It happens way more often than organizations realize. Invoices get coded directly to the inventory account – which is no Bueno when we are talking about a balance sheet GL account that is purportedly supposed to tie to a sub system (and that system is IC, not AP!)
So why do we see directly Coded Invoices and Credits for Inventory Items in the first place? Don’t inventory items need to come through a PO to be received in as Inventory in the first place? Yes, they sure do!
But sometimes we have instances where charges for a PO are credited and re-invoiced for an already matched line. There is Lawson functionality to handle this (MA75 PO Invoice Cancel – more on that below), but quite often, with approval from purchasing, the invoice, and the credit are simply processed as Expense (/Non-PO) type invoices and coded to the Accounting Unit/Account distribution on the PO Line.
This actually works for Non-Stock, Special and Service Items where it basically nets to the correct GL postings for the AU and Expense Account.
For Inventory items, however, the distribution on the PO Line is coded to the balance sheet (i.e. GL inventory account). Coding to this account on the invoice will cause discrepancies between the Inventory Balance as reflected in the IC module and the GL Account. Some of our clients use system restrictions at the Chart of Accounts (GL00) or Accounting Unit (GL20) level to only allow relevant Subsystems to post to the inventory asset account, thereby systematically preventing this reconciling issue from arising.
To find out if this might be an issue in your company simply export GL transactions for the inventory account and look for anything with a source system of “AP”.
Leverage MA75 PO Invoice Cancel
This screen operates in a similar manner to Lawson’s MA70 Reverse Match (Inquire on Company, Vendor, Invoice > Select Reverse Match), except that MA70 is used for invoices that have not been posted or paid and allows you to bring up the invoice in AP30.4 in order to cancel it.
Once a PO invoice has dependent records (posted GL distributions or payments) Lawson is going to make use live with it forever.
What the MA75 does, it allows to automatically:
Create a credit that balances out payment and distributions for the original (and historical) invoice
Unties the PO from Invoice, making it available for future matches
In the event of a ‘credit and rebill’ the credit would automatically be generated by MA75 and the ‘rebill’ invoice could be entered and matched appropriately.
The MA75 process may also be useful in a situation where invoices have been mismatched to a PO and subsequent Invoices required lines that are now closed. Or in the event you have some crazy MNR postings and need to reverse them out for GL purposes. When you re-entered the PO Invoice in these scenarios (with a period at the end to distinguish) and matched it correctly to the PO, the new invoice and PO Cancel credit will result in $0 payment to the vendor.
Use the Inventory Tolerance Account
If for whatever reasons, processing an Expense (Non-PO) Invoice for an Inventory Item is the best course of action, considering leveraging the Inventory Tolerance Account as listed in the IC04 GL Category for that item and coding the Invoice and Credit to this account. Remember when inventory transactions or values get funky, all roads lead to the Inventory Tolerance Account!
Populate PO Numbers on EXP (Non-PO) type invoices and Credits
This actually applies to all Non-PO invoices processed in relation to Purchase Orders, including direct coded any credit and re-bills, or invoice adjustments for closed PO Lines that are currently coded as EXP type invoices. Always have the PO Number on AP20 populated with relevant PO! While not a required field, it will allow the invoice/credit to be drillable from PO20 and make it available for queries and reports against the PO.
Leverage Subsystem Controls for Specific GL Accounts
We recommend the following GL Accounts be limited (in GL00 or GL20) to postings from specific subsystems as follows:
AP Liability Account(s) – limited to AP
Inventory Account(s) – limited to RQ, IC, PO and GL
Received not Invoiced / PO Receipt Accrual account(s) – limited to IC, PO, AP, MA and GL
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