Hello All,

With this Blog Post, I would like to cover the topic GR/IR Clearing run and different scenarios relating the the GR/IR runs.

Agenda :

  1. Introduction and purpose
  2. Posting Logic
  3. Account Determination
  4. Final Clearing date for purchasing document
  5. Different Business Scenarios
  6. References

1. Introduction and Purpose :

The main Purpose is to clear the clearing accounts or the Offset accounts affected during the Goods receipt posting and invoice posting (Procurement process).

GR/IR is used in two broad cases.  One where the Invoice is paid but the goods are yet to be delivered and the other where goods are already delivered but the invoice is yet to be paid.

Clearing or the offset accounts here are Purchase in transit GL account and Unbilled Payable GL account.

If the Invoice is paid and Goods are yet to be delivered the amount is debited in the Purchase in Transit account.

Secondly if the Goods are delivered and the Invoice is yet to come then the amount is credited in the Unbilled Payable Account.

This Offset GL accounts also helps in keeping the track of the goods which are not delivered and goods for which invoices are not yet received.

We perform a GR/IR run in order to nullify both these offset accounts i.e. Credit the Purchase in Transit account and Debit the Unbilled Payable account.

Ideally the Offset accounts should account to zero at the end of the year signifying that all the goods have been received and all the corresponding invoices have been paid.

2. Posting Logic :

Goods receipt:

Debit Material, Credit Unbilled Payable EUR 500 (10 ea.)

Invoice receipt:

Debit Purchase in Transit, Credit Payable EUR 500 (10 ea.)


GR/IR clearing:

Debit Unbilled Payable EUR 500 (10 ea.)

Credit Purchase in Transit EUR 500 (10 ea.)

In summary, Above Postings can be seen in the below table

Document Debit Credit
Goods Receipt Material Unbilled Payables
Invoice Purchase in Transit Payables
GR/IR Unbilled Payables Purchase in Transit
Result Material Payables

3. Account Determination :

Business configuration activity : Charts of Accounts, Financial Reporting Structures, Account Determination

Material GL account maintained under Inventory Sub ledger -> Inventory tab -> Material Inventory Column

Payable GL account maintained under Account Payable Sub ledger -> Payable tab -> Payable Column

Unbilled Payable accounts maintained under Account payable sub ledger -> in transit tab -> unbilled payable column

Purchase in transit accounts maintained under Account payable sub ledger -> in transit tab -> in transit column

Paths for other GL accounts like Cash discount, Price difference etc, are mentioned in the scenarios below.

4. Final Clearing Date for Purchasing Document Items:

Purchasing document items that are fully delivered and fully invoiced are normally marked for final clearing automatically Marked items are cleared by the next GR/IR clearing run that is executed for the period in which Marked Final Clearing Date is set.

There can be situations where it is required to clear the offset accounts even if goods are not delivered or invoices are not generated. In such situations, User hast to Option to either manually finish the delivery/Invoice or Manually mark final clearing date for the purchase order/Purchase order item.

If final clearing date is maintained on the purchase document/purchase document item, GR/IR run process the purchase order and clears the clearing accounts completely even if the goods receipt and invoice receipt quantities do not match.

Note: If the Purchase order/Purchase order item is finished, system always takes the date when Purchase order was finished as final clearing date.

5. Different Business Scenarios:

Following postings are based on the following information :

Process type : To-stock

Perpetual Cost method for material : moving Average

With Different Process type (Non-stock) and/or Perpetual cost method (Standard), postings will vary.

Purchase order Details –

Material X : 10 USD / 1 Ea

Purchase order Quantity : 10 ea.

Scenario 1: A Goods Reciept and an Invoice of equal amounts are made and GR/IR run is executed.

Goods reciept quantity : 10 Ea

Invoice : 100 USD /10 Ea

Final Clearing date is set automatically by system based on the last transaction date.

Document Debit Credit
Goods Receipt Material : 100 USD Unbilled Payable : 100 USD
Invoice Purchase in transit : 100 USD Payables : 100 USD
GR/IR Unbilled Payable : 100 USD Purchase in transit : 100 USD


Scenario 2: A Goods Reciept is made and an invoice of different amount (due to purchase price difference) is made and GR/IR run is executed.

Goods Receipt quantity : 10 Ea

Invoice : 110 USD /10 Ea

Exception of type Price variance appears during the supplier invoice postings.


Final Clearing date is set automatically by system based on the last transaction date.

Document Debit Credit
Goods Receipt Material : 100 USD Unbilled payable : 100 USD
Invoice Purchase in transit : 110 USD Payables : 110 USD
GR/IR Unbilled Payable : 100 USD + Purchase Price Difference : 10 USD Purchase in transit : 110 USD

G/L for Purchase price difference : Inventory Sub ledger -> Difference tab -> Gain from purchase price difference / Loss from purchase price


Scenario 3: A GSR is made and an Invoice is paid with cash discount and GR/IR run is executed.

Goods Receipt quantity : 10 Ea

Invoice : 100 USD / 10 Ea

Payment  : 87 USD


Final Clearing date is set automatically by system based on the last transaction date.

Document Debit Credit
Goods Receipt Material : 100 USD Unbilled payable : 100 USD
Invoice Purchase in transit : 100 USD Payables : 100 USD
Payment Payable : 100 USD Bank : 87 USD + Purchase in Transit : 13 USD
GR/IR Unbilled Payable : 100 + Purchase in Transit : 13 USD Purchase in Transit :100 USD + Discount : 13 USD

G/L for Discount : Account Payable Sub ledger -> Payment Difference tab


Scenario 4: Only a Goods Receipt is made and no Invoice is made for the Purchase order and the GR/IR run is executed.

Goods Receipt quantity : 10 Ea


In order to process the Purchase document in the run and to clear the offset accounts, Final clearing date has to be maintained manually.

Document Debit Credit
Goods Receipt Material : 100 USD Unbilled payable : 100 USD
Invoice NA NA
GR/IR Unbilled Payable : 100 USD Purchase Valuation Difference : 100 USD

G/L for Purchase Valuation difference : Inventory Sub ledger -> Difference tab -> Gain from purchase valuation difference/Loss from Purchase valuation difference


Scenario 5: Only an Invoice is made and no Goods Receipt is made for the Purchase Order and GR/IR run is executed.

Invoice : 100 USD / 10 Ea

Exception of type Missing Receipt or Return Document appears during the supplier invoice postings.


In order to process the Purchase document in the run and to clear the offset accounts, Final clearing date has to be maintained manually.

Document Debit Credit
Goods receipt NA NA
Invoice Purchase in transit : 100 USD Payabels : 100 USD
GR/IR Purchase Valuation Difference : 100 USD Purchase in transit : 100 USD

G/L for Purchase Valuation difference : Inventory Sub ledger -> Difference tab -> Gain from purchase valuation difference/Loss from Purchase valuation difference



6. Reference :

Help Center :

GR/IR Clearing Runs

GR/IR Clearing Quick Guide

Marked Final Clearing date for purchasing document items

GR/IR Clearing Run – Standard Case (Without Differences)

GR/IR Clearing Run – Partial Invoice and Completion of Purchase Order Item

GR/IR Clearing Run – Price Differences with Moving Average Cost Method

Price Differences, Exchange Rate Differences, and Cash Discounts

GR/IR Clearing Run – Credit Memo

GR/IR Clearing Run – Invoice Receipt Before Goods Receipt

Purchasing Document Items Quick Guide

GR/IR Inventories – Balance Summary

Report :

GR/IR Inventories – Balance Summary

Purchase Price Variances

Purchasing Documents – Line Items

I hope this will help in understanding the GR/IR Clearing runs.

Cheers,

Harshal Vakil

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3 Comments

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  1. Fred K

    Hi Harshal,

    Thanks for the great document.

    ->Scenario 2: A Goods Reciept is made and an invoice of different amount (due to purchase price difference) is made and GR/IR run is executed.

    I have one issue. The difference amount is posted directly to the inventory G/L account 130000 – Raw Materials instead of the G/L account 500210 – Losses on Materials – Purchase Price assigned in Loss from Purchase Price Differences.

    Best Regards,
    Fred

    (0) 
  2. Chempian Pontie

    Hi Fred,

    Can you check the Valuation TAB whether Perpetual Cost Method is STANDARD or MOVING AVERAGE. The system will drive the differences based on the selection of cost method.

    Thanks
    Chempian Pontie
     

    (1) 
  3. Fred K

    Hi Harshal,

    You mentioned that “Final Clearing date is set automatically by system based on the last transaction date.”

    Why am I having different dates ?

    Here are what I have done with the purchase order.

    1. Created a PO
    2. Post GR with full quantity at 27/03/2017 for the PO
    3. Post Supplier Invoice for the delivery at 27/03/2017
    4. Post a new GR for the same PO at 27/03/2017
    5. Created a supplier invoice from the new delivery at 27/03/2017 without posting
    6. Post the new invoice with posting date 28/03/2017
    7. Created a GR/IR at 28/03/2017 (The new invoice was included in the run)

    Best Regards,

    Fred

    (0) 

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