Financial Agreements

This document explains how to:

Manage financial agreements
Manage accounting for agreement invoices
Match supplier invoices against agreements.

Outcome

A supplier invoice can be matched against an agreement in 'Supplier Invoice. Record' (APS100) or in 'Supplier Invoice Batch. Open' (APS450).
An agreement can be followed up in 'Financial Agreement. Open' (AGS100) and in the related programs 'Financial Agreements. Open Connected Invoices' (AGS130) and in 'Financial Agreements. Open Budget and Actuals per Period' (AGS140).

Before you start

An AP10 FAM function, to be used for financial agreement matching, must be defined in 'FAM Function. Open' (CRS405) with 'Financial agreement matching' set to 1-'Agreements' and 'Next manual step - invoice matching' set to 1 (the invoice should not be matched to a PO).
An agreement with type 2-'Agreements' must be defined in (AGS100).

Limitations for financial agreements

You cannot use the pre-payment process together with financial agreements.
You cannot match against a financial agreement in (APS450) when a line type 8-'Accounting Line' is connected to the same invoice.
You cannot use a purchase order together with a financial agreement.
Automatic matching of supplier invoices that are connected to leasing is not possible.

Auto approval methods

Financial agreements of type 2-'Agreements' created in (AGS100) can be matched against supplier invoices in (APS450) and (APS100). When defining an agreement you specify how an invoice should be matched against the agreement and how the agreement should be posted. The field 'Auto approval method' in (AGS100) is the base for how the invoice are matched against the agreement. The available auto approval methods are:

1-'Invoice amount limit''. The invoice amount is matched against the 'Invoice amount limit' of the agreement. If the invoice amount, VAT excluded, is within the 'Invoice amount limit' of the agreement, the invoice is approved for payment. If not, the invoice is stopped for manual handling in 'Supplier Invoice. Recode' (APS110).
2-'Total budget'. The invoice amount is matched against the 'Agreement amount limit' of the agreement. If the invoice amount, together with the accumulated amount of matched invoices of the agreement, is within the agreement amount limit, the invoice is approved for payment. If not, the invoice is stopped for manual handling in (APS110).
3-'YTD budget'. The invoice amount is matched against the 'Budget invoice amount per period' and the 'Agreement amount limit'. The 'Budget invoice amount per period' is based on the 'Agreement amount limit'. It is calculated by splitting the 'Agreement amount limit' equally per period within the agreement timespan. To see the budgeted invoice amount per period, use related option 22='Budget and Actuals per period' in (AGS100). The budgeted period amount can be adjusted, but the total amount must still be the same as the agreement amount limit. If the invoice amount, together with the accumulated amount of matched invoices of the agreement during that period and during the YTD, is within the period budget and YTD budget respectively, the invoice is approved for payment. If not, the invoice is stopped for manual handling in (APS110).

Accounting of agreement invoices

If the same accounting string is valid for the entire agreement, you can specify the accounting string in (AGS100). If that is done, that accounting string is always added to the matched invoice, regardless if the matching against the agreement is approved or not.

If the invoice should be posted on more than one line, a standard voucher of type 5-'Financial agreement invoices' must be connected to the agreement. To create the standard voucher, open 'Standard Voucher. Open' (GLS015) and select standard voucher type 5-'Financial agreement invoices'. If the invoice will always contain a fixed amount, start by setting up a line with amount type 1-'Fixed amount'. Use the amount type 2-'Limit amount' if the invoice will have costs that are variable. Amounts within the limit will be approved. If the standard voucher is configured to have more than one limit amount line, the invoice is stopped for manual handling during the invoice matching. This to manually split the variable amount between the limit lines.

Matching of supplier invoice against agreements

In (APS450) the fields 'External reference number' and 'Financial agreement ID' support the functionality to match against a financial agreement. 'External reference number' is used if you are using both agreements and purchase orders. In this case you can use the 'External reference number' for both an agreement ID and a purchase order number. When information has been added to this field in (APS450) and a validation has been done, M3 Business Engine identifies if it is an agreement or a purchase order number and puts it in the correct field.

To manually match an invoice to a financial agreement in (APS100) you must select an AP10 FAM function that has been defined for matching of financial agreements. If the FAM function has 'Next manual step - invoice matching' set to 1, the field 'Financial Agreement ID' is displayed on both panel E and F in (APS100).

Invoice matching logic

A basic requirement for matching an invoice in (APS450) and (APS100) is that the invoice and the financial agreement have the same supplier, financial agreement ID, and currency. If you do not have to adjust the invoice, it can be matched against the financial agreement. To get the invoice automatically posted and approved for payment, the following logic must apply:

The invoice date is within the start date and end date of the financial agreement. If this is false, the invoice is not approved for payment and the message 'Inv date not within range' is displayed on the invoice in 'Supplier Invoice. Recode' (APS112).
The invoice amount on the invoice is within the invoice amount limit. This applies to approval method 1-'Invoice Amount limit'. It also applies if an invoice amount limit is added on agreements using approval method 2-'Total budget' or 3-'YTD budget'. If this is false, the invoice is not approved for payment and the message 'Inv amount>inv limit amt' is displayed on the invoice in (APS112).
The invoice amount, together with the accumulated amount of matched invoices of the agreement, is within the agreement amount limit. This applies to approval methods 2-'Total budget' and 3-'YTD budget'. If this is false, the invoice is not approved for payment and the message 'Total used>total budget' or the message 'Total used>budget YTD' is displayed on the invoice in (APS112).
An expense account has been added in the financial agreement. If this is true, the expense account is used.
No expense account has been added. A standard voucher has been selected in the agreement with a maximum of one 'Limit amount' line connected. The invoice amount is within both the 'Fixed amount' and 'Limit amount' of the voucher. If one of these statements is false, the invoice is not approved for payment.

When an invoice is approved for payment, it is connected to the agreement and can be displayed in (AGS130). This program can only be opened through related option 21='Connected invoices' in (AGS100). The invoice amount is also updated in (AGS140). In that program the budget for the agreement is displayed together with the accumulated amount of the matched invoices. The program (AGS140) is retrieved from (AGS100) through related option 22='Budget and Actuals per period'.

Manually connect invoices to agreements

In (APS110) related option 26='Connect a Financial Agreement to Invoice' can be used to connect an invoice to an agreement. This is only possible if the invoice is posted on a suspense account. Otherwise the invoice needs to be canceled and re-entered to match it against the financial agreement. The field 'Financial agreement ID' is shown with sorting order 3='Supplier invoice number' and 5='Authorized user'.

Recoding supplier invoices

In (APS112), when a supplier invoice is connected to an agreement, fields showing the financial agreement ID and the error code from the agreement matching are displayed.

If the invoice has been stopped because of the limits defined in the standard voucher lines, it must be recoded in (APS112). You open (APS112) by selecting related option 8='Simplified invoice approval' in (APS110). By selecting 'Recode', the standard voucher is retrieved and the lines from the standard voucher are displayed. For 'Fixed amount' lines, the defined amount is proposed. For 'Limit amount' lines, the amount must be entered manually. When the recoding is completed in (APS112), the normal approval flow is triggered.