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Liquidity Forecast – Purchase Order Life cycle

Background

Liquidity forecast in SAP is derived based on the payment terms. Such as entry date, Posting date & document date. More precisely for AR/AP, forecast is done based on the baseline date on the invoice of customer/vendor. In purchase order life cycle, there is only purchase order delivery date. In the absence of the baseline date on a purchase order, liquidity forecast is calculated on document date/planned delivery date on a purchase order line item. In most of the cases planned delivery date and actual delivery date might vary. In this blog, we will discuss using a work around how we can achieve the liquidity forecast based on Purchase order date and on Goods Receipt date.

User Story

Edward Fernandez is from Finance department responsible for arranging funds based on the liquidity forecast. Often it was observed that the forecast from Purchase department are not matching. William Francis is from Purchase department claims that the data provided for liquidity forecast is based on the Purchase order dates. When goods are received against a purchase order the forecast is not impacted as the data used for forecasting is based on purchase order dates. Thomas Mathew is head of Finance department would like to have the forecast based on the purchase order, Goods receipt, and Invoice receipt. As there is a significant delay from the date when purchase order is raised and invoice is received from Vendor. Thomas Mathew had reached out to his IT Consultant Thomas Becket to provide a solution which can meet the business requirement.

Business Requirement

Liquidity forecast-ed based on Purchase order date + payment terms

Liquidity forecast-ed based on delivery date + payment terms. A work around solution, the planned delivery date to be updated as GRN date

Liquidity forecast-ed based on vendor invoice receipt date + payment terms

SAP Solution

Liquidity forecast for Purchase order is based on the PO delivery date + payment terms on PO until it’s invoiced. After invoicing, the liquidity forecast dates are based on invoice document / posting date + payment terms on vendor invoice.

Liquidity forecast-ed based on delivery date + payment terms. A work around solution, the planned delivery date to be updated as Goods Received Note (GRN) date

Fig: – 12 (One Purchase Order with multiple items report in Liquidity Forecast based on the item delivery date)

Once the Purchase item is Invoiced, automatically the Liquidity Forecast will be update with planning level F1 (C/V open items)

Disclaimer:

Idea of automation to update the delivery date based on GRN is possible. However, please check with P2P consultants for further implications.

Conclusion

Life cycle of a Purchase Order in a liquidity forecast can be achieved based on the delivery date + payment terms on a purchase order, until the invoice is accounted against Purchase order. Later after vendor invoice is accounted from date of document / posting date + payment terms (based on payment terms configuration).

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