The three-way match consists of the process of verifying the invoice quantity versus the goods receipts quantity and the invoice price versus the purchase order price. If the tolerances established in the system are not being respected, then the invoice can either be posted but blocked for payments or not posted at all. Evaluated receipt settlement (ERS) is an alternate way of processing vendor invoices. In this method, instead of a vendor submitting the invoices for payment, the company on its own settles the vendor liabilities and presents a payment statement. This method of payment takes the data based on purchase orders and delivered quantities to arrive at the vendor payment amount. The ERS process yields the best results when the pricing and goods receipts remain consistent with the purchase orders created. ERS is particularly suitable for creating settlement documents at regular intervals and offers the following main advantages:

• Purchasing transactions are closed more quickly
• Manpower to process invoices is reduced
• Communication errors are avoided
• Invoice variances are eliminated
• No price and quantity variances occur in invoice verification
• Payment to vendors is timely

For the process that I describe, the business activities managed in the system involve the following master data prerequisites:

• Enable a vendor for ERS functionalities
• Maintain a purchasing information (info) record
• Create price condition records

The process that I describe also involves the following transactional data processes:

• Create a purchase requisition
• Create a purchase order
• Post the goods receipt
• Display the ERS postings
• Perform the actual ERS postings
• Verify the invoice documents created during the ERS settlements
• Print the ERS documents

ERS Business Flow

The ERS business flow in the SAP system is diagrammed in Figure 1.

Master Data Prerequisites

In this section, I introduce the main master data objects that are relevant and necessary to the purchasing department to post purchasing transactions for ERS configurable products.

Enable a Vendor for ERS Functionalities

In this step, the master data department is enabling the vendor for ERS functionalities. In order to do that, you can either use transaction code MK02 or follow menu path Logistics > Materials Management > Purchasing > Master data > Vendor > Purchasing > Change (current). In the initial screen (not shown), enter an account number in the Vendor field and enter a value in the Purchasing Org. (purchasing organization) field. After you press the Enter key, the system displays the Purchasing data screen shown in Figure 2. In the Control data section, select the GR-Based Inv.Verif., AutoEvalGRSetmt Del, and AutoEvalGRSetmt Ret check boxes. Click the save icon to save your data.

Maintain a Purchasing Info Record

The purchasing department should be responsible for creating an info record and ensuring that the document has the right logistics and financial information, such as tax code, price, terms, and conditions. To create the info record and assign variant conditions, use transaction code ME11 or follow menu path Logistics >Materials Management > Purchasing > Master Data > Info Record > Create. In the initial screen, keep the default value for the value in the Info Record field after entering data in the Vendor, Material, Purchasing Org., and Plant fields. In the Purchasing Organization Data 1 view of the document, enter VA (the tax code for purchasing transactions valid in the vendor’s country, in this case DE for Germany) in the Tax Code field, and select the GR-Bsd-IV indicator. Leave the No ERS box blank and enter data in the fields for Net Price. Note that for the materials, you do not need to set any special parameters for the ERS processes. If you need to exclude a material from the ERS processes, you could select the No ERS indicator. These details are shown in Figure 3.

Create Price Condition Records

To create the price condition records for the vendor’s planned delivery costs, the purchasing department can use either transaction code MEK1 or follow menu path Logistics > Materials Management > Purchasing > Master Data > Conditions > Other > Create. In such cases, planned delivery costs are agreed upon with the vendor, a carrier, or a customs office before the purchase order is created. They can be differentiated by origin of costs (freight charges and custom charges) and calculation of costs:

• • Fixed amount, irrespective of delivered quantity
  • Quantity-dependent amount
  • Percentage of value of the goods

To view the condition record details, execute transaction code MEK1. This action displays the screen shown in Figure 4 in which you enter the appropriate freight condition type, (e.g., Z01C) and then click the Key Combination button. In the pop-up screen that appears, select the key combination to trigger the determination of this condition in the purchase order price conditions line items (e.g., Vendor/Plant/Material). Click the enter icon (the green check mark) to go to the screen shown in Figure 5. In Figure 5, enter the material code, amount, and other basic data for the packaging characteristic. Click the save icon to save your entries.

Transactional Processes

In the following steps, you can test the complete purchasing cycle for your configurable products and verify the correlations between the relevant master data and preceding documents.

Create a Purchase Requisition

To create a purchase requisition for a configurable product, use transaction code ME51N or follow menu path Logistics > Materials Management > Purchasing > Purchase Requisition > Create > Vendor/Supplying Plant Known. In the initial screen that appears, populate the Material, Quantity, Plant, Stor. Loc. (storage location), and PGr (purchasing group) fields as shown in Figure 6 and click the save icon. In the Source of Supply tab, the system searches for the appropriate source of suppliers. The system then displays the purchase requisition document number, as shown in Figure 6.

Create a Purchase Order

In this step, the purchasing organization converts the purchase requisition into a purchase order. To create a purchase order for your ERS settlements, use transaction code ME21N or follow menu path Logistics > Materials Management > Purchasing > Purchase Order > Create > Vendor/Supplying Plant Known. In the screen, that appears (Figure 7), select the purchase requisition created in the previous step from document overview (e.g., 10013903) and then drag and drop it to the shopping basket. All main logistics data from the purchasing requisition and the price conditions are taken from the condition’s variants defined in the info record based on the characteristic’s value defined in the purchasing requisition. Verify that the following information is set up in Figure 7:

• The vendor relevant for the ERS process is entered in the Vendor field
• The Inv. Receipt, GR-Bsd-IV, and ERS check boxes are selected
• A code is entered in the Tax Code field

Now click the Conditions tab and view the price condition details (Figure 8). In Figure 8, verify that the condition type for planned freight costs has been defaulted in the Conditions tab and then click the save icon to save the document. The system then displays the purchase order document number, as shown in Figure 8.

Post the Goods Receipt

In this step, the warehouse organization posts a goods receipt of products. The goods receipt can be done with reference to the delivery schedules or the purchase order by using transaction code MIGO or following menu path Logistics > Materials Management > Inventory Management > Goods Movement > Goods Movement.

In the screen that appears (Figure 9), enter the purchase order that you created in the previous step and make sure to specify the Delivery Note details that are relevant for the ERS settlement run. The Delivery Note field should be filled in order for the ERS settlement run program to run successfully. Click the Check button to check the consistency of the data and then click the Post button to post the goods receipt. Click the save icon after you post the goods receipt. The system then displays an information message reporting the goods receipt material document number as shown in Figure 9.

Display the ERS Postings

In this step, the accounts payable organization runs the ERS program in simulation mode in order to verify that no errors have occurred during the process. This can be done either by using transaction code MRRL (Evaluated Receipt Settlement) or following menu path Logistics > Materials Management > Logistics Invoice Verification > Automatic Settlement > Evaluated Receipt Settlement (ERS). In the Document Selection section of the initial screen that appears, populate the Company Code, Plant, Vendor, and Purchasing Document fields as shown in Figure 10. In the Processing Options section, enter a value in the Doc. selection (document selection) field and select the Test Run and Settle Goods Items + Planned Delivery Costs check boxes. Click the execute icon  to run the report.

In test mode, the system can issue a list of goods receipts that can be settled and goods receipts that cannot be settled. The system makes no postings; it only lists the purchase orders and goods receipt documents selected. To see whether a goods receipt can be settled, check the status of the field Pstable (Figure 11). If an X appears in the Pstable field, the goods receipt can be settled. Note that in my example, you can also settle the planned delivery costs because an X appears in the Ind.: Upd. Del.Cst field  as shown in Figure 11.

If you do not post an invoice for a certain document, you may decide to exclude it from the ERS run by clicking the save icon. If you decide to exclude an invoice from the ERS, during the next ERS program run, this document is not selected as ERS relevant. Instead, the system deletes the entry for this line item from table EKRS, which the ERS transaction (transaction code MRRL) uses to generate its list of ERS invoices to be processed. In this case, you still can post an invoice using transaction code MIRO, but just make sure that the message M8225 is set to warning. To do this, execute transaction code OMRM and populate the fields as shown in Figure 12.  

Perform the Actual ERS Postings

  In this step, the accounts payable organization runs the ERS program in posting mode to settle the ERS vendor’s documents. To complete this step, execute transaction code MRRL or follow menu path Logistics > Materials Management > Logistics Invoice Verification > Automatic Settlement > Evaluated Receipt Settlement (ERS). In the screen that apppears (Figure 13), enter the same details as shown in Figure 10, but this time, make sure that the Test Run check box is not selected. Click the execute icon to run the report. The system determines the invoice amount for the relevant ordering transaction from the prices entered in the purchase order, the terms of payment, the tax information, and the delivery quantity entered in the goods receipt. ERS also generates credit memos: If an invoice has already been posted for a goods receipt and a return delivery has since taken place, the system generates a credit memo for the quantity returned. In my example, the system has generated the logistics invoice verification and financial documents, for both products and freights, as shown in Figure 14.

Verify the Invoice Documents Created During the ERS Settlements

In this step, the accounts payable organization displays the logistics invoice verification created in the previous step, either by using transaction code MIR4 or following menu path Logistics > Materials Management > Logistics Invoice Verification > Further Processing > Display Invoice Document. In the initial screen (not shown), enter the invoice document number and fiscal year. Press Enter. The system then displays the details shown in Figure 15. Note that two items have been created to invoice products and freights, respectively. To display the FI document associated with the logistic invoice document, click the Follow-On Documents… button shown in Figure 15. Execute transaction code FB03 or follow menu path Accounting > Financial Accounting > General Ledger > Document > Document > Display. In the screen that appears, enter the FI document number in the Document Number field and press Enter. The system then displays the details shown in Figure 16. In this step, the financial department should validate the accounts affected by the ERS postings.  

Print the ERS Documents

  The accounts payable department prints the ERS invoice in case there is a requirement to resend the ERS output message to the vendor. To complete this step, execute transaction code MR90 or follow menu path Logistics > Materials Management > Logistics Invoice Verification > Further Processing > Output Messages. This path displays the screen shown in Figure 17 in which you populate the fields as shown. After you have populated all the fields, click the execute icon to run the report. After you run the report, the system lists the documents that can be printed (Figure 18). Select the line item you need to process and click the preview icon (circled in Figure 18) to check the details of the message. The system now shows the layout of the invoice (Figure 19). If you want to process the output, click the execute icon shown in Figure 18.

Customizing

In this section I explain the main customizing activities to be performed to implement the ERS process.

Automatic Settlement of Planned Delivery Costs

In this customizing step, you enable the settlement of the planned delivery costs using the ERS program. In order to do that, the automatic delivery cost settlement must be activated for the freight vendor in Customizing for Logistics Invoice Verification. Follow IMG menu path SPRO > Materials Management > Logistics Invoice Verification > Evaluated Receipt Settlement (ERS) > Specify Automatic Settlement of Planned Delivery Costs. In the screen that appears, populate the fields for each of your vendors that are ERS relevant in your company code and purchasing organization as shown in Figure 20. Note that the check box under the Activate Autom... (activate automatic delivery costs settlement) column controls whether to include or exclude planned delivery costs from automatic settlement during the ERS settlement run via transaction code MRRL.  

Define a Number Range for the ERS Logistic Invoice Documents

  In this IMG activity, you define the number range for the ERS logistic invoice documents. To complete this step, follow IMG menu path SPRO > Materials Management > Logistics Invoice Verification > Incoming Invoice > Number Assignment > Maintain Number Assignment for Logistics Documents > Maintain Number Range Intervals for Invoice Documents. Alternatively, you can use the transaction code OMRJ. In the screen that appears (Figure 21), enter a two-digit number(e.g., 01) and specify the fiscal year until the number range is valid. Enter values in the fields under the From number and To number columns and click the save icon.

Define a Number Range for the ERS Financial Invoice Documents

In this IMG activity, you define the number range for the ERS financial invoice documents and assign it to your company code. To complete this step, follow IMG menu path SPRO > Financial Accounting > Financial Accounting Global Settings > Document > Document Number Ranges > Define Document Number Ranges. Alternatively, you can use the transaction code FBN1, in the screen not shown in this article, enter your company code and click the Change intervals button. The system then displays the screen shown in the Figure 22. In Figure 22, enter a two-digit number, (e.g., 01) and specify the fiscal year until the number range is valid. Enter values in the fields under the From number and To number columns and click the save icon.

Define Document Type for ERS Invoices

To create a new document type for ERS, I recommend that you not use the same document type for regular invoicing. Therefore, create a document type (ZE) and assign it for ERS. Define the new document type, assign it to the number range, reverse the document type, and select the Reference number check box so that it is required during document entry.  To complete this step, execute IMG transaction code OBA7 or follow menu path SPRO > Financial Accounting > Financial Accounting Global Settings > Document > Document Header > Define Document Types (Figure 23). Assign a New ERS Document Type for the ERS Program You have to assign the new document type for ERS to the ERS program either by using IMG transaction code OMR4 or by following menu path Materials Management > Logistics Invoice Verification > Incoming Invoice > Number Assignment > Maintain Number Assignments for Accounting Documents (Figure 24). Enter the Document Type ZE as the Defaulted Value, as shown in Figure 24 and click the save icon.

Output Condition

In the case of ERS, you must send the vendor a statement of the invoices created so that the vendor can compare the payments made with the purchase orders and deliveries. When you reduce an invoice, you must inform the vendor so that differences between the payments and the receivables can be accounted for. You configure message determination for Logistics Invoice Verification in Customizing under Message Determination. In the SAP system, the standard output type to print ERS invoices is ERS, but usually in a production environment, a custom object is created with reference to it to satisfy a company’s requirements. For example, you can copy the Output type ERS by selecting Output type ERS and clicking the copy icon . In the screen that appears, create a new Output type by entering ZERS in the Output Type field and for each message transmission medium (e.g., print output, fax, and external send) associate the new print program, entering the new program’s name in the Program field, the form’s routine name in the FORM routine field, and the form’s name in the Form field. In my example, I have specified only standard SAP programs, but usually in production systems, these programs are customized according to the company’s business requirements. You can do that either by using the following IMG menu path: SPRO > Materials Management > Logistics Invoice Verification > Message Determination > Maintain Message Types or executing transaction code M806 (Figure 25). After you maintain the output type, add it to the ERS procedure. To complete this step, follow IMG menu path SPRO > Materials Management > Logistics Invoice Verification > Message Determination > Maintain Message Schemas. In the screen that appears, expand the Schemas folder and select the Control Data subfolder (Figure 26). In the Reference Step Overview section, enter data for the ZERS output type in the fields shown in Figure 26. Click the save icon. To define the output condition for ERS invoice printing execute IMG transaction code MRM1 (Create output – condition records: Invoice Verification) and output type ERS. In this step, you define the message types for ERS. The system can generate and possibly send a message to inform the vendor about the transaction settled, depending on the settings in customizing. Alternatively, you can follow IMG path SPRO > Materials Management > Logistics Invoice Verification > Message Determination > Maintain Conditions. In the pop-up screen that appears (not shown), double-click the Create Condition: Invoice Verification option. This action opens the screen shown in Figure 27. In Figure 27, enter the Output Type (e.g., ZERS) and click the Key combination button or execute transaction code MRM1. In the pop-up screen that appears, select the CoCode, Vendor (company code-vendor) radio button and click the enter icon (the green checkmark) to go to the next screen (Figure 28) to maintain the condition record. In Figure 28, select the conditions you need. For my example, enter details in the following fields:

• Company code (e.g., 1000)
• Vendor (e.g., 1000 for the ERS vendor)
• Funct: (e.g., VN for vendor partner function type)
• Medium: (e.g., 1 for printing)
• Date/Time: (e.g., 3 to print the invoice on a user command)

After you populate all the fields in Figure 28, select the line item and click the Communication button. This action displays the next screen in which you enter printer details (Figure 29).  Note that for my example, you need to select the Print Immediately and Release after output indicators. After you click the save icon to save your entries, the system generates a message indicating that the condition records were saved. After you apply the settings shown in Figure 29, when you create the invoice using transaction code MRRL, the printing message is determined. If necessary, you can also reprint the invoice using transaction code MR90.

Classify FI Document Type for Document Splitting

If you have document splitting activated, then you should also perform the following activity in configuration. Follow IMG menu path SPRO > Financial Accounting (New) > General Ledger Accounting (New) > Business Transactions > Document Splitting > Classify Document Types for Document Splitting. Now for document type ZE, enter a transaction and variant number as specified in Figure 30. I suggest you make the same entries as per the document type RE.