Materials Management

User Manual: Procurement Of External Services

Procurement Of External Services

Prepared By M.Ramesh Kanna

Materials Management
User Manual: Procurement of External Services

Icons
Icon Meaning Caution Example Note Recommendation Syntax

Typographic Conventions
Type Style Example text Description Words or characters that appear on the screen. These include field names, screen titles, pushbuttons as well as menu names, paths and options. Cross-references to other documentation. Emphasized words or phrases in body text, titles of graphics and tables. Names of elements in the system. These include report names, program names, transaction codes, table names, and individual key words of a programming language, when surrounded by body text, for example, SELECT and INCLUDE. Screen output. This includes file and directory names and their paths, messages, source code, names of variables and parameters as well as names of installation, upgrade and database tools. Keys on the keyboard, for example, function keys (such as F2) or the ENTER key. Exact user entry. These are words or characters that you enter in the system exactly as they appear in the documentation. Variable user entry. Pointed brackets indicate that you replace these words and characters with appropriate entries.

Example text EXAMPLE TEXT

Example text

EXAMPLE TEXT

Example text <Example text>

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Abbreviations
R Required entry field (used in the end-user procedures) Optional entry field (used in the end-user procedures) Conditional field (used in the end-user procedures)

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Contents

Procurement of External Services......................................................5

1 Procurement of External Services Procurement Process.............................................. 5 Use ............................................................................................................................... 5 Prerequisites ................................................................................................................. 5 Creating Service Master ................................................................................................ 5 Use ............................................................................................................................... 5 Procedure...................................................................................................................... 5 Purchase Order ............................................................................................................. 8 Use ............................................................................................................................... 8 Prerequisites ................................................................................................................. 8 Procedure...................................................................................................................... 8 Result ......................................................................................................................... 13 Example...................................................................................................................... 14 Message Output .......................................................................................................... 14 Use ............................................................................................................................. 14 Procedure.................................................................................................................... 14 Creation and Acceptance of Service Entry Sheet ......................................................... 16 Use ............................................................................................................................. 16 Procedure.................................................................................................................... 16 Result ......................................................................................................................... 19 Invoice Verification for Services................................................................................. 19 Use ............................................................................................................................. 19 Procedure.................................................................................................................... 19 Result ......................................................................................................................... 22 Example...................................................................................................................... 22 Withholding Tax Processing (Tax Deduction at Source)... Error! Bookmark not defined.

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Withholding tax Remittance Challan............................. Error! Bookmark not defined. Use ............................................................................... Error! Bookmark not defined. Prerequisites ................................................................. Error! Bookmark not defined. Procedure...................................................................... Error! Bookmark not defined. Result ........................................................................... Error! Bookmark not defined. Example........................................................................ Error! Bookmark not defined. Updating Bank Challan Number for TDS Payment ....... Error! Bookmark not defined. Use ............................................................................... Error! Bookmark not defined. Prerequisites ................................................................. Error! Bookmark not defined. Procedure...................................................................... Error! Bookmark not defined. Result ........................................................................... Error! Bookmark not defined. Example........................................................................ Error! Bookmark not defined. Vendor TDS Certificate Print ........................................ Error! Bookmark not defined. Use ............................................................................... Error! Bookmark not defined. Prerequisites ................................................................. Error! Bookmark not defined. Procedure...................................................................... Error! Bookmark not defined. Result ........................................................................... Error! Bookmark not defined. e File Returns (Annual Return)................................... Error! Bookmark not defined. Use ............................................................................... Error! Bookmark not defined. Prerequisites ................................................................. Error! Bookmark not defined. Procedure...................................................................... Error! Bookmark not defined.

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Procurement of External Services

1 Procurement of External Services Procurement Process Use
External Services Management is an application component within Materials Management Module. It covers from creation of service master, bid invitation; order placements process, entering and accepting services and finally invoice verification process.

Prerequisites
The following scenario specific master data must be created for operation of this building block and subsequent dependent building blocks. Service Master record o AMC Charges for Computer Maintenance Vendor Master record o 1500

Creating Service Master Use

The service master record counts as part of the master data within External Services Management and serves as a source of data for you to draw upon when creating services. This enables you to save time and reduces the frequency of errors, since you need only enter the complete service descriptions in the service master record once.

Procedure
1. Access the transaction choosing one of the following navigation options:

SAP R/3 Menu

Transaction code

Logistics Materials Management Service Master Service Service Master AC03

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2. On the Display Service screen, make the following entries: 3. Choose on Create new service icon or choose F5 (white paper icon) to create new service master. 4. Then you will get Create Service Master Record screen, make the following entries: Field name Service Number Description Service master record (internally assigned) R/O/C R User action and values You can see %_1 will be displayed on this field, leave it as blank. System will assign internal service number Mait. Contract for COMPUTER Service: purchasing AU Activity Comment Leave blank

Service description Service Category Base unit of Measurement Basic Data Mat/srv.grp Division Valuation class Long Text This is free input place. You can fully input the service specification. Material Group or Service Group Division Valuation class Service Category Base unit of Measurement

R R R

Input the value Select from drop down Input Monthly payment

R O R

SERVICES 01 3200

Computer Maintenance.

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Activity number of service master (internally Generated)

Choose Service Category as service purchasing

Enter Description of activity

Enter Material Group as Services SERV

Enter Text if required

5. Choose enter to complete the entries. 6. Choose Save icon or Control + S to save the entries.

Result
Service Master Record is created.

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Purchase Order Use

A purchase order is a legal document used to record an individual purchase with the vendor. It also basis for making and accepting Service Entry Sheet as a proof of performing service and invoice verification processes also depends on this.

Prerequisites
1. Before creating purchase order if this vendor is subject to Tax Deduction at Source (TDS) or with holding tax please ensures that necessary entries in vendor master is updated. 2. On vendor master record screen Withholding Tax Accounting screen maintain the following entries: (Transaction Code XK02, Control data). For Eg. Note:Use your Company standards- Refer FI MANUAL With. T. type W/tax code Liable Rec. ty Withholding tax Liability Receipt type Withholding transaction type code I1 (TDS on I1 Tick the check box CO Invoice) P1 (TDS on P1 Tick the check box CO Payment) EA (ECess on EA Tick the check box CO EWT) E1 (ECess on E1 Tick the check box CO EWT) This will ensure for this vendor TDS is deducted at invoice verification stage.

Procedure
1. Access the transaction choosing one of the following navigation options:

SAP Easy Access menu

Logistics Materials Management Purchasing Purchase Order Create Vendor/Supplying Plant Known
ME21N

Transaction code

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2. On the Create Purchase Order screen, make the following entries:

Field name Shopping Cart Symbol Purchasing document number Vendor Doc. date Header Purchasing Organization

Description Order type

R/O/C R

User action and values Choose Service PO from drop down list Leave blank

Comment Choose

Number can be internally O or Assigned Vendor number Purchase order date Section Header Purchasing organization code R R

Vendor number Date PO created (defaults to todays date) Purchasing Organization known or via match code search GOPO PG1 Enter if not defaulted in from purchasing org or group 1000

Purchasing Group Company Code

Purchasing group code Company code for purchase

R R

Select Additional Data tab Validity start

Validity start

Validity end

Validity end

Give the starting date of this order, for example 01.04.2006 Give the end date of this order, for example 31.03.2004

Item Overview Item number Acct. assignment category

Item Overview Item number within document Account where costs are allocated For a consumable material. For a stock material it is not required Type of purchase Material number R C Will default by system K for cost center For cost center

Item category Material

C R

D for Service Leave blank

For Service

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Short text PO Quantity Unit of measure Category of delivery date

Text from the material master record Required units / quantity Unit that good or service is purchased Indicates whether the delivery date is to be entered and displayed as a calendar day, week or month.

R R R R

Computer Maintenance Contract Defaulted by system Defaulted by system default

Delivery Date Net Price Currency Per Order unit

Date material is required R Vendor selling price R for good or service Currency used for plant R Price per unit The unit of measure for which material is purchased Grouping together of materials by characteristics Facility where goods or services are produced or sold. Location where stock is stored Number that facilitates monitoring of the procurement of required materials R R

Enter delivery date Leave it blank for this scenario Defaulted from vendor master Default Default

Material group Plant

Enter material group YG10270 External services Enter plant 1000

Storage Location tracking number

R O Enter if known Can be used in List display to list all POs created by a certain buyer. Potential entry is employee number.

Requisitioner Purchase req

To whom material or service is ordered Reference document number

O C Use tool bar button to reference other purchasing documents

Requisn. Item Outline Agreement

Purchase requisition item no Reference document number

C C Enter contract number if you want create Release

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Agreement Item Item Details Select Services tab Service number Short text Quantity Unit of measurement Gross price

Item number Item Details

Order. Enter contract line item number for Release Order

Service master record number Short text Quantity Unit of measurement Gross price per unit of measurement selected in service master

R R R R

Select the service you have created in above step For example 3000000 Defaulted from service master 1 activity Defaulted from service master 2000.00

Select Account assignment tab G/L Account CO Area Cost Center Choose Enter Select Invoice tab Tax code

G/L Account Controlling area Cost Center

R R R

58120000 Defaulted by system 1201 - purchasing Select from drop down list

Enter Tax code

S1

Select S2 tax code

Since the procurement services covered with service tax of 10% (for example only, check for legal requirement), it is advised to create Tax Code for 10% ( But it is Already Created) GR-based IV Goods Receipt based O Tick this check box invoice verification Srv.-based IV Service based invoice O Tick this check box verification

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Select PO type as SPO Service PO

Enter Account Assignment As K Cost Center and Item Category as D Service

Enter Short Text for activity dont enter any material Number

Enter Material group as Services

Important Note: After entering required data, system shall show Services tab in Item details where you have to enter Service No., Quantity, gross price and G/L Account

3. The Purchase Order may be posted by Choosing on the Save or choose Control + S for saving.

Result
A message will be displayed stating that the purchase order was saved, with the purchase order number, please note this purchase number.

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Example
Service PO created under the number 4500000021.

Message Output Use

A Purchase Order needs to be printed for transmitting to vendor.

Procedure
1. Access the transaction choosing one of the following navigation options:

SAP Easy Access menu

Transaction code

Logistics Materials Management Purchasing Purchase Order Messages Print/Transmit ME9F

2. On the Message Output screen, make the following entries: Field name Purch. Doc. Data Document Number Vendor Purchasing Organization Purchasing Group Document Type Description R/O/C User action and values Comment

Purchase Order # Vendor # Purchasing Organization # Purchasing Group #

O O O

Document Date Message Data Application

Identifier allowing differentiation between the various kinds of purchasing document in the SAP system Date on which the purchasing document was created.

Input the purchase order number you created above Choose from drop down menu Choose from drop down menu 1000 Choose from drop down menu PG1 Choose from drop down menu

Enter Document date or choose from drop down menu

Subdivides the usage of a condition for the

EF defaults for Purchase Order

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Message type Transmission time-spot

use in different application areas Specifies the kind of output You can process the message immediately or at a later time. If processing later you must use report program RSNASST00 Indicates the status1 indicates the process was successful. 2 indicates an error 0 indicates the process has not yet started Date the message is create Displays the time the message was created

Choose from drop down menu NEU Choose from drop down menu

Processing status

Default is 0

Creation date Time created

O C

Enter date or choose the drop down menu Defaults to time started

3. Choose on the Execute. 4. On screen Message Output select the appropriate Document number and perform the following:
Choose Output Message and/or Choose Display Message and/or Choose Message Detail and /or Choose Trial Printout

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Creation and Acceptance of Service Entry Sheet Use

The services actually performed (work actually done) by a service vendor are recorded in a Service Entry Sheet with reference to the purchase order.

Procedure
1. Access the transaction choosing one of the following navigation options:

SAP R/3 Menu

Transaction code

Logistics Materials Management Service Entry Sheet Maintain ML81N

2. On the Service Entry Sheet screen, make the following entries: 3. Choose on Other Purch. Orders icon or Shift + F5, system will popup new screen. 4. In this screen against Purchase Order field give the purchase order number which is created in above steps and choose enter to continue. 5. You will get new Service Entry Against Purchase Order 6. Here on this screen Choose Create Entry Sheet (white paper icon) or Shift + F1 to get new entry sheet. 7. System allocates service entry sheet number internally and you will get the number on screen. 8. For example the following screen name will come: 9. On the 1000000### Create Entry Sheet screen, maintain the following entries: Field name Short text Description Shot text of entry sheet R/O/C R User action and values Example - Bill for the month of November 2005 Comment Freely maintainable short text

- Select Service selection icon at the bottom of screen to adopt the data. - System will give a popup screen with purchase order number on that, choose enter to continue. - System will give new screen Select Services as Reference the services list from purchase order is displayed here. - Select the line item 10 and Choose on Services or F9 (Adopt services) icon on top of screen. - You can observe the system copied the service line item from purchase order with open item quantity i.e. 12 months. - Change the quantity as per your requirement. For example in this scenario we are going to make entry sheet for 1 month only. Correct that 12 months as 1 month at line item level. Quantity Quantity of service R Replace 12 with 1 Only one month

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entry sheet -

entry sheet.

With this the basic information of service entry sheet is fully completed. As per the requirement you can fill other fields also if required. To accept the service Choose on Accept icon or Control + F1 (Green flag icon). You can see the traffic light is become Yellow color. That means it is ready to save the service entry sheet. 10. To save the entries Choose on Save icon or choose Control + S. 11. If any information / warning messages come please ignore them before saving, also please note the acceptance document number.

2 1
Click here to get Purchase order-1 After entering PO in Popup screen, then click this icon to create Service Entry Sheet

Click here to accept service entry Sheet

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You can see yellow signal

After saving the document you can see green signal

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Result
Service entry sheet saved, acceptance document 50000000## posted

Invoice Verification for Services Use

In this process of Logistics Invoice Verification all the Incoming Invoices are verified in terms of their content, prices and arithmetic. When the invoice is posted, the invoice data is saved in the system. The system updates the data saved in the invoice documents in Materials Management and Financial Accounting.

Procedure
1. Access the transaction choosing one of the following navigation options:

SAP Easy Access menu

Transaction code

Logistics Materials Management Logistics invoice Verification Document Entry Enter Invoice MIRO

2. If you are opening for the first time this transaction, system will ask for Company Code, please give 1000 to go in side the transaction. 3. On the Enter Incoming Invoice: Company Code 1000 screen, make the following entries: Field name Transaction Header Data Basic tab Invoice Date Reference Description Invoice Header data of Invoice Basic information tab Invoice Date Invoice reference R/O/C R R R R O User action and values Select Invoice from drop down list Defaulted by system Select basic information tab to give initial information Enter the Vendor invoice date Enter the vendor invoice reference Comment

Posting date

Posting Date

Enter the posting date of document

System will give current date as

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default Amount Invoice Amount R Enter invoice gross amount including taxes and duties 2,200.00 Enter the currency in which the bill is presented by vendor, if not entered by user system will default the document currency from purchase order INR Check this tick box, system will calculate tax amount Select the tax code from drop down list V0 Enter Section code 1000, if the Vendor is subject to Withholding Tax Rs. 200.00 system will calculate the tax amount Ensure only Section code is entered. First filed represents the Business place and the second filed represents the Section Code.

Currency

Calculate tax

Check box calculate tax Tax code

O R

Bus.place/se ctn

Business place or section code

Text Payment tab BaselineDt

Text Payment tab Base line date for payment Payment terms

O R R

Enter text if required for reference Select payment details tab Enter the base line date for payment Payment terms of document, if entered will be defaulted from purchase order Will be calculated by system Enter if cash discount is offered by vendor Grayed out Will be defaulted if payment terms entered in PO

Pmnt terms

Due on Discount

Payment due on Cash discount

O O

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Hide Header data for getting full screen of items if required. Purchase order / Schedule Agreement R Select Purchase order / Schedule Agreement in the reference document category from drop down list Enter the purchase order number which you created above Select Goods / Service items in indicator from drop down list Select All information from drop down list Choose Enter Select Withholding Tax Tab W/taxcode Withholding Tax Code O I1 The entry defaulted from the Vendor Master Record. If the nature of services are tax deductible, keep the TDS code as it is without change Recommended to remove the P1 withholding tax code at the time of invoice posting and deduct the TDS at the time of Invoice posting it self using the I1 tax code Defaulted Defaulted for user

Purchase order number Goods / service items

Layout

Layout of invoice verification

W/tax code

Withholding Tax Code

P1 The entry defaulted from the Vendor Master Record. If the nature of services are tax deductible and it will be deducted at the time of Payment only, then, keep the TDS code as it is without change and Remove the I1 tax code EA Ecess on EWT Recommended to remove the EA

W/tax code

Withholding Tax Code

W/tax code

Withholding Tax Code

E1 Ecess on EWT

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4. Choose Enter to complete the document feeding part. 5. To check the document credit and debit is balanced on the top right corner of your screen a traffic light is displayed. Beside that Balance of the document is displayed.

Ensure that the Balance is ZERO before posting the document and the traffic light is green or yellow color. 6. If you want to see the accounting postings in simulation mode, choose Simulation push button on middle of fourth row of your screen. 7. Choose Save posting the document.

Result
Logistics Invoice verification document is posted.

Example
Document no. 5105600123 created

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