AP open period

[Former Member]

Hi Gurus

I am trying to understand the SAP AP closing and logic for posting to different accounting periods. Every month when we close the books, we go through a process to “close AP” as soon as possible after month end (usually the first Monday). We use that 1st day to post all invoices we receive from vendors that are dated prior to month end. That way we get as many invoices (expenses) as possible into the period being closed. At the end of the day on Monday we close AP in SAP. Then for the remainder of the week, we receive additional vendor invoices that are dated in the prior period (invoices received after month end that relate to goods and services of the prior month end). AP personnel post these invoices into the subsequent accounting period just like any other vendor invoice. Accounting goes through a process of manually accruing and posting a REVERSING entry for these invoices into the prior period (so that we get all the invoices that relate to the prior period into that period).

The question is this: Can’t we just keep AP open for as long as we want and post each invoice into the correct accounting period? For example, suppose on Wednesday following the close of the accounting period we get two vendor invoices. One of the invoices is dated in the prior period. The other invoice is dated in the subsequent period. Can we post both invoices to SAP so that the invoice dated in the prior period gets posted to the prior period and the invoice dated in the subsequent period gets posted to the subsequent period (in SAP GL)? That way we would not have to undertake the manual effort that we have been doing to manually accrue invoices.

Thanks in advance

Satya

[Former Member]

Hi,

Accounting periods are not kept open till all the Vendor invoices are received. Oflate many Companies are trying to close the books the next day after the month end, and submit the financial data to Top Management.

If you keep open the period, Users will be continuously posting the entries and this will distort the financial pictures submitted to Management / outsiders. Hence, the business policy in many organizations is to have a cut off period a day / two to post transactions of previous periods.

If there are any pending transactions they can still be accounted in subsequent month (Business is a on going concern) unless it is a financial year closing.

Thanks

Murali.

[Former Member]

We need to get FY07 vendor invoices into the FY07 fiscal year and the FY08 vendor invoices into the FY08 fiscal year. My question is: Can we just keep AP open and book the vendor invoices into the appropriate fiscal year based on the invoice date? That way we will not have to do any manual accruals.

Message was edited by:

satya kantiwal

[Former Member]

The system will allow you to keep the periods open and use the posting date to drive what period the invoice posts to, but I think your question comes down to how accruate and quick that the company needs to produce its financial data. If you are closing shortly after month end, then I would think that financial reports are being produced and utilized. If that financial data is being relied upon to make business decisions that it is probably not a good idea to keep the period open and therefore keep changing the data when another invoice comes in (and then another and another etc.). Of course the exception from an accounting standpoint would be materiality (would the inclusion or omission) of an additional invoice influence your business decisions. What if you close and a huge invoice is received that really should have been included? If the timeliness of the financial data is important and the invoice is not material, then i would suggest going ahead with closing the period. Since we are in the public sector, we don't close months that soon after month end to produce any financial data. At year end there definitely has to be a cutoff to make sure all obligations are taken into consideration as well as make sure we close in a timely manner to produce financial data. I hope this helps some.