportsTopic: Financial Reports


Create a financial reports template

Run a balance sheet report

The company needs to create financial report templates that they cancustomize for their business needs.

1-1 Create a financial report template.

Create a financial report template for the balance sheet based on your chart of accounts. For example, if you are using the training database, change the following G/L account titles:

G/L Account Details Account Name Change to:Stocks Inventory and Raw Materials

Cash at Bank and In Hand Cash Assets

Capital and Reserves Equity

Tip:

If you are not familiar with the balance sheet contents, run thereport first before you create the template. Choose FinancialsFinancial Reports Financial Balance Sheet.

Or, in the Chart of Accounts change to Find mode and searchusing the name field including *.

The Financial Report Template present title accounts only. Topresent active accounts, double click a title account.

7-2

1-2 Run a Balance Sheet Report.

Run a balance sheet report using the new template. Make the report showthe balance for each quarter of the year to date. Show all accounts, eventhose with a zero balance.

7-3

Financial Reporting - Solutions

Unit: Controlling ReportsTopic: Financial Reports

1-1 Create a financial report template.

Choose Financials Financial Report Templates

Field Name or Data Type Values or Action

Report Balance Sheet

Template Create your own template bychoosing Define New

Type a suitable name for your template.

Choose Update then OK.

Select your new template.

Choose Generate Standard Chart of Accounts. This copies the chart ofaccounts to your report template.

Make some changes to the report layout. For example, if you are using thetraining database, change the following G/L account titles:

G/L Account Details Account Name Change to:Stocks Inventory and Raw

MaterialsCash at Bank and In Hand Cash AssetsCapital and Reserves Equity

Choose Update to save your template.

7-4

1-2 Run a balance sheet report.

Choose Financials Financial Reports Financial Balance Sheet.


Template <Name of your financial reporttemplate>

Select the Accounts with Balance of Zero indicator.

Select Quarterly Report.Choose OK. The system displays the quarterly balance sheet with theorganization from your template.