Invoicing

An invoice is generated to bill customers for the goods or services that they have received.  It also provides relevant billing information to various sources, including accounting departments.  Several options exist for invoice generation:

·     Mass-billing can be done at shipment time using the Shipping Workbench.

·     Billing can be deferred when using the Shipping Workbench.

·     Single order shipments can be billed at shipment time using the Open Order Shipping/Billing conversation.

·     Order shipments may be collected and billed on a consolidated invoice.

Processing Options

The invoice contains billing information about a shipment including the sales order number, customer number, ship date, shipping terms, tax information, and order-specific data. 

When you use the Shipping Workbench to mass-ship order shipments, you have the option of billing at shipment time or deferring billing until a later time. This choice is defined using the Shipping Workbench End Transaction window.  On the window, you set the Bill Shipment Flag to Y or N.  Regardless of whether you bill immediately or defer billing, you still have the option to consolidate the invoice for a selected shipment.

If you defer, you must generate invoices for the order shipments using the Open Order Billing conversation.  This conversation enables you to invoice one order shipment at a time.  For reference parts, you can add or maintain shipment picker lines.  The conversation also allows you to choose to consolidate invoices for shipments shipped using the Shipping Workbench.

The Open Order Shipping/Billing conversation allows you to invoice single order shipments at the time they are shipped.  When you use this conversation, billing is done automatically.  The conversation allows you to add or maintain shipment picker lines containing inventoried and reference parts.  You also can choose to consolidate invoices for shipments being shipped.

Consolidating Invoices

The decision whether to consolidate is defined through the Consolidated Invoicing flag at the customer level.  This flag may be overridden at the order shipment level in various conversations.  This allows you to use either single or consolidated invoicing for billing order shipments, making the billing process more flexible.  The appropriate choice between the two billing options depends on the customer's requirements.

If a customer wishes to be invoiced for every shipment, the Consolidated Invoicing flag for that customer should be defined as N (no).  If a customer prefers to be invoiced for multiple shipments at the same time, the flag should be set to Y (yes).  In either case, you may override this flag , if necessary, in the Sales Order Maintenance, Shipping Workbench, Open  Order Shipping/Billing, or Open Order Billing conversations.

To consolidate order shipments on one invoice the consolidated invoicing flag must be set to Y.  Consolidation allows you to collect any number of shipped order shipments (for the same bill-to customer) to be invoiced together.  If you choose to group shipments in this manner, invoicing will be delayed until a later time.  When you decide to invoice the customer, orders that have been shipped but not invoiced can be consolidated through the Consolidated Billing Selection conversation (OP290E).

Invoice consolidation only collects shipments that are being billed to the same customer.  There are, however, additional fields on the Consolidated Billing Function Select screen (OP290S01) where you can enter selection criteria to limit the shipments designated for consolidation.  These additional fields include Currency Code, A/R Code, Book Code, VAT Included Flag, Ship-to Country, Ship Reason, Document Type, and Home Export Flag.  If you do not specify values for these fields, a default value will be retrieved and processed.  The reason you would enter a specific value in one or more of these fields is to control the value and enable the system to capture certain order shipments for consolidation.

Order shipments need to meet all the specified criteria to be eligible for invoice consolidation, regardless of whether you specify additional selection criteria values or whether they are defaulted (i.e., you left them blank).  Shipments that meet all requirements will be listed on the Consolidated Billing Selection Detail screen (OP290S03) where they can be chosen to be included on the consolidated invoice.

Invoice numbers can be assigned in two different methods.  Some companies which have their own document numbering scheme set up user-defined external programs to retrieve the next document number.  If a record for the company/location exists on Reference File category M12, then the external program on that category will be used to retrieve the next available document number.  Otherwise, invoice numbers are automatically assigned according to Reference File category 440, Next Available Document Number.  This category is keyed by company/location/document type to allow companies to have their invoices generated sequentially for a specific location.  This simplifies the process of tying the financial records to a specific company location.

In some European countries, documents and payments need to managed in the software such that: (1) when a document is created, a dedicated sector has to be used for recording the document; and (2) when the payment is applied, the payment fiscal number has to be assigned and the taxable amount, non-taxable amount, and taxpayer ID have to be formatted for the VAT record on the Accounting Transaction file.

For countries that need to manage documents and payments in such a way, payment time VAT review processing can be specified.  For more information about Payment Time VAT Review processing within the Order Processing module, refer to the VAT key concept in this manual. 

Considerations

The option to consolidate is defined at the customer level on the Customer Master File (ARCUSTP).  This option defaults to each Sales or Quote Order for the customer.  Order releases take the value of the consolidation flag from their parent order.  The consolidation flag may be overridden both at the parent and the child order levels any time prior to shipping a line.

If collective invoicing is used and the value of the header fields for the invoice being consolidated differs from the values established for the individual shipments, the values on the Consolidated Billing Selection Header screen (OP290S02) will override the values on the individual shipments.  This is true for the following fields:  Accounting Date, Payment Terms, Discount Date, Due Date, Exchange Rate, Invoice Release, VAT Declaration Point (if you operate in a VAT environment), and Exchange Rate (if you operate in a multi-currency environment).

For example, assume you are grouping two shipments on a consolidated invoice.  The first shipment uses the payment terms P1 and the second shipment uses payment terms P2.  If the payment terms established for the consolidated invoice (as determined on OP290S02) is P1, it will override the payment terms of the second shipment.  If the payment terms for the consolidated invoice are P3, then both shipments' payment terms will be overridden.

If you are generating a collective invoice, you cannot change the value of the Consolidated Invoicing flag associated with a shipment once that shipment had been sent.  Likewise, in the Consolidated Billing Selection conversation, you cannot change the shipments selected for invoice consolidation once you press command key F22-End Transaction.

You may generate a Pending Invoices Report (OP670A) to highlight orders in the system that have been shipped but not invoiced.  This report is requested through the Daily Shipping/Billing Reports menu option.  When you request the report, you can specify a cut-off date.  Only uninvoiced orders with a shipment date earlier than the cut-off date will be included in the report.  This feature is especially useful in European Community countries where VAT must be reported by the 15th of the month following shipment.  The report is helpful in these situations because VAT is calculated and posted when the invoice is created.

You may inquire an invoice through the Accounts Receivable Inquiry conversation.  If you inquire on an invoice that was not consolidated, the number of the sales order being invoiced is displayed on the Open Item Detail screen (AR230S04).  If you inquire on a consolidated invoice, the same field displays all asterisks since a consolidated invoice may contain many sales orders.

Invoices will be printed according to the invoice release code.  The invoice printing options are defined in Reference File category 444.  In addition, they can be printed/reprinted any time after creation by selecting the Document Reprint option from the Order Processing Main Menu.  Documents can be reprinted as long as the information still exists in the Open Item files.

A major difference between the two invoicing methods is the way in which accounting transactions are generated.  If invoices are generated for each shipment at shipment time, the following transactions occur:  Accounts Receivable (A/R) is debited directly; Sales and Tax/VAT/GST are credited.  If you choose consolidation, an intermittent account, Accrued Receivable is debited at shipment time rather than Accounts Receivable.  If you operate in a U.S. tax environment, U.S. tax will also be credited at shipping time.  Once the invoice is created, Accounts/Receivable will be debited and Accrued Receivable will be backed out (credited).  If you operate in a VAT environment, and if applicable, VAT will also be credited at invoicing time.  For further explanation, see the example below.

Examples

The following shipment exists on the system.  For simplification purposes, assume that the customer operates in a U.S. tax environment and does not require adjustments for exchange rate changes.

Example 1

The first example demonstrates Shipment A being invoiced at shipment time.  The single shipment/single invoice options results in the following accounting transactions.

At shipment/invoicing time:

Example 2

The second example uses the same information for Shipment A, but the Consolidated Invoicing flag has been changed to request Consolidated Invoicing.  Information is also provided for another shipment:  Shipment B.

In this example, an invoice will not be automatically created for Shipments A or B at shipment time.  To generate an invoice, you have to go into the Consolidation Billing Selection conversation.  If you do this and specify customer C01, shipments A and B will be eligible for consolidation.  Then, as long as each of these shipments meet the selection criteria, they will appear on the selection screen.  Assuming that both shipments were selected, the following accounting transactions would be generated:

At the time the order is shipped, the following transactions will be generated.  Notice that each shipment creates a separate transaction to the COGS and Inventory accounts.

Shipment A:

Shipment B:

When you decide to invoice the shipments, the following transactions would be generated to back out the temporary account:

Note:    Because shipments A and B have different payment terms, the payment terms established on the Consolidated Billing Selection Header screen will override the shipment values if they do not match.  The same is true for Accounting Date, Payment Terms, Discount Date, Due Date, Exchange Rate, Invoice Release, VAT Declaration Point (if operating in a VAT environment), and Exchange Rate (if operating in a multi-currency environment).