Purchasing and Accounts Payable

Solomon IV Order Management and Accounts Receivable Integration in Version 4.2 White Paper June 27, 1999 Table of Contents Introduction ........................................................................................................................................................... 4 Overview of the Key OM/AR Integration Business Process Flows ................................................................. 4 Standard Sales Orders ................................................................................................................................. 4 Counter Sales with Payments...................................................................................................................... 5 Sales Order Adjustments............................................................................................................................. 6 Section I. Understanding How OM/AR Integration Works ............................................................................ 8 The Role of Order Types in OM/AR Integration.............................................................................................. 8 Standard Sales Order Order Types ............................................................................................................. 8 Counter Sale Order Type ............................................................................................................................ 8 Adjustment Order Types ............................................................................................................................. 8 Numbering of Sales Orders, Shippers, and Invoices .................................................................................. 9 Account and Subaccount Definitions.......................................................................................................... 9 The Role of Process Manager in OM/AR Integration ...................................................................................... 9 The Role of Sales Orders and Shippers Screens in OM/AR Integration .......................................................... 9 Line Items ................................................................................................................................................... 9 Shipping Information ................................................................................................................................ 10 Billing Information ................................................................................................................................... 10 Other Information ..................................................................................................................................... 10 Misc Charges ............................................................................................................................................ 10 Sales Tax ................................................................................................................................................... 11 Payments ................................................................................................................................................... 11 Totals......................................................................................................................................................... 11 The Role of the Sales Journal in OM/AR Integration..................................................................................... 11 AR Batch Generation ................................................................................................................................ 11 AR Document Creation............................................................................................................................. 12 AR Transaction Creation .......................................................................................................................... 12 Account and Subaccount Validation ......................................................................................................... 12 The Role of the Invoice and Memo Screen in OM/AR Integration ................................................................ 13 The Role of Payment Application in OM/AR Integration .............................................................................. 14 Open Item Billing vs. Balance Forward Automatic Payment Application ............................................... 14 The Role of the AR Release Process in OM/AR Integration.......................................................................... 15 Journal Entries for Open Invoices and Debit Memos ............................................................................... 15 Journal Entries for Applied Payments ...................................................................................................... 15 Journal Entries for Applied Credit Memos ............................................................................................... 15 Section II. Examples of the Key OM/AR Integration Business Process Flows ............................................ 16 Standard Sales Order....................................................................................................................................... 16 Sales Order – Taxable Inventory Line Items with Trade Discounts ......................................................... 16 Sales Order – Shipping Information ......................................................................................................... 17 Sales Order – Billing Information with Cash Discount Terms ................................................................. 18 Sales Order – Other Information Order Release ....................................................................................... 19 Sales Order – Non-taxable Miscellaneous Charge ................................................................................... 20 Sales Order – Sales Taxes ......................................................................................................................... 21 Sales Order – Totals with Premium Freight and Whole Order Discount ................................................. 22 Process Manager – Shipper Creation ........................................................................................................ 22 Shipper List –PV to Select Shipper Created by Process Manager............................................................ 23 Shipper – Inventory Item Shipments ........................................................................................................ 24 Shipper – Shipping information ................................................................................................................ 24 Shipper – Billing Information ................................................................................................................... 25 Shipper – Other Information ..................................................................................................................... 25 Shipper – Miscellaneous Charge .............................................................................................................. 26 -2- Shipper – Sales Taxes ............................................................................................................................... 26 Shipper – Payments Disabled ................................................................................................................... 27 Shipper – Totals ........................................................................................................................................ 27 Release or Confirm Shipper -- Confirm Shipping .................................................................................... 28 Process Manager – Close Shipper............................................................................................................. 28 Shipper – Closed Shipper with Invoice Number ...................................................................................... 29 Sales Journal – Create AR Invoice Batch ................................................................................................. 30 Batch List – Invoice and Memo PV to Select the AR Invoice Batch ....................................................... 31 Invoice and Memo – Invoice Confirmation .............................................................................................. 32 Release AR Batch – Invoice Batch Release ............................................................................................. 33 Payment Application – Pay Invoice in Full .............................................................................................. 34 Customer Activity – Confirm Payment Application ................................................................................ 35 Counter Sale with Payments ........................................................................................................................... 36 CS Shipper – Taxable Inventory Line Item without Trade Discount ....................................................... 36 CS Shipper – Shipping Information .......................................................................................................... 37 CS Shipper – Billing Information ............................................................................................................. 37 CS Shipper – Other Information ............................................................................................................... 38 CS Shipper – No Miscellaneous Charges ................................................................................................. 38 CS Shipper – Sales Taxes ......................................................................................................................... 39 CS Shipper – Payments by Credit Card and Check .................................................................................. 39 CS Shipper – Totals .................................................................................................................................. 40 Process Manager – Close CS Shipper....................................................................................................... 40 Sales Journal – Create CS Invoice and Payment Batches......................................................................... 41 Batch List – Invoice and Memo PV to Select the CS Invoice Batch ........................................................ 42 Invoice and Memo – Invoice Confirmation .............................................................................................. 42 Release AR Batches – Select and Release CS Invoice Batch ................................................................... 43 Batch Number List – Payment Application PV to Select CS Payment Batch .......................................... 44 Payment Application – Credit Card Payment Applied ............................................................................. 45 Payment Application – Check Payment Applied...................................................................................... 45 Payment Application – Batch Release ...................................................................................................... 46 Customer Activity – Confirm CS Payment Application........................................................................... 46 Sales Order Adjustment .................................................................................................................................. 47 Sales Order – Taxable Inventory Line Item without Trade Discount ....................................................... 47 Sales Order – Sales Taxes ......................................................................................................................... 48 Sales Order – Totals .................................................................................................................................. 48 Process Manager – Shipper Creation ........................................................................................................ 49 Shipper – Totals ........................................................................................................................................ 49 Process Manager – Close Shipper............................................................................................................. 50 Sales Journal – Create AR Invoice Batch in Error ................................................................................... 50 Invoice and Memo – Confirm and Release Invoice Processed in Error ................................................... 51 Shipper – Credit Memo to Reverse Inventory Item Invoiced in Error ..................................................... 52 Shipper – Credit Memo Sales Tax Reversals ........................................................................................... 53 Shipper – Credit Memo Totals .................................................................................................................. 53 Shipper – Closed Credit Memo with Memo Number ............................................................................... 54 Sales Journal – Create AR Credit Memo Batch........................................................................................ 55 Invoice and Memo – Confirm, Correct, and Release Credit Memo Batch ............................................... 56 Payment Application – Error Invoice Retrieval........................................................................................ 57 Unapplied Payment/Memo List – PV to Select OM Credit Memo .......................................................... 58 Payment Application – Credit Memo Applied to Error Invoice and Released......................................... 59 Customer Activity – Credit Memo Application Confirmation ................................................................. 59 -3- Introduction This white paper describes the primary Solomon IV Order Management and Accounts Receivable Integration functionality found in Version 4.2. This document begins with an explanation of how integration works between OM and AR and concludes with detailed examples of key Business Process Flows (BPF) that are common to most organizations. Overview of the Key OM/AR Integration Business Process Flows The following subsections describe the key BPF found in the OM/AR Integration. The overview presented here serves as a foundation for understanding how the integration works between the two modules, the details of which are explained in Section I. Detailed examples of these flows are presented in Section II. Standard Sales Orders This is the primary BPF in OM/AR Integration. This BPF normally begins when a Standard Sales Order is processed in OM and ends when a Payment is applied to the order’s invoiced amounts in AR. The flow is characterized by the following activities: 1. Standard Sales Order Setup and Release A Standard Sales Order placed by a customer for goods and/or services on account is normally recorded in OM using the Sales Orders screen (40.100.00). When the order is released the OM Process Manager (40.400.00) automatically creates Shippers by warehouse site according to the inventory requirements specified on the order. Although this is the most common starting point for an OM sale this step can be bypassed, starting directly with Shipper creation. 2. Standard Shipper Creation and Confirmation Shippers are created mainly for inventory picking and packing by site to fill customer orders. Standard Shippers are created automatically by Process Manager based on released Sales Orders or manually using the OM Shippers screen (40.110.00). When shipment is confirmed using 40.110.00 for a Standard Shipper, Process Manager closes the Shipper and assigns an Invoice Number to it. At this point sales revenue can be recognized. Note: If quantities shipped were less than quantities ordered Process Manager would create new open Shippers to account for the differentials. 3. Sales Journal Print Printing an OM Sales Journal (40.690.00) creates a balanced, unreleased batch for AR with one Invoice document for each closed Shipper from step 2. It is important to note that there can be many Invoices in one batch, and that there exists a one-to-one relationship between Shippers and Invoices in the Version 4.2 OM/AR Integration. Associated with each Invoice document are Transaction lines for the inventory items sold and all miscellaneous charges, taxes, trade discounts, premium freight, and shipping and handling charges reflected on the Shipper. Sales, Discount, Freight, and Miscellaneous Charges accounts and subaccounts assigned to AR transaction lines by the Sales Journal are determined by Account edit masks for the Order Types assigned to Shippers. -4- When account/subaccount validation is in effect and a transaction line fails validation, the Invoicing Error account and subaccount defined in Sales Order Setup (40.950.00) is assigned to the transaction line and the line is displayed in the last section of the Sales Journal report. Error transactions created by the Sales Journal cannot be corrected in OM. Instead, they must be reviewed and corrected downstream in AR. 4. Invoice Confirmation and Release The AR batch created by the Sales Journal can be confirmed using the AR Invoice and Memo screen (08.010.00). If the account or subaccount is incorrect, for example, it can be corrected in 08.010.00 prior to release. Information that is fundamental to OM such as currency amounts, however, cannot be changed in AR. When all the documents in a batch are determined to be financially correct the batch can be released directly from 08.010.00. Alternatively, the batch can be selected and released using the Release AR Batches screen (08.400.00). The release process creates the AR Trade account journal entry, updates customer and tax history balances, and prepares the Invoice documents for Payment application. 5. Payment Application and Release The last step in this BPF involves the application of Payments received from the customer to the OM generated Invoices. Payments can be entered and applied as usual through the AR Payment Application screen (08.030.00). Open Invoice documents created in AR by OM will appear in the 08.030.00 grid just like those entered directly into AR using the Invoice and Memo screen (08.010.00). Upon release, fully settled OM Invoices will be closed and will appear correctly in the Customer Activity screen (08.260.04), i.e., they will be associated with the Payments that settled them. Counter Sales with Payments This is a special BPF in OM/AR Integration. This BPF starts when a Counter Sale Shipper is processed with one or more Payment amounts in OM and ends when its Invoice and Payment batches are released in AR. The flow is characterized by the following activities: 1. Counter Sale Shipper with Payment Creation The Counter Sale Order Type (CS) is unique to Shippers and is the default Order Type for the Shippers screen (40.110.00). Therefore, the CS BPF starts with a Shipper by definition. The 40.110.00 Payments tab is activated for the CS Order Type to permit one or more Payment Types like cash, checks, and credit cards to be entered for the sale. Since a Counter Sale does not require shipment confirmation, Process Manager (40.400.00) immediately closes the Shipper, assigns an Invoice Number to it, and prints a physical Invoice. Although the transaction may be complete since the Payment will usually settle the Invoice, the financial entries must still be posted through AR. -5- 2. Sales Journal Print Printing the Sales Journal (40.690.00) for a CS Shipper with Payment will create two balanced, unreleased batches for AR: one for the Invoice document and one for the Payment document(s). Payments will be assigned the default Cash account and subaccount defined in AR Setup (08.950.00). Moreover, the Sales Journal process creates the batches in a posture where Payments are already applied (linked) to the Invoices they settle and should normally require only release processing in AR. 3. Invoice Confirmation and Release The CS Invoice batch must be confirmed and released using the Invoice and Memo screen (08.010.00) as for any other OM generated Invoice document. 4. Payment Confirmation and Release The CS Payment batch will not be exposed on the Sales Journal report but will be numbered one greater than its apply-to Invoice batch number. The CS Payment batch can be pulled into the Payment Application screen (08.030.00) together with the customer’s open CS Invoice document. The document balances will reflect the application already effected by the Sales Journal process. Upon release, the fully settled CS Invoice will be closed and will appear correctly in the Customer Activity screen (08.260.04), i.e., it will be associated with the Payment(s) that settled it. Sales Order Adjustments This kind of BPF provides Sales Order Adjustment capability in OM/AR Integration. This BPF may begin with a Sales Order processed in error by OM and end with a Sales Order Adjustment applied in AR to correct the customer account balance. The flow is characterized by the following activities: 1. Standard Sales Order Setup and Release This step is the same as the one for the Standard Sales Order BPF except that it could be the point at which incorrect information is recorded for a sale. For example, the wrong inventory item or price may be specified on the Line Items tab of 40.100.00. Such errors will perpetuate themselves through to AR and must be corrected using a Sales Order Adjustment. 2. Standard Shipper Creation and Confirmation This step is the same as the one for the Standard Sales Order BPF. 3. Sales Journal Print This step is the same as the one for the Standard Sales Order BPF. 4. Invoice Confirmation and Release This step is the same as the one for the Standard Sales Order BPF. -6- 5. Adjustment Shipper Creation The adjusting entry that is required should be effected directly from a Shipper using a Credit Memo (CM) Order Type to completely reverse the original entry created in error. Credit Memos are entered in OM with negative quantities to effect reversal transactions. 6. Sales Journal Print When the Sales Journal (40.690.00) is executed it will create a batch of reversing entries. In other words, what was debited will be credited and vice versa. A Shipper of Order Type CM will create a Credit Memo document for AR. 7. Adjustment Memo Confirmation and Release The Credit Memo batch created by the Sales Journal should be confirmed and released using the Invoice and Memo screen (08.010.00) as usual. A review of the Account Distribution report (08.630.00) after release will confirm that all journal entries have been properly posted to effect the reversal. 8. Adjustment Memo Application and Release The original Invoice developed in error (steps 1-4) can be settled by applying the Credit Memo to it through the Payment Application screen (08.030.00). A PV on the Number field in the Document frame of 08.030.00 where Type = Credit Memo will identify the OM generated document. The result of CM application is similar to that of a Payment as described in step 5 of the Standard Sales Order BPF. -7- Section I. Understanding How OM/AR Integration Works This section explains the fundamental concepts employed in the OM/AR Integration for Version 4.2. The Role of Order Types in OM/AR Integration At the heart of OM lie Order Types (40.200.00). Order Types govern important aspects of OM/AR Integration as described below. Several Order Types have been predefined in Solomon IV but users may alter them or create new ones as required to satisfy their unique operational requirements. All Order Types discussed below are valid for both Sales Orders and Shippers with the exception of the Counter Sale, which is only valid for Shippers. Standard Sales Order Order Types Standard Sales Order Order Types for purposes of this white paper shall mean those which effect the creation of Invoice documents in AR, i.e., where ARDoc.DocType = IN. The Behavior assigned to an Order Type determines this functionality, not the Order Type itself. This is significant for user-defined Order Types since an incorrect Behavior assignment will yield unexpected results in AR. The Order Types delivered with Solomon IV that will create Invoice documents are:  AO – Advanced Order  INVC – Invoice  RMSH – Replacement Merchandise Shipment  SO – Standard Order  WC – Will-Call Order Counter Sale Order Type The Counter Sale (CS) Order Type will always effect the creation of an Invoice document in AR like a Standard Sales Order. However, this Order Type will also cause one or more Payment documents to be created depending on the number of transaction lines entered on the Payments tab of the Shippers screen (40.110.00). Payments are identified in AR by ARDoc.DocType = PA. Adjustment Order Types Adjustment Order Types for purposes of this white paper shall mean those which effect the creation of Credit Memo or Debit Memo documents in AR, i.e., where ARDoc.DocType = CM for Credit Memos or ARDoc.DocType = DM for Debit Memos. The Behavior assigned to an Order Type determines this functionality, not the Order Type itself. This is significant for user-defined Order Types since an incorrect Behavior assignment will yield unexpected results in AR. The Order Types delivered with Solomon IV that will create Credit Memo documents are:  CM – Credit Memo  REP – Return for Repair  RFC – Return for Credit  RPL – Return for Replacement The Order Type delivered with Solomon IV that will create a Debit Memo document is:  DM – Debit Memo -8- Numbering of Sales Orders, Shippers, and Invoices Order Types control the document numbers assigned to Sales Orders, Shippers, and Invoices. The composition of an OM generated document number is typically an alpha prefix followed by a numeric sequence number incremented by one for each new document. Invoice numbers, for example, can to be up to 10 positions long. Document numbers defined by Order Type are also unique within the Company a user is logged into. For this reason it is important to note that Invoice numbers should be defined so they will not overlap between two companies in the same database. If they do, the reference number links between ARAdjust and ARDoc will yield unexpected results since foreign key relationships do not include Company ID in Version 4.2. Account and Subaccount Definitions All AR transactions created by the Sales Journal (40.690.00) depend on the implicit or explicit definition of accounts and subaccounts for the Order Type associated with a Shipper. Order Type is responsible for the assignment of the following account and subaccount numbers for AR transactions:  Sales  Trade Discounts  Miscellaneous Charges  Freight Order Type also controls the assignment of the account and subaccount for Cost of Goods Sold transactions in Inventory batches, which are also created by the Sales Journal process. The Role of Process Manager in OM/AR Integration Process Manager (40.400.00) is normally running on the server to automatically perform tasks according to the Steps defined for Order Types assigned to Sales Orders and Shippers. With regard to OM/AR Integration, the Process Manager performs the following noteworthy tasks:  Creates Shippers for Released Sales Orders  Creates Additional Shippers for Partially Filled Orders  Assigns Invoice (and Memo) Numbers to Released Shippers  Closes Confirmed Shippers The Role of Sales Orders and Shippers Screens in OM/AR Integration Sales Orders (40.100.00) and Shippers (40.110.00) screens are discussed together in this section since they exhibit virtually the same characteristics for OM/AR Integration. The discussion is organized by the tabs on these screens. Line Items The Line Items tab is used primarily to record Inventory item orders. However, non-inventory items can be set up in the Inventory module to represent charges for services and be recorded as Line Items on this tab. These lines account for most of the sales value of an order. Each line contains a quantity and a price that yields a total, non-discounted sale amount that will be recorded as an AR transaction detail line by the -9- Sales Journal. For example, a Quantity Shipped = 10 at a Unit Price = $500 yields a Total Sale = $5,000. Line items, however, show discounted sales rather than total sales. The Discount Pct for a line item is deducted from the total sale amount to yield an extended amount. For example, a 2% discount on the above transaction would reduce the sale by .02 * $5,000 = $100. Thus, the discounted sale will be equal to $5,000 - $100 = $4,900. An AR transaction detail line will be created for the $100 Trade Discount by the Sales Journal. Every detail line is identified as Taxable or not. This designation is governed by the Inventory item Tax Category. Project ID and Task ID are conditionally required based on the value of the Project Controller Account Category assigned to the customer’s AR Trade account. The PC Account Category is designated in the Chart of Accounts Maintenance screen (01.260.00). When Project ID and Task ID are assigned, they are carried through the entire integration process between OM and AR at the transaction level. Shipping Information The Shipping Information tab has the following impact on OM/AR integration:  Ship-to Address ID identifies the address record to use for Tax IDs.  Freight Terms ID determines how special freight charges will be calculated and applied to the order. Billing Information The Billing Information tab includes the default Payment Terms for the customer. The default terms can be overridden order-by-order. OM evaluates Payment Terms exactly like AR and will assign values for due date, discount due date, and discount amount to documents during the Sales Journal procedure. Other Information The Other Information tab displays the Tax IDs that default in from the Ship-to Address ID designated on the Shipping Information tab. They cannot be overridden through 40.100.00 or 40.110.00. The Invoice Number field on the Sales Order screen is freeform and informational only and has no direct bearing on OM/AR Integration. On the Shipper screen, however, Invoice Number is the direct point of reference back from an AR document. Period to Post is not defaulted on the Shipper screen but can be explicitly stated when more than one period is open during Shipper development. If the period to post is not passed correctly to AR, it can be corrected prior to batch release using the Invoice and Memo screen (08.010.00). Misc Charges The Misc Charges tab is used to record Miscellaneous Charges. Misc Charge IDs are maintained in a table where they can be identified as - 10 - taxable or non-taxable. The amount recorded for a Misc Charge becomes an AR Sale transaction when the Sales Journal is printed. Miscellaneous Charges are not discounted at either the Line Item or Whole Order level. Sales Tax The Sales Tax tab reflects the tax amounts calculated for the charges on the order after taking into account all Line Item and Whole Order Discounts. If the tax rate were .25%, then the tax on the Sale used in the example thus far would be equal to 0.0025 * ($5,000 - $100) = $12.25. The Sales Journal creates one tax line in AR for each tax line on the Sales Tax tab. Payments The Payments tab is unique to Shippers with Order Type = CS, Counter Sale. The grid will accept one or more payment amounts by Payment Type such as Cash, Check, Credit Card, etc. Each line becomes a separate Payment document in AR when the Sales Journal process a Counter Sale Batch. OM insures that overpayments are not recorded on CS Shippers. Totals The Totals tab provides direct entry of a charge for Premium Freight, which is taxed the same as Inventory Line Items and to which the Whole Order Discount applies. The Whole Order Discount Percent applies to Inventory Line Items after they have been reduced by their respective Line Discounts. However, the Whole Order Discount does not apply to Miscellaneous Charges. Thus, a Whole Order Discount equal to 1% would impact the example used thus far as follows:  An additional Trade Discount would be calculated for the Inventory Item equal to 0.01 * $4,900 = $49. This amount would be posted as a separate Trade Discount transaction in AR by the Sales Journal.  The amount of the Tax line that will be posted to AR will be changed from $12.25 to 0.0025 * ($4,900 - $49) = $12.13. The Role of the Sales Journal in OM/AR Integration The Sales Journal (40.690.00) is the only OM process that creates AR batches, documents, and transactions. An important principle in the OM/AR Integration is that batches are created using Shippers only and never directly from Sales Orders. The relationship between a Shipper and an Invoice is one-to-one in Version 4.2. Moreover, the interface between OM and AR is strictly one-way from OM to AR. AR does not provide transactional information to OM at this time. The following subsections describe the important features of the Sales Journal process with respect to OM/AR Integration. AR Batch Generation The Sales Journal normally creates one AR batch for all Shippers released or submitted since the last running of the Sales Journal. Each batch will contain one or more Invoice, Credit Memo, and Debit Memo documents based on Shipper Order Type Behaviors (refer to the discussion above for more information on Order Types and their Behaviors). OM batches can be readily identified where the field Batch.JrnlType = OM. - 11 - The AR Batch Number assigned by the Sales Journal is displayed on the Sales Journal report for cross-reference in AR. This is very useful since the Invoice and Memo screen (08.010.00) provides a PV list of available batch numbers. Invoice, Credit Memo, and Debit Memo batch records contain the value 08010 in the field Batch.EditScrnNbr. Additional AR batches will be created for Counter Sale Shippers that include Payments. Separate Invoice and Payment batches will be created by the Sales Journal for CS Shippers. The CS Invoice batch will be identified on the Sales Journal report but the CS Payment batch will not. This is not a problem since the number assigned to the Payment batch will be one greater than the number assigned to its corresponding Invoice batch. The CS Payment batch can easily be identified in AR, for example, through the Release AR Batches screen (08.400.00). For Payment Application purposes, Payment batches contain the value 08030 in the field Batch.EditScrnNbr. AR Document Creation The AR documents created in an AR batch by the Sales Journal contain the same information as they would if they were created manually in AR using the Invoice and Memo screen (08.010.00). The reference number, i.e., the Invoice Number in the case of an Invoice document, establishes the foreign key relationship between an AR document and an OM Shipper. Specifically, where SOShipHeader.InvcNbr = ARDoc.RefNbr. In the case of Payments, each Payment line item drives the creation of a separate AR document identified by a reference number equal to its six-digit batch number followed by a four-digit sequence number starting with 0000. AR Transaction Creation Transaction detail lines are created one-for-one between the Inventory and Miscellaneous Charge lines on a Shipper. Credit entries are standard for Invoice transactions with the exception of Trade Discounts, which are recorded as debits. Trade Discount transactions are derived from discounted Inventory line items and from Whole Order Discounts. Tax lines are created in AR to match those on the Shipper Sales Tax tab. Tax ID is stored in the ARTran.S4Future11 field for AR Release processing awareness. Tax ID is not stored in the usual way since OM performs all tax calculations for net sale amounts. Freight charges are passed to AR as separate lines. Transaction amounts are either derived from OM Freight Terms on the order or from explicitly stated Premium Freight charges. No explicit foreign key relationships have been established between OM and AR transaction level records. Account and Subaccount Validation The accounts and subaccounts assigned to transactions by the Sales Journal process are functions of the Order Type assigned to the Shipper. When account/subaccount validation is required by the implementation the Sales Journal performs standard Solomon IV validation logic. If any part - 12 - of the validation fails for a transaction, both the account and the subaccount are assigned the values of the Invoicing error account and subaccount defined in SO Setup (40.950.00). Problem transactions are exposed in the last section of the Sales Journal report for correction downstream using the AR Invoice and Memo screen (08.010.00). The Role of the Invoice and Memo Screen in OM/AR Integration The Invoice and Memo screen (08.010.00) is the primary receiving point in AR for OM generated batches. The AR Batch number presented on the Sales Journal report (40.690.00) will appear in the Batch List returned by the PV on the 08.010.00 Batch Number field. Once a batch is pulled into the Invoice and Memo screen its associated documents can be scrolled through and reviewed for accuracy. In general, everything should be correct from OM. Nevertheless, some documents may have been released to AR with incorrect data. In some cases the data will be repairable directly through 08.010.00 while in others a Sales Order Adjustment will have to be processed. The Invoice and Memo screen has been tightened down for OM batches to preclude updates of certain key pieces of information that need to remain synchronized with OM. The special non-updateable characteristics of OM generated records in this screen are summarized below:  Batch Frame  Control – disabled  Document Frame  Customer ID – disabled  Date – disabled  Amount – disabled  Invoice/Memo Tab  Project – disabled  New field Sales Ord Nbr is non-updateable  Account Override Tab  Company ID – disabled  Detail Grid/Form  Company ID – disabled  Project ID – disabled  Task ID – disabled  Quantity – disabled  Unit Desc – disabled  Unit Price – disabled  Amount – disabled  Ext Ref Nbr – disabled  Tax Category – disabled  Tax ID – disabled  Tax Button – disabled  Toolbar  Insert – disabled  Delete – disabled - 13 - If information in any of the disabled fields presented above requires correction, then a Sales Order Adjustment must be issued from OM to AR. However, if any of the following data requires correction it can be accomplished directly through the Invoice and Memo screen prior to release:  Batch Frame  Period to Post  Document Frame  Invoice/Memo Tab  Description  Terms  Salesperson ID  Disc Date  Due Date  Discount  Detail Grid/Form  Account  Subaccount  Description The Role of Payment Application in OM/AR Integration The Payment Application screen (08.030.00) is the primary screen through which OM generated Invoices and Debit Memos will be settled and where OM generated Credit Memos and Counter Sale Payments will be applied. Open OM Invoices and Debit Memos will be imported into this screen just like non-OM generated documents for settlement by Payments received through normal channels and by Credit Memos. In this regard, Credit Memos can originate from OM or AR for application to OM documents. A special case exists for OM Counter Sales with Payments. The PV on Batch Number can be used to pull an unreleased CS Payment batch into 08.030.00. The open CS Invoice will load into the grid for the customer provided the CS Invoice batch has been released through 08.010.00 or 08.400.00. The OM Sales Journal process will have effected application of the payment amounts to the Invoice so that only the release is necessary to complete the BPF. Open Item Billing vs. Balance Forward Automatic Payment Application Payment application for OM customers will normally use the Open Item Billing method. OIB payment application explicitly matches Payments and Credit Memos to Invoices and Debit Memos to settle them. This is the kind of activity performed through the Payment Application screen (08.030.00). Occasionally, a customer will use the Balance Forward method of payment application. Balance Forward payment application is an automatic method that applies as much of a payment as possible to the oldest invoice first and continues on to the second oldest invoice if cash remains unapplied after the first invoice is settled using a FIFO type algorithm. This method works for OM generated documents but will not attempt to settle Counter Sales, neither invoices nor payments. - 14 - The Role of the AR Release Process in OM/AR Integration Release AR Batches (08.400.00) can be used to release any OM generated Invoice, Credit Memo, or Debit Memo batch. However, Counter Sale Payments should be released using the Payment Application screen (08.030.00) to insure proper alignment with Invoices being settled during release. The AR Release process performs the following functions on OM generated documents:  Creates journal entries for Accounts Receivable and Cash.  Updates customer balances.  Updates tax history.  Closes open documents when settled by offsetting entries. The following subsections specify the state of possible journal entries for OM related AR activity at the conclusion of standard release processes. Journal transactions are eventually posted to the General Ledger using the Post Transactions procedure (01.520.00). Journal Entries for Open Invoices and Debit Memos DR – AR Trade [Asset] DR – Trade Discounts [Income] CR – Sales Tax Payable [Liability] CR – Sales [Income] CR – Freight [Income] CR – Miscellaneous Income [Income] Journal Entries for Applied Payments DR – Cash [Asset] DR – Cash Discounts [Expense] CR – AR Trade [Asset] Journal Entries for Applied Credit Memos DR – Sales Tax Payable [Liability] DR – Sales [Income] DR – Freight [Income] DR – Miscellaneous Income [Income] CR – AR Trade [Asset] CR – Trade Discounts [Income] - 15 - Section II. Examples of the Key OM/AR Integration Business Process Flows Standard Sales Order In this Business Process Flow example, a Standard Sales Order is created in OM and settled by a Payment received and applied in AR. This illustration is very comprehensive. It includes screen shots and comments that describe primary OM/AR Integration transaction flow. Moreover, it explains certain setup requirements that are apparent in the examples which must be in place to insure a successful implementation of OM and AR. Sales Order – Taxable Inventory Line Items with Trade Discounts Two inventory items have been ordered. Both qualify for a 1.5% Trade Discount and both are taxable. Integration notes:  Order Type SO will create an Invoice.  Discount Pct defaults from the Customer Maintenance (08.260.00) Customer Information tab.  These two transactions will result in at least four journal entries:  $5,000 Sale = 10 * $500  $2,400 Sale = 5 * $480  $75 Trade Discount = 0.015 * $5,000  $36 Trade Discount = 0.015 * $2,400 - 16 - Sales Order – Shipping Information Integration notes:  Tax IDs will be assigned from the customer’s “DEFAULT” Ship-to Address.  The default Ship-to Address for a customer is designated on the Customer Maintenance (08.260.00) Order Management tab.  Customer ship-to information is maintained using the Shipping Address option (08.262.00).  Ship Via ID and Freight Terms ID default from the Shipping Address Order Management subscreen (08.262.01). - 17 - Sales Order – Billing Information with Cash Discount Terms Integration notes:  Billing address information defaults from the Customer Maintenance (08.260.00) Address tab.  Payment Terms code defaults from the Customer Maintenance (08.260.00) Customer Information tab.  The 2% cash discount allowed by the Payment Terms will be calculated for the AR Invoice document by OM and will be equal to $148 = 0.02 * ($5,000 + $2,400). - 18 - Sales Order – Other Information Order Release Integration notes:  The Order Released checkbox signals Process Manager to create a Shipper.  Tax IDs cannot be overridden in 40.100.00 or 40.110.00. - 19 - Sales Order – Non-taxable Miscellaneous Charge One miscellaneous service charge is on the order. It is not taxable and will not qualify for a trade discount. Integration notes:  This line item will result in a single journal entry for $50 to the Miscellaneous Income account. - 20 - Sales Order – Sales Taxes Integration notes:  The Taxable Merchandise amount takes into account both a 1.5% line item discount on both inventory items and a 1% Whole Order Discount.  $7,216.11 = ($5,000.00 – $75.00 – $49.25) + ($2,400.00 – $36.00 – $23.64)  The Taxable Freight amount takes into account a 1% Whole Order Discount.  $198.00 = $200.00 – $2.00  Chicago Taxes  $18.04 on Merchandise = 0.0025 * $7,216.11  $0.50 on Freight = 0.0025 * $198.00  CTA Taxes  $54.12 on Merchandise = 0.0075 * $7,216.11  $1.49 on Freight = 0.0075 * $198.00 - 21 - Sales Order – Totals with Premium Freight and Whole Order Discount Process Manager – Shipper Creation Process Manager creates a Shipper for the released Sales Order. - 22 - Shipper List –PV to Select Shipper Created by Process Manager Integration notes for the Shipper:  Tabs carry virtually the same information as those for the Sales Order.  Shippers are created by site.  Quantities shipped can be different from quantities order.  Period to post can be overridden on the Other Information tab.  The Payments tab is disabled for the SO Order Type. - 23 - Shipper – Inventory Item Shipments Shipper – Shipping information - 24 - Shipper – Billing Information Shipper – Other Information - 25 - Shipper – Miscellaneous Charge Shipper – Sales Taxes - 26 - Shipper – Payments Disabled Shipper – Totals - 27 - Release or Confirm Shipper -- Confirm Shipping This action will invoke Process Manager to close the Shipper. Process Manager – Close Shipper Process Manager automatically closes the Shipper and assigns an Invoice Number. - 28 - Shipper – Closed Shipper with Invoice Number - 29 - Sales Journal – Create AR Invoice Batch Invoice batch #000020 has been created for AR by the Sales Journal. - 30 - Batch List – Invoice and Memo PV to Select the AR Invoice Batch - 31 - Invoice and Memo – Invoice Confirmation - 32 - Release AR Batch – Invoice Batch Release Journal entries after release: DR 1110 AR Trade 7,540.26 DR 3050 Trade Discount 183.89 CR 2241 Sales Tax Payable CR 3030 Sales CR 3070 Freight Income CR 3080 Miscellaneous Income ----------7,724.15 74.15 7,400.00 200.00 50.00 ----------7,724.15 - 33 - Payment Application – Pay Invoice in Full Integration notes:  The Payment was applied to the OM Invoice in full and took advantage of the Cash Discount allowed by the Payment Terms = $148.  Journal entries after release: DR 1030 Cash DR 4040 Discounts Taken CR 1110 AR Trade 7,392.26 148.00 ----------7,540.26 7,540.26 ----------7,540.26 - 34 - Customer Activity – Confirm Payment Application Integration notes:  All documents are closed.  Application relationships are correctly stated. - 35 - Counter Sale with Payments In this Business Process Flow example, a Counter Sale Shipper is developed to include a full Payment received and applied to the Shipper in OM. The Payment is applied in two unequal parts to fully illustrate the Payment Application process in the OM/AR Integration. CS Shipper – Taxable Inventory Line Item without Trade Discount Integration notes for the Shipper:  Only one taxable inventory item is sold over the counter in the example.  Payment is made in full but in two parts:  $400.00 is paid by a VISA credit card.  $84.80 is paid by check.  The Invoice Number is assigned immediately when the CS Shipper is saved and a hardcopy invoice prints automatically. - 36 - CS Shipper – Shipping Information CS Shipper – Billing Information - 37 - CS Shipper – Other Information CS Shipper – No Miscellaneous Charges - 38 - CS Shipper – Sales Taxes CS Shipper – Payments by Credit Card and Check - 39 - CS Shipper – Totals Process Manager – Close CS Shipper - 40 - Sales Journal – Create CS Invoice and Payment Batches Integration notes:  The Sales Journal process created two batches for AR:  CS Invoice batch #000022 which is shown on the Sales Journal report.  CS Payment batch #000023 which is not shown on the Sales Journal report. - 41 - Batch List – Invoice and Memo PV to Select the CS Invoice Batch Invoice and Memo – Invoice Confirmation - 42 - Release AR Batches – Select and Release CS Invoice Batch Journal entries following release: DR 1110 AR Trade CR 2241 Sales Tax Payable CR 3030 Sales 484.80 4.80 480.00 --------484.80 --------484.80 - 43 - Batch Number List – Payment Application PV to Select CS Payment Batch - 44 - Payment Application – Credit Card Payment Applied Payment Application – Check Payment Applied - 45 - Payment Application – Batch Release Journal entries after release: DR 1030 Cash CR 1110 AR Trade 484.80 484.80 Customer Activity – Confirm CS Payment Application - 46 - Sales Order Adjustment In this Business Process Flow example, a Standard Sales Order is created and released to AR in error by OM. The entire Invoice document is subsequently reversed using an OM Credit Memo, which settles the original Invoice through the AR Payment Application screen. Sales Order – Taxable Inventory Line Item without Trade Discount - 47 - Sales Order – Sales Taxes Sales Order – Totals - 48 - Process Manager – Shipper Creation Shipper – Totals - 49 - Process Manager – Close Shipper Sales Journal – Create AR Invoice Batch in Error Integration note:  AR Batch #000024 created in error by the Sales Journal. - 50 - Invoice and Memo – Confirm and Release Invoice Processed in Error Journal entries after release: DR 1110 AR Trade CR 2241 Sales Tax Payable CR 3030 Sales 50,500.00 500.00 50,000.00 -----------50,500.00 -----------50,500.00 - 51 - Shipper – Credit Memo to Reverse Inventory Item Invoiced in Error Integration notes:  Credit memos must be entered with negative quantities.  The entire sale is to be reversed, including taxes. - 52 - Shipper – Credit Memo Sales Tax Reversals Shipper – Credit Memo Totals - 53 - Shipper – Closed Credit Memo with Memo Number - 54 - Sales Journal – Create AR Credit Memo Batch The Sales Journal created AR Credit Memo batch #000025. - 55 - Invoice and Memo – Confirm, Correct, and Release Credit Memo Batch Integration notes:  The Sales subaccount was incorrectly derived by the OM Credit Memo and had to be changed to effect the proper GL reversing entry. - 56 -  Journal entries after release: DR 2241 Sales Tax Payable DR 3030 Sales CR 1110 AR Trade 500.00 50,000.00 -----------50,500.00 50,500.00 -----------50,500.00 Payment Application – Error Invoice Retrieval - 57 - Unapplied Payment/Memo List – PV to Select OM Credit Memo Integration note:  The PV is on the Number field in the Document frame of the Payment Application screen (08.030.00). - 58 - Payment Application – Credit Memo Applied to Error Invoice and Released Customer Activity – Credit Memo Application Confirmation - 59 -