The Accounts Payable application component of SAP system handles and manages financial transactions and accounting data of all vendors. It is fully integrated with Material Management component through account determination. Vendors are treated in the system as subsidiary accounts. Logically, monitoring should be done at vendor level. Transactions to each vendor is unique, hence necessitate individual recording and monitoring.

Each vendor account is link with a general ledger account. The general ledger account must be a reconciliation account for account type K (vendor). This allows all postings to vendor transfer simultaneously and seamless to the Accounts Payable g/l account. Good thing is, the subsidiary accounts and the reconciliation g/l accounts are always balanced; hence, no reconciliation activity needed to tally the balance.

Vendor Master

• The vendor master pertains to information about the vendor which remain unchanged over an extended period of time. It controls how transactions and data are processed by the system for the company. Do remember that each vendor must have a master data created in the system. Otherwise, you can not do business with the vendor in the system.

Vendor Account Group

• Just like the G/L account group, the purpose of the vendor account group is to manage and organize huge numbers of vendor accounts in the system;
• Normally, vendors with the same business functions are assigned to one account group;
• The number range for vendor master is determined also by the account group;
• The account group also determines the fields (required, optional, diaplay, or suppress fields) for the entry screen when creating or changing vendor master.

Vendor Master Data

Vendor master data is grouped into three parts:

General Data

• This gives basic information about a vendor such as vendor name, address, TIN, payment transactions information, contact persons and communication. General data applies to all company codes using the vendor. For example, change in vendor name.

Company Code Data

• This gives information specific to individual company code. Example of information under this area are reconciliation accounts, sort key, terms of payment, payment method, and correspondence. Any change on company code-specific data won’t affect other company codes.

Purchasing Organization Area Data

• Information on this area is relevant and applies to the purchasing organizations of the company. Example of information under this area are order processing, billing, shipping info and terms of payment.

To create vendor master, you can use transaction code FK01 or XK01. The difference of the two is that, if you use FK01 the Purchasing Organization Area Data screen won’t appear. So you can create only vendor information on the general and company code data. Whereas, if you use XK01 all the above 3 areas appears and you need to fill up the required and necessary information.

Business Transaction Processing

• Basically, transactions involving vendors are downpayment, invoice postings, downpayment clearing/application, debit memo, and outgoing payment. Each of the said transaction types use different document types e.g. vendor invoice is KR, incoming payment is KZ. Each transaction posted in the system creates a unique document number.
• If the business processes in the company require approvals and authorization , then the document parking functionality can be used. The encoder can park the data of the invoice. The approver do the final posting of the transaction. During document parking, the balances of the accounts are not updated.
• Vendor account can be monitored easily. Outstanding (open items) are segragated from those already collected (cleared items).
• The SAP system provides dynamic reporting for vendor accounts in the system which greatly help the collection and accounting department manage data of vendors.

Reporting

• SAP delivers readily available to use reporting in Accounts Payable application component. Example; diplay vendor account balance, display line items, vendor aging report, due date analysis, and etc.
• Drilldown reporting is standard in SAP system. There is an online trail of information from the current document to the original source document(s).