What you need to know about SAP Vendor Master Data Maintenance

 
A Vendor Master Data contains information of a permanent nature, about a supplier/vendor that your organization is dealing with. Such information may be general in nature (name, address etc.) or financial (bank accounts, payment terms etc.) or purchasing information.
 
In this post we will discuss the Vendor Master Data maintenance with focus on explaining key concepts and fields in the process.
 
1) Vendor master data creation
 
In SAP, vendor master data is created using transaction XK01 or by following the menu path:
Logistics—Materials Management—Purchasing—Master Data—-Vendor—Central— Create.
 
Alternatively, you can create a vendor master data using transaction FK01 or by following the menu path:
Accounting— Financial Accounting— Accounts Payable — Master Records— Create
 
Note: when you create a vendor with XK01, that vendor is created under both the FI structure (Company code) and MM structure (purchasing organization). In this case, the vendor that is created may be used in purchasing related transactions (Purchase requisition, purchase order) and financial related transactions (invoicing, vendor payments). However, if the vendor is created using FK01, it can only be used in FI transactions.
 
In this post, we will use the transaction XK01 to create a vendor master record.
 

 
Note: You can create a vendor by copying from a reference vendor (if this vendor already exists in the selected company code or another company code) or create it from scratch. The same steps are followed, the only difference is that some values are pre-populated when you copy from a reference vendor.
 
Company code: This is the FI structure under which you are creating this vendor.
 
Purchasing Organization: This is the Logistic structure to which the selected company code is assigned to. More than one company may be assigned to a purchasing organization. But a company code cannot be assigned to more than one purchasing organization.
 
Account Group: Vendors of an organization may be categorized into groups according to, for example its reporting requirements or the nature of the suppliers or any applicable criteria. The account group determines among other things:
 
a) The fields that are made available in the vendor master creation and which one is a required or optional.
b) The number range within which a vendor master data is created.
c) Whether the vendor account number is assigned internally (by the system) or externally.
d) Whether the vendor is a one-time vendor or not.
 
Note: In our settings we have an account group called foreign vendor and we will be creating our vendor under this group. The creation of an account group is a configuration matter which will be dealt with in a separate post.
 
Note: Vendor Master Data creation through XK01 has three views: General Data View, Company Code View and Purchasing Organization View.
 
2) General Data View
 
This is the part of the vendor master data that is applicable to all company codes (of the same client) in which it exists. Meaning that this information is uniform for this vendor irrespective of which company code you choose to display this Vendor in. Information like name, address, contact details, payment transaction data etc. fall under this. The general data view has the following tabs:
 

 

 
Press enter to move to the next screen.
 
The fields of the first screen above, (which is part of the general data view) are self-explanatory and need no detail explanation.
 
We will just mention that some of the fields (example postal code) are validated by the system for some countries (in terms of say the number of characters to be inputted therein). So if you enter less or more characters than required, the system issues an error message like the one below. If this happens just correct and proceed.
 

 
Note: That there are key fields that needs to be populated (especially if they are required fields as per your system configuration), other fields may or may not be populated by you depending on their importance to you. In the course of our vendor master creation we will endeavor to explain the significance of some key input fields.
 

 
VAT Registration Number: if this field is enabled in your settings, just input and proceed by pressing enter.
 

 
Payment Transactions
 
Generally, this screen contains the payment details of the Vendor. It has the bank account and IBAN of the vendor, the country of the vendor’s bank and the bank key.
 
Note: the “payment transaction data” is listed under both General data view and Company code view. This is because this tab has data that are company code independent like the vendor account details (bank key, account number etc.). It also has data that are company code dependent.
 

 

 
Alternative Payee
 
You input the alternative payee number here. The Alternative Payee is used where for one reason or another, the Vendor you are dealing with requests that payments of invoices from him are made to another payee (Alternative Payee).
 
Note, however, that the alternative payee has to be created as a vendor in the system before you can assign it to the main vendor. It is important to also know that if an alternative payee is inputted in this field, all invoices on the main vendor are paid directly to the alternative payee.
 
The alternative payee can be inputted in two places in the vendor master data, the Payment transaction screen of the general data view and the automatic payment transaction tab of the company code view as below:
 

 

 
If different alternate payee is enter in the two fields, the company code data view takes precedent over the general data view.
 
Alternative payee in document
 
Just like in the case of one time vendor, if this indicator is set, you can enter new payment details during vendor invoice document creation which is different from those in the master record of the main vendor. Meaning that each time you are creating a vendor invoice you can put new payment details different from the details of the vendor who sent the invoice.
 

 
Permitted Payee
 
If this indicator is set, the system opens another screen where you can assign to this vendor master record, as many vendors as you require to act as permitted payees. You only reach this screen by clicking on the permitted payee button above.
 
Note that as in the case of the alternative payee, the permitted payee has to exist in the system before you can assign it here.
 
Note also that, just the alternative payee, the permitted payee is assigned at both the general data level and company code level.
 

 

 
Click on copy. It is only after this, the indicator is set.
 
During invoice creation, if you select a vendor that has a permitted payee assigned to it, the payee account becomes available to select one of the assigned vendors. See below:
 

 
You can also assigned the Permitted Payees at the company code level, as below.
 

 
Contact person
 
If you wish to maintain additional contact details of your vendor, you can do that here.
 

 
3) Company Code Data
 
This component of the vendor master data is specific to the company code you are accessing it from. The accounting and payment data like payment terms, reconciliation account, payment transaction data, house banks etc. The company code data has the following tabs:
 

 
Accounting Information
 
In this screen the accounting and other related information are maintained.
 

 
Reconciliation account
 
This the GL account were all transactions of vendors under this account group are posted to. It is the account that links the accounts payable (AP) sub ledger to the general ledger. The reconciliation account basically summarizes all the normal postings recorded on vendors of a particular vendor account group. Special postings like down payments goes to an alternative reconciliation account.
 
Sort key
 
 
The sort key determines what values are displayed on the assignment field of the line item postings on a given general ledger (GL) account. For example, if you select 001 as the value for the sort key, the system will display the “posting date” in the assignment field. If you select 000, it means that whatever, is manually inputted in this filed during document entry will be displayed. Several sort key values are available to select as below:
 

 
Cash Management Group
 
If you have implemented the sap Cash management module, this field serves as the link between the cash management module and the SAP Accounts Payable. It is the main field in the account determination exercise between these two modules. Through this, vendor transactions are transferred to the cash management module for cash and liquidity forecasting.
 
Previous Account Number
 
In case you migrated out of a legacy system, and you wish to maintain the old vendor number for future reference you may store that here.
 

 
Payment Terms
 
These are the terms agreed with the vendor according to which you will make payment for invoices posted. The payment terms are defined in configuration (configuration of payment terms will be discussed in a different post). It is during the configuration of payments terms that you can choose what default your baseline date will take. Consequently, it is a key variable in the calculation of due date.
 
Tolerance Group
 
Tolerance group is defined in configuration and it defines the tolerance the organization sets for payment differences. After this is done in configuration, you can then assign it in the vendor master data.
 
Check Double Invoice
 
This is to avoid booking of a single invoice more than ones. If this indicator is set, the system checks to see whether the invoice you are trying to booked has previously been booked.
 
Payment Method
 
The payment method you will use to pay invoices from this vendor can be defaulted here. During the automatic payment program (APP) run the system will pay this vendor according to this default. However if at the invoice posting stage you default a payment method different from this, the later default takes precedent. Also this default can be superseded, if you choose another payment method during your APP run.
 
Payment Block
 
This field is used to block an open item to payment transactions or from being paid automatically. When it is left blank it means that the account or open items therein are free for payment as long as they are due.
 
House Bank
 
If you plan to pay this Vendor every time through a known House Bank, you can default that house bank here. With this, the payment program always select this house bank for payment to this vendor.
 
Individual Payment
 
If this indicator is set, it means that every open item on this Vendor is paid separately during automatic payment execution. Open items are not grouped together for payment to this Vendor.
 
4) Purchasing Organization data
 
This component has data relevant to purchasing transactions like order currency, purchasing group etc. The purchasing organization view has the following tab:
 

 

 
Order Currency
 
The currency on which an order placed with a vendor is based.
 
Payment Terms
 
As can be seen, “payment terms” is listed as both Company Code data and Purchasing Organization data because it is maintained under both. Payment Terms in company code data is defaulted when you create invoice directly in FI-AP. While the payment term in Purchasing Organization data is defaulted if invoice is created from the logistic invoice verification process.
 
Minimum order value
 
This is the minimum order value of purchase orders on this vendor.
 
Account with Vendor
 
This represents your account number with your vendor or supplier. It is the number that represents you in the records of your vendor.
 

 
Partner Function
 
Under this you define the relationship between your supplier and you company.
 

 

 
 
 
 
 
 
Please do share your thoughts on this topic. We would love to hear your comments and suggestions.
 
 
 
 
 
 
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  2. What if I did not create the Vendor master record centrally and did not create a purchasing organisation.

    How can I fix this without creating a new Vendor master record?

    1. A Vendor master record (as in the post} can be created through FK01, or XKO1. if created with FK01, it means it will not be assigned to any purchasing organization. If you want to eventually assign it to a Purchasing organization, use XKO2 and then in the change screen assign the purchasing organization.

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