Lesson 3 of 5
Finance effects: inventory, GR/IR and the supplier
9 min
Procure-to-pay is a logistics process that keeps finance up to date at each step. For stock materials, the goods receipt and the invoice both post journal entries automatically. Knowing those entries lets you prove that a P2P test is complete: not just "the receipt posted" but "inventory and GR/IR moved by the right amounts."
Goods receipt: inventory up, GR/IR credited
When the warehouse posts receipt of 500 rotors (CMC-RTR-200) for plant 1710, SAP creates a material document and a journal entry. Inventory is debited. The credit goes to the GR/IR clearing account (goods received / invoice received), a temporary account that says "we have the goods, but not yet the invoice." The amount depends on the material's price control.
| Step | Debit | Credit | Amount (example) |
|---|---|---|---|
| Goods receipt, 500 rotors, PO price $42, standard price $40 | Inventory 500 × $40 = $20,000; price difference $1,000 | GR/IR clearing 500 × $42 = $21,000 | $21,000 |
| Supplier invoice, 500 × $42 | GR/IR clearing $21,000 | Supplier (accounts payable) $21,000 | $21,000 |
| Payment | Supplier $21,000 | Bank $21,000 | $21,000 |
Journal entries for a stock material with standard price control. The supplier item is open from invoice until payment.
With standard price (price control S), inventory always posts at the standard price, and any difference between PO price and standard goes to a price difference account. With moving average price (price control V), inventory posts at the PO price and the moving average adjusts. Rotors at Contoso use standard price, which is why the $2 per unit difference goes to price differences at goods receipt.
- Goods receiptDebit inventory, credit GR/IR: goods here, invoice pending
- InvoiceDebit GR/IR, credit supplier: GR/IR clears, liability created
- PaymentDebit supplier, credit bank: liability settled
Account determination in one paragraph
SAP finds the G/L accounts automatically. The material's valuation class (in the accounting view) and the posting's transaction key point to the inventory account; other keys point to GR/IR and price differences. Consultants know these keys from the account determination configuration (inventory posting, GR/IR clearing, price differences). Business users do not maintain them, but a wrong valuation class on a product will post inventory to the wrong account, and that is a very common master data defect.
GR/IR clearing and month-end
In a perfect world every goods receipt is followed by a matching invoice and the GR/IR balance for each PO item nets to zero. In practice there are timing gaps (goods received this month, invoice next month) and permanent differences (a supplier never invoices the last 2 units). At month end, finance analyzes the GR/IR account so that the balance sheet shows goods received but not invoiced as a liability, and invoices received but not yet delivered appropriately.
| Situation | GR/IR balance | What to do |
|---|---|---|
| Goods received, invoice expected next month | Credit balance (received, not invoiced) | Normal timing; reported as an accrued liability at month end |
| Invoice received, goods not yet received | Debit balance (invoiced, not received) | Chase the warehouse; check whether the invoice was premature |
| Small permanent difference, no more documents expected | Small residual | Clear it with GR/IR account maintenance (MR11), with approval |
| Quantities match but amounts never will | Residual amount | Investigate price or currency issues before clearing |
In SAP S/4HANA all of these postings land in the Universal Journal, so the journal entry from a goods receipt already carries the cost and profitability information that ECC split across separate ledgers. For a tester that is good news: one journal entry per business event, visible from the material document via its accounting documents.
What would you do?
After a test receipt of 500 rotors and the matching invoice, the GR/IR balance for the PO item is $1,000, not zero. What is the most likely explanation?
- Goods receipt debits inventory and credits GR/IR; invoice debits GR/IR and credits the supplier.
- Price control (standard or moving average) decides how price differences post.
- The valuation class drives which inventory account is used.
- GR/IR should net to zero per PO item; residuals need analysis before clearing.
Check your understanding · not graded
Lesson check
1. At goods receipt of a stock material, which account is credited?
2. What does the supplier invoice post?
3. With standard price control, where does a difference between PO price and standard price go at goods receipt?
4. Which product field drives the inventory G/L account?