1.

Invoice verification marks the end of procurement after purchase order

and goods receipt.
2. Invoice posting will update all related documents in financial and
accounting
3. Blocked invoice that vary from actual invoice can be processed through
invoice verification.
Invoice verification deals with the following terms which are as follows.

Posting of Invoice - MIRO

Blocked Invoice

Evaluated Receipt Settlement(ERS)

Quantity VarianceThis generally relates to the difference between quantity received and
invoiced by vendor. Or quantity in the purchase order and invoiced by the vendor.
Price VarianceThis refers to the variance of per unit price as compared to the purchase order.
Schedule VarianceThis is generally invoked if the date of invoice entry is earlier than the
delivery date in the purchase order.

Blocked Invoice
Sometimes accounting department is unable to pay the invoice to vendor.
This may happen when you try to post an invoice, system expect certain
default value against purchase order or goods receipt and posted invoice
differs from default value. This may lead to invoice blocking. Some of the
reasons for invoice blocking are as follows.

Variance in amount at item level

Variance in quantity at item level

It is also difficult to analyze the small variances in invoice. So, tolerance limits
are set up in the system and if variance in invoice is within the tolerance limit
then system accepts the invoice. If variance limit is exceeded then it may lead
to blocking of invoice. Then we need to manually unblock or release that invoice
if we want to process the invoice. Invoice can be unblocked by following the
below steps.

Path to Release Blocked Invoice:

Logistics => Materials Management => Logistic Invoice verification =>
Further Processing => Release Blocked Invoice
TCode: MRBR

On SAP Menu screen select Release Blocked Invoices execute icon by

following the above path.

Provide the necessary details like company code, invoice document number,
vendor, posting date, purchasing group. Then select execute icon. Blocked
invoice will be released.
Evaluated Receipt Settlement (ERS)
Evaluated Receipt Settlement (ERS) is an easy method of settling goods
receipt automatically. If ordering party has agreed with vendor on all financial
terms and condition, then ordering party need not verify the invoice. Invoice
will be posted automatically from the information present in purchase order
and goods receipt. The various advantages of ERS are as follows.

Purchase orders can be settled and closed quickly.

 It reduces human efforts as no need to verify the invoice.

Amount and quantity variances in invoice can be avoided with the help of ERS.

To implement ERS some mandatory setting needs to be done in vendor

master which is described in below context.

Go to XK02 (Change mode of vendor master). Select Control data tab.

Check the AutoEvalGRSetmt Del. and AutoEvalGRSetmt Ret box. Click on
save. Now the particular vendor is enabled for ERS.
ERS can be created by following the below steps.

Path to create ERS:

Logistics => Materials Management => Logistic Invoice verification =>
Automatic Settlement => Evaluated Receipt Settlement (ERS)
TCode: MRRL

On SAP Menu screen select Evaluated Receipt Settlement (ERS) execute icon
by following the above path.
Fill in all necessary details like company code, plant, goods receipt document
number and date, vendor, purchasing document. Click on save. ERS will be
created for the corresponding purchase order and goods receipt.
The three way matching of invoice, good receipt and the purchase order is what is referred to as
the logistic invoice verification (LIV) process. The process matches the supplier invoice received
with the Goods Receipt in terms of quantity, and with the Purchase Order in terms of prices.
The LIV process may lead to the following outcomes:

a) A perfect match of debit and credit in the GR/IR account, because the quantity ordered, is
delivered and invoiced, or

b) A balance in the GR/IR account, due to quantity difference between the Invoice receipt and
the Goods Receipt, representing a delivery surplus or an invoice surplus.

In this weeks post, we will discuss the SAP logistics invoice verification process and the
resulting Goods receipt/invoice receipt (GR/IR) account maintenance, including the necessary
configuration settings.

1) Logistics Invoice Verification Process Explained

As explained above, the LIV process is the classic three way matching of Invoice, Goods
Receipt and Purchase Order. The process matches the supplier invoice received with
the Goods Receipt in terms of quantity, and with the Purchase Order in terms of prices.

For the system to perform this three-way match, the flags of the Good Receipt and
Invoice Receipt must be set in the Purchase order as below:

2) Defaulting Good receipt and Invoice Receipt flag in Configuration settings

The Goods receipt and invoice receipt flags may be set by the user when creating a
purchase order. However, it is better that end users are not left to determine on their
own whether goods receipt and Invoice receipt transactions are to be performed for the
purchase order. These settings should be defaulted in configuration and not set within
the purchase order.

The defaulting of these two fields (Good Receipt and Invoice Receipt) in the Purchase
order can be done in configuration by following the menu path below:
IMG Materials Management Purchasing Account Assignment Maintain Account
Assignment Categories
Double click on the relevant account assignment category.
3) Illustration of The Accounting Treatment during the Three-way Match
 As the name implies, the GR/IR accounts record both the Goods Receipt and Invoice
Receipt documents. The GR document is recorded on the credit side of this account and
the Invoice Receipt document on the debit side.

In the simplified situation, where the quantity ordered is delivered and invoiced, the
balance in this account is zero.

A balance in the GR/IR account represents either a good received but not yet invoiced
(delivery surplus- credit balance) or goods invoiced but not yet received (invoice surplus-
debit balance).

Consider a scenario where we ordered stationery (quantity of 100 units, price USD 20
per unit).The supplier delivers say 80 units. The system records this by:

GR Document

Now, consider also that the supplier sends in an invoice equaling the value of the good
receipt (80 units) at price of USD 20. The system records this as:

Note that in this example the GR/IR account is zero after the posting of the invoice. This
simply means that all the goods that all the received are invoiced.

It should be noted that, this may not always be the case, and in most cases, you will
have a variation either in prices (between the PO and Invoice), or in quantity (between
quantity delivered and Invoiced).

4) Treatment of Price Differences

Price differences is the difference in price as in the Purchase order with the price quoted
on the invoice. The way the system treats this will depend on which event happened
first, between the posting of the goods receipt document and the posting of the invoice
document.
a) Treatment of the Price Difference When Good Receipt Document is Posted
First

In this case, the amount of the GR Document is a function of the price quoted in the
PO multiplied by the quantity of the goods delivered. The difference in price is used
to adjust the charge to the expense account (in our case stationery- the account
assignment object in the PO). See the illustration below:
 Assume in our example above that the supplier/vendor sends in an invoice equaling
the value of the good receipt (80 units) at price of USD 18 (instead of the PO price of
USD 20). The system will record this as:

GR Document

IR Document

Note again that the balance in the GR/IR is zero after the invoice Posting.

b) Treatment of the Price Difference When Invoice Document is Posted First

In this case, the amount of the GR Document is a function of the price quoted in the
Invoice multiplied by the quantity of the goods delivered. See the illustration below:

Assume in our example above that the supplier/vendor sends in an invoice before
delivery of the goods, for a quantity of 80 units at price of USD 22 (instead of the PO
price of USD 20). The system will record this as:

IR Document

Now if the Vendor delivers all the goods invoiced, the GR document will be recorded
as:

GR Document
 Note that the invoice price of USD 22 is used in this case instead of the Purchase
order price of USD 20.

Note also that the balance in the GR/IR is again zero after the invoice Posting.
It is important to note therefore that the difference in the GR/IR account is not
caused by difference in prices (between the PO and invoice) as such difference
will be adjusted to the purchase order line account assignment. The difference
in the GR/IR account is caused by quantity difference between the Goods
receipt and Invoice.

5) Two-way Invoice Verification

Another invoice verification approach (which is not relevant in GR/IR maintenance) but
useful to mention, is the two-way match invoice verification. This approach simply
matches both the price and quantity on the invoice to the ones quoted on the Purchase
Order. For the system to do this you will have to make sure, the Goods Receipt flag is
unchecked in the PO. This means that no Goods Receipt document is created in the
verification process.

The system simply expensed/charged the account assignment on the Purchase Order
line item during invoice entry instead of at the time of the GR.

Taking our example above, the following accounting entry will take place:

6) Non-Valuated Goods Receipt

Under this approach, the whole process of the three-way match applies. The only
difference is that, as the name suggests, no accounting document is created during
goods receipt. This means that the three-way matching of price against the PO and
quantity against the GR is carried out, but the GR document is not generated. Therefore,
the accounting entries of the non-valuated GR is the same as the two-way match
(above).

We use the non-valuated GR approach, if more than one account assignment are to be
used for one purchase order line item. Meaning a single PO line item distributed to
multiple GLs, cost centers or other account assignment objects.

The non-valuated GR flag is located in delivery tab of the purchase order line item as
below:
7) GR Based Invoice Verification

In terms of the accounting treatment, this option is the same as the three-way match
invoice process. The difference though is on the details. Purchase Orders under this
approach captures and retains information about all GR documents posted against
specific PO items.

Just like the IV flag, the GR based invoice verification flag can be found in the Invoice
tab of the purchase order line item, as below:

8) Dealing with the Quantity Difference- The GR/IR Maintenance

The GR maintenance has to do with clearing the Good Receipt, invoice receipt (GR/IR)
account. The GR/IR accounts records the receipt of goods on its credit side and the
invoice on the debit side. In the simplified situation, where the quantity ordered, is
delivered and invoiced, the balance in this account is zero.
As stated above, a balance in the GR/IR account represents either:

a) Goods received but not yet invoiced (delivery surplus- credit balance) or

b) Goods invoiced but not yet received (invoice surplus- debit balance).

By nature, the GR/IR account is a clearing account that has to be zero at the conclusion
of the relevant business process cycle (in our case the purchasing cycle). Therefore,
upon the conclusion of each purchase cycle the accounting impact of that transaction
should be zero on the GR/IR account.

If this is not the case because of one of the reasons listed above, then we have to deal
with the clearing of this account. The balance on the GR/IR account may be cleared
through:

1) Manual Clearing (MR11)

2) Automatic Clearing (F.13)

9) GR/IR Account Configuration

Before we continue with the end user process of GR/IR account maintenance, we will go
through the necessary GR/IR account related configuration steps.

a) Configure Automatic Postings

In this step, we maintain the configuration settings for Inventory Management and
Invoice Verification transactions for automatic postings to G/L accounts.
Follow the menu path below to configure automatic postings:

IMG Materials Management Logistics Invoice Verification Configure

Automatic Postings
Or use transaction OMR0

b) Characteristics of the GR/IR GL Account

It is preferable for your GR/IR account to have the following features:

1) The GR/IR Account should be created as an Open Item Management account.

2) It should be a Line item Display account.

3) Preferable to select Sort Key option 14 (purchase order).

4) Preferable to select field status group G045 (Goods/invoice received clearing

account).
c) The GR/IR Clearing Account Maintenance Configuration
In this step, we maintain the configuration settings for GR/IR account maintenance.
The step involves:

i. Maintain Number Assignments for Accounting Documents

Here we maintain settings necessary to generate documents in Financial Accounting

in the GR/IR clearing maintenance process. This configuration step involves:

a) Defining a document type for our GR/IR maintenance transactions. The standard
provided by SAP KP is for account maintenance.

b) Assign number ranges to the document type in FI. The standard provided
by SAP KP 48.

c) Defaulting the document type in the account maintenance transaction (MR11).

The following menu path is followed to maintain this setting:

IMG Materials Management Logistics Invoice Verification Clearing

Account Maintenance Maintain Number Assignments for Accounting
Documents

Document Type: We use the standard document type KP.

Number Range for Document type in FI: maintain your number range (48) here.
Document Types in Invoice Verification: Defaulting the document type in the
account maintenance transaction.
 ii. Maintain Number Range for Account Maintenance Document

Here you assign number ranges to you document type for your account maintenance
document. Follow the menu path below:

IMG Materials Management Logistics Invoice Verification Clearing

Account Maintenance Maintain Number Assignment for Account
Maintenance Documents Maintain Number Range for Account Maintenance
Document

iii. Maintain Number Range Interval for Account Maintenance Document

Here maintain number range intervals for your assigned number range above.

IMG Materials Management Logistics Invoice Verification Clearing

Account Maintenance Maintain Number Assignment for Account
Maintenance Documents Maintain Number Range Interval for Account
Maintenance Document

9) Manual Clearing (MR11)

When there is a balance sitting in the GR/IR account (whether a delivery or invoice
surplus), the first thing to do is to investigated the nature and cause of the difference. We
need to determine whether all GR and invoice receipt documents are posted, or whether
further GR or Invoice documents are expected. Based on the outcome we either execute
the MR11 or wait for the natural conclusion of the transaction.
 The GR/IR clearing account is usually cleared at the end of a period, as part of the
period closing exercise, for those order items that no further goods receipts or invoices
are expected.

a) Clearing the delivery Surplus- (GR/IR credit balance)

Execute Transaction MR11 or follow the menu path:

Logistics Materials Management Logistics Invoice Verification GR/IR Account

Maintenance Maintain GR/IR Clearing Account
Make your selections as highlighted in the screen shot above and execute. Note we could select
both the delivery and invoice surplus in one run. However, since we are now demonstrating the
delivery surplus scenario, we only select that.

GR/IR Clearing Account Clearing: If you flag this indicator, the purchase order items for which
quantity differences still exist between goods receipt and invoice receipt postings, are selected
Clearing of Delivery Cost Accounts: If you set this indicator, the purchase order items for
which quantity differences for the planned delivery costs still exist between the goods receipt
and invoice receipt postings, are selected.
Last movement before key date: Normally, the system date is defaulted here. This field
ensures that transactions are selected only if the posting date of the GR and Invoice documents
is earlier than the date specified here.

Quantity variance less than/equal to: Enter here the maximum variance in percentage (%)
between the quantity delivered and the quantity invoiced of the selected PO. All variances less
than or equal to the specified percentage are selected by the system.

Value variance less than/= to: This is the same as the above, except that the specification
here is variance denominated in monetary value instead of percentage.

Select any PO and click on the Purchase Order icon above to analyze the chain of events.
Click on the status tab to display the status of this particular procurement.

i. We see that there was a PO for 1200 boxes of A4 Size paper.

ii. 800 boxes were delivered in 3 GRs (see the second half of the screen-purchase order history
tab).

iii. 500 boxes was invoiced in 2 invoice receipts.

iv. This means that the system is expecting an additional invoice.

v. If we are able to determine upon investigation that there will be no more invoice to be
received from the vendor, then we can go ahead and clear this manually with MR11.

vi. However, if we look further, we can see that this invoice was actually received and is
currently being processed, hence the parked invoice (see the last line item of the screen shot). It
means therefore, that it will be better not to clear this GR/IR balance manually and wait for the
full cycle of the transaction to run its course.

Let us look at one more example of delivery surplus by selecting another PO on our screen
shot.
In this example, we see that 6 GR documents in the value of 32,148 are created as against 5
Invoice documents totaling 26,790. The system expects and additional invoice document.

Assuming that upon investigation it is determined that no further invoice will be received.
We can now manually clear the GR/IR account by exiting the PO screen and going back to the
GR/IR maintenance screen.
Click on post after highlighting the PO line item you want to clear.

b) Displaying or Cancelling the Account Maintenance Document

Use Transaction MR11SHOW to Display/Cancel Account Maintenance Document, or

follow the menu path below.

Logistics Materials Management Logistics Invoice Verification GR/IR

Account Maintenance Display/Cancel Account Maintenance Document

Click on follow-on documents to display.

 Double click on accounting document.

The GR/IR account is debited to clear the balance to zero for this PO line item, and
the expense is credited to restate the value for the invoice that will no longer be
received.

For any reason that you want to cancel this account maintenance document, click on Item list.

Click on Reverse to cancel the GR/IR maintenance document.

 c) Clearing the Invoice Surplus- (GR/IR Debit balance)

Here you run the MR11 and make the exact selection as in (a) above, except that
instead of selecting delivery surplus you select Invoice surplus.

The difference in accounting treatment is that, instead of the does an exact opposite
entry as in delivery surplus.

10) Automatic Clearing

We have discussed above, the manual clearing of the GR/IR clearing account. In this
section, we will discuss the automatic clearing process. We will go through the automatic
clearing configuration and execute the automatic account clearing transaction (F.13).

To configure the automatic account clearing, follow the menu path below:

IMG Financial Accounting (New) General Ledger Accounting (New)

Business Transactions Open Item Clearing Prepare Automatic Clearing

Click on new entries or copy from an existing entry.

Enter your chart of account, account type and the GR/IR Clearing GL account.

Enter the criteria you want the system to use to select Open items. We used the purchase
order document (EBELM) and the purchase order line item (EBELP) as our clearing criteria.

Save your entries.

12) Automatic Clearing Account Execution (F.13)

To carry out the automatic clearing of the balances on the GR/IR account, execute transaction
F.13, or follow the menu path:

Accounting Financial Accounting General Ledger Periodic Processing

Automatic Clearing Without Specification of Clearing Currency
Enter all necessary selections (as above) and execute the program first in test run, by flagging
the test run option. If everything is okay, execute the life run.
Note: For the real run, this may be done in background, by clicking on program, execute in
background.