AP – Creating Vendor Accounts (Part 1)

Yesterday, we started the accounts payable and posted the entries. We have created the GL account, inventory of raw materials and five recon accounts we have created. Now let us create the vendor account. Master records FK01, FK02 to change, FK03 to display.

Thank you for reading this post, don't forget to subscribe!

Company code DRLB, account group. Let us select the account group. So here we have created DRMV, material vendors for domestic. Press enter.

So suppose this is a company. So, for manufacturing of our medicine, we need raw materials. The raw material supplier may be ABC raw material suppliers. So here’s the supplier from Delhi. So this is the first screen.

Postbox, all the details can be entered here. Now press enter.

Second screen.

We need not enter anything here unless otherwise specifically required.

Next screen,

even this, I don’t require.

This also not required. Next screen, Recon account.

Now ABC raw material suppliers are linked to which recon account?

See, only these recon accounts. Vendor recon accounts are displayed here. Sundry debtors for materials. So link up materials account. Sort key, I’ll take 001. Cash management group, you can say, A1, domestic payments. So these are domestic party, that’s why I’m taking this one. So like that, so many other details are there. What is where is the head office and authorization, whether in the authorization group we are going to create, Interest calculation indicators with the tax code, so many. Withholding tax code, there is. If any tax is going to be deducted, that code we need to give here. Exemption number. So many other things are there. Depending upon the requirement, we’ll enter it. Again, press Enter.

Payment terms, for the time being, let us see 0001. Tolerance group we have created already, DR09 tolerance group for vendors. Press enter.

Dunning procedure, this is not required. That’s all. Save it.

Now similarly, this is 400501.

Company code, DRLB. So with reference to this number, I’m creating one more path account. Just like with creation of template, we can create new new GL account. Similarly, new customer account. Like that, we are creating vendor account. Except first screen, everything will get copied because this is PQR raw material supplies.

So enter this, press enter to the fifth screen.

See, all these fields are already filled up. Payment terms.

Here, payment methods. In future, if you want, we can enter the payment methods. Anyway, we are going to use this. What are the payment methods that we are going to use in order to make the payment to this vendor? Alternate payee. Right, sometimes, we may have to use alternate payee also. Say for example, I was telling you about one implementation we have done in Rajasthan. That is one organic food processing company. So they are procuring the material from farmers. Say, they are food processing company. So what they do is, they buy wheat and other pulses etc from farmers. They go to the farming land directly and where they are going to produce organic food. You know, organic food means they don’t use any artificial fertilizer, only organic manures they use and that will be sold to this company. Even that organic manures, everything, how to produce organic pulses, organic wheat, organic rice, everything, this company is going to guide them and they give free fertilizer. Everything fertilizer in the sense, organic manures they give and they don’t use even a single grain of fertilizer or pesticides. So what they have done, say for example, few of the farmers did not even have a bank account. So that’s why out of the say for example, half a dozen vendors are there. Out of half dozen vendors, only one vendor has got a bank account, or say for example, a group of half dozen farmers are there, none of them have a bank account. But what they do, this company is procuring through these people but they have a somewhat small cooperative society. Through that cooperative society, they have procured it. But payment has to be done to these six people or five people or whoever it may be. So, instead of those people, they create alternative payee. Or otherwise, say one person is there and he do not have bank account, instead of his name, we use alternative payee account and payment will be done to this vendor. Vendor account is the same party. Whatever the PQR we are creating, it will go to PQR. But payment will be going to alternate payee. So the six farmers whom or from whomever we are going to procure the material, we are going to create their accounts. But while coming to the payment, we are going to do alternative payee account. The payment will be made to that their cooperative society whoever it may be. Through that, it will reach these people. So like that, this alternative payee can be used. Individual payment, bills of exchange limit, so depending upon the requirement, all these fields are used. So many fields are there depending upon the client requirement or actually the business process requirement, we use it. We can even block the payment. Payment can be blocked to this particular. Blank means free for payment, * means skip the account, A means blocked for payment. If you use ‘A’ here, it’ll be blocked. So, like this, all the things get copied. Save it. So, we have created the vendor account.

So, two vendors we have now. So if you want to change, what you need to do is you need to go to the FK01, FK02, FK03. Go to FK02, enter the party number. Right.

What are the screen you want? You can select only this one, accounting information, payment transactions. Select this. Press enter. Now system directly take you to those screens only. Come back.

Now let us post invoice. Imagine that whatever material that we have procured, so we have to enter the accounting entry. Now so as I told you yesterday, if accounting entry is going to be flowing from materials management module, inventory of raw material account return to GR/IR clearing account. When invoice is verified, GR/IR account is going to be debited and vendor account is to be credited. Ultimately, the accounting entry is going to be inventory of raw material account return to vendor account. This is the entry that is going to be flowing from MM module. But since we do not have MM module, we are directly posting this entry. So inventory of raw material account return to vendor account. Same inventory to vendor. When payment is received, vendor account is debited and to bank. And, the posting key is going to be 25 and 31. So 25 is for vendor debit, and 31 is for vendor credit. Like, even if we have discussed for customers. For customers, the posting key was 01 and 15, but here, 25 and 13. So what is the difference here? Now imagine that we have received the material at plant, and we have received the invoice. So that invoice, we need to enter into the system. So then only we can post the respective accounting entry here. Accounts payable, Document entry FB60, F-43. FB60 means the same relation here with FB50 and F-02. I think I forgot to tell you, entering FB70 in case of customers. Here in F-22 we have posted. Here in FB70 we did not post. Even it doesn’t make any difference. If you want to post any customer entry through FB70, what you need to do is, here enter the customer and post the GL account here.

Say for example, say customer account for this party. Sorry I’m deviating from accounts payable to account receivable. Right. Say you got company code, DRLB. Customer account 610021. Here you have to post the amount, say 1 lakh 30,000. And here, GL account, customer account is going to be debited, sales account is going to be credited. So 3 lakhs 1. Same similarly, if you have 3 lakhs 2, 3 lakhs 2. And here, the amount is going to be, say, one invoice is, say 1 lakh. Another invoice is 30,000.

Press Enter.

So Sun Pharma Dealers. So like this, you can post. For customer, this is the amount to be debited, and this is the sales. Two products written. So here, multilevel entries can be done here. Multi line items can be entered here. Any number of products can be sold to one customer. That is the facility we have here because sometimes, say a single customer takes so many products. So in such a case, I can use this T-code. Save it and display.

So like that, we can use. Similarly, see, even you may get the problem. If somebody has changed the tax procedure and you have calculated the tax, you have created the tax procedure, everything. But before you post an invoice and if you want to see that you want to calculate the tax, go and check your settings whether same your tax procedure has been assigned to the country or not. If it is not there, first assign then come back then only you post it. Otherwise, system will not allow you. Because since this is a common system, so many people will be using for practice. And the same tax procedure, whatever you have used, may not be available if you are using the same. If not, this server, any other server, whatever you are using.

 

Now, so here what I’m going to do now, accounts payable. Accounts payable, Document entry, F-43 invoice general or FB60 invoice. For multi line items you can use FB60, and F-43 can be used for a single line item.

So date 25.09.2013, Type KR, Company code DRLB. See, what is KR? KR is nothing but vendor invoice, by default system has taken. Posting key 25 and 31. 25 is vendor debit and 31 is vendor credit. Why I have to take only 31? Why shouldn’t I take 01 and 15? 01 and 15 are being given for customers, and 25 and 31 are given for vendor. And when you are posting vendor account, first line item, system always suggest credit line item. Right? See 31 vendor credit invoice.

Here in the first line item section, if you click on the account options, see, vendors are seen here.

PQR, ABC customers. And even here, if you want to change posting key, say for example, if you want to take 01. Let’s see here.

System is showing customer accounts. So, the importance of posting key is that it will decide which type of account you need. If you take 40 here, you can see GL accounts. So, that’s why the importance of posting keys is very high. So here it is using 31. I’m posting to the ABC raw material. First line item posting key, credit. So when you are procuring the raw material, raw materials account that are two vendor account. So first line item vendor account is being credited and the second line item is going to be debit vendor as a debit the material account. So first or second doesn’t make any difference for us. Say for example, 1 lakh 22,000. Payment terms, 0001. Because we have already assigned 0001 to the party account, system is picking up this. If you want, you can change it.

Right. So raw materials procured. Now second line item is going to be debit 40. Posting key 40 raw, material account 200201, inventory of raw material. So vendor account is created, raw material account is going to be created.

Next screen, Amount 1 lakh 22,000, text description raw materials procured.

So ABC raw materials account is credit and inventory of raw material is going to be debit here. Now save it. Document 19 lakhs 1 was posted in company code DRLB. So KR. Whatever the number range that we have given for KR, so that is picked up.

Similarly, I want to post one more invoice to the same party, ABC raw material. See, as soon as we have taken raw material account, ABC raw material suppliers, see GL account 101201, system is posting to Sundry Creditors for materials, material vendor account. Say 1 lakh 35,000 second invoice. Even here you can take your business area also. What are the business area that we are using, DRHY. So 40 raw material debit. 200201.

Business place and business area are different. Business place is used through the SD module, and here, we we also we can use it. Specifically, when there is a tax, withholding tax is there, then we use business area. Generally, business place is defined through the SD module. In SD module, wherever they are going to use the sales area, etc, the identical place will be created as business place in financial accounting. Anyway, for the time being, don’t bother about the business place, only take business area if you want.

So this is the display entry. So raw material suppliers is going to be credit, and inventory of raw materials is debit. And same way, general ledger view. So this above is the entry view. This below is general ledger view.

SundRy creditors for materials, inventory of raw material. These two are GL accounts. And, you can see the party account.

So accounting, financial accounting, accounts payable, document Entry, account, FK10N display balances. In case of sundry debtors, that is customers, FD10N. In case of, GL account, FS10N. F stands for financial accounting. S for GL, D for customer, K for vendor. 10N both are common. Alright. So when you are, going through the transaction codes, logically, you can remember all these things. So FK10N.

See vendor account has been created. So all 16 periods. Sixth period we have posted. Click the credit amount.

Again, same, open item. You can go to settings, legend on off, icons.

Here, open item, overdue, parked item, due, cleared item, not due. Not due means still we have credit period. So that’s why amount is not due. The payment is not due. That’s why we can take this one not due. So here this is due. Open item, that is we are yet to make the payment to the vendor. So raw materials procured. Come out.

And now I want to make the payment to vendor. We have received the material, posted the entries. Now I am making the payment to vendor. Here, while making the payment to Vendor, now just I’m just posting the entry. That’s all. But subsequently, when we go to APP, that is automatic payment program, you have to configure that. Once you configure, we can raise even check. For every payment, I can raise a check. How we do it, we’ll see later. But for the time being, accounts payable, document entry, just I’m posting an accounting entry for outgoing payment.

See here, this is outgoing payment, only I’m passing the accounting entry here. But if I use F-58 ‘post + print forms’, I can even generate a check and we can see that. But this is possible only once you configure automatic payment program. So once we go to the topic, we’ll see in detail. But for the time being, I’m using this, F-53.

KZ means what? Vendor payment. KR vendor invoice. So KZ vendor payment. Company code DRLB, INR. Document header text, say for example we can give the check number something like that. And, for clearing text, again same process, complete clearing, partial clearing, all those things are there. So here, full clearing. I’m using first of all full payment made to vendor. That is nothing but full clearing. Right. Bank data. 200405 is my bank account. Now amount is 1 lakh 22,000. Now my vendor account, ABC raw materials Suppliers. Once you enter these details, click on process open items.

If you are comfortable with accounts receivable, you’ll be comfortable with accounts payable also. Now what should I do now? Deactivate other line items.

See 122, 122. Amount entered and amount assigned are same. Save it. Go to menu, display the accounting entry.

So Axis Bank head office account is credited and raw material account is going to be debited. Party account is going to be debited here and, bank account is going to be credited because we have we have made the payment to the vendor.

Now let us go and see the party account. Go to Account, FK10N. Let us go to the FBL1N. Here FBL1N means, like FBL5N in case of sundry debtors as we have seen in case of account receivable. There is nothing but to view the open items we use that t code. Here also I’m using FBL1N. FK10N total balances. This is only open items. If I want to see, I can use this. Open items as on 25th to date.

Execute.

See. Now only one open item, one lakh thirty five is there. If I want to see all items,

See 135 is still pending and 1 lakh 22,000 has been cleared.