Orbian Supply Chain Finance Solution

Accounting and reconciliation process example for

Buyers using SAP

Version 1.0

This document forms part of Orbian’s policies and procedures. All defined terms used in this document shall have the meanings given to them in
the Service Agreement, except where they are re-defined in this document or where their meanings must, necessarily, be varied by the context in
which they arise in this document. In the event of conflict between this document and the Service Agreement, the Service Agreement shall control.

Except as permitted by the Service Agreement, this document must not be disclosed outside of your organization and you are not authorized to
duplicate or distribute it (whether electronically or otherwise) in whole or in part.

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 TABLE OF CONTENTS

Page
1 INTRODUCTION ............................................................................................................................................................. 3

1.1 OBJECTIVE.............................................................................................................................................................. 3

1.2 ACCOUNTING OPINIONS DISCLAIMER................................................................................................................ 3

2 BUYER SAP ACCOUNTING AND RECONCILIATION PROCESS ................................................................................ 4

2.1 STEP 1 - BUYER RECEIVES AND PROCESSES INVOICE FROM SUPPLIER.................................................... 4

2.2 STEP 2 - BUYER PERFORMS PAYMENT RUN TO PAY SUPPLIER VIA ORBIAN PAYMENT METHOD........... 5

2.3 STEP 3 - BUYER PROCESSES THEIR ORBIAN MT940 ACCOUNT STATEMENT - AFTER PAYMENT
INSTRUCTION ISSUED...................................................................................................................................................... 6

2.4 STEP 4 - BUYER PERFORMS CASH SETTLEMENT FROM THE BUYER TO ORBIAN, FOR DUE DATE OF
THE PAYMENT INSTRUCTION. ........................................................................................................................................ 7

2.5 STEP 5 - PROCESSING OF CASH SETTLEMENT CONFIRMATION, VIA BANK STATEMENT UPLOAD. ........ 8

2.6 STEP 6 - BUYER PROCESSES THEIR ORBIAN MT940 ACCOUNT STATEMENT - AFTER PAYMENT
INSTRUCTION HAS BEEN CASH SETTLED BY THE BUYER TO ORBIAN ON DUE DATE .......................................... 9

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 1 Introduction
1.1 Objective

This document is designed to show an example of an accounting and reconciliation process, for the Orbian Supply Chain
Finance Solution, for Buyers who use SAP.

This document shows one possible example, but is dependant on configuration of the SAP system; and therefore will not
necessarily cover every possible SAP configuration.

It is not designed to explain the configuration steps required to implement this process; configuration guidance is covered
within the "SAP Configuration Guide".

1.2 Accounting opinions disclaimer

“Orbian or its partners, is not, and does not purport to be in the practice or business of providing accounting advice or
opinions, and does not present itself as necessarily qualified to provide such advice. Accordingly the contents of this
report should not be construed by any entity or individual to represent a conclusion or opinion as to how any transaction
(whether real or theoretical), should be accounted for in their books and records. Any references to authoritative
accounting literature contained herein, is included to assist in providing a framework for initial discussions and should not
be construed as applying to any individual transaction, or collection of transactions. Accounting for any business
transaction(s) will require consideration, among other things, of the rights, benefits, and obligations conferred by the
underlying agreement(s) to the transaction(s). Entities or individuals entering into any transactions based on this product,
or any other product, must make their own accounting decisions and determinations, and should follow their standard
internal process for determining how to account for a transaction(s), including where applicable consulting their internal
accountants, external auditors, legal counsel, or other consultants or accounting professionals that they deem prudent in
the circumstances. “

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 2 Buyer SAP accounting and reconciliation process
Process Overview:

Step 1: Buyer receives and processes invoice from supplier

Step 2: Buyer performs payment run to pay supplier via Orbian Payment Method

Step 3: Buyer processes Orbian MT940 account statement - after Payment Instruction issued

Step 4: Buyer performs cash settlement from Buyer to Orbian

Step 5: Buyer processes Bank statement - Cash Settlement confirmation.

Step 6: Buyer processes Orbian MT940 account statement - after Payment Instruction cash settled by Buyer

2.1 Step 1 - Buyer receives and processes invoice from supplier

• Supplier invoice is posted as Credit to Accounts Payable (AP) Sub-Ledger, Debit offset posted to a General
Ledger (GL) account depending on type of activity (e.g. expense account, for example).
• Assumed that Invoice is "good to pay"; i.e. necessary Buyer invoice controls have been performed (e.g. 3 way
match).

Notes:

• This Step 1 should be unchanged from non Orbian settlements.

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 2.2 Step 2 - Buyer performs payment run to pay supplier via Orbian Payment Method

• This step is performed on day "n", whenever the next payment run is performed.
• The Orbian Payment Run collects all "open" invoices, and Credit memos, that are good to pay, on the Vendor
accounts set to Orbian payment method, regardless of Invoice Due Date.
• The Payment Run should automatically create an Orbian Payment File (containing the Payment Instruction
Requests), and send to Orbian, and post the following accounting entries, in red (2), in the Buyer SAP system:
• Orbian returns a Transaction Results Report which shows the successful and failed Payment Instruction
Requests. All failures should be investigated and rectified. Please call the Orbian Contact Centre for assistance
with rejections, if required.

Notes:

• As part of the payment run the Payment Instruction Request raised is assigned a unique Request ID (Clearing
Document Number) by the Buyers A/P system.
• The credit entry on the Orbian PI Control Account is outstanding because the payment request has not yet been
accepted, processed and confirmed by Orbian.
• Where PI requests are rejected by Orbian (for example, incorrect Orbian Account Number), Buyer resets and
reverses the related open item on the Orbian PI Control Account thereby the original invoices will be returned to
the status of open in the Vendor Account on AP. This open item can then be included in the next Orbian payment
run.
• The debit entry to the Vendor Account (2) has a Posting date equal to the Payment Run date and a Clearing date
equal to the Invoice Due date.

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 2.3 Step 3 - Buyer processes their Orbian MT940 Account Statement - after Payment
Instruction issued

• This step is performed on day "n+1".

• The Buyer receives their Orbian MT940 statement and uploads it into SAP. The following red (3) accounting
entries are automatically posted in the Buyer SAP system.
• The MT 940 statement includes the Payment Instructions successfully processed at Orbian.
• Optional: The Buyer clears the related open items (using F03), in the Orbian PI Control account. Any reconciling
items need to be investigated (May be done daily, weekly or monthly).

Notes:

• The Balance on the "Vendor Account Payables Orbian", after the upload of the Orbian MT940 statement
represents the payable from the Buyer to Orbian, and should be equal to the closing balance on the Orbian
MT940 statement. (Control Point).
• Assuming the Payment Instruction was successful and that no other Orbian payment runs have been performed,
then the returning statement should zero the Orbian PI Control Account.
• The Value date of this accounting entry in SAP is automatically populated with the Due date of the Payment
Instruction, as per the Orbian system.

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 2.4 Step 4 - Buyer performs cash settlement from the Buyer to Orbian, for Due Date of the
Payment Instruction.

• This step in the process is not part of the Orbian specific process, but is assumed and shown here for clarity and
completeness.
• On the day prior to Due date of the Payment Instruction (and hence Invoice), May 29, the amount due from Buyer
to Orbian, is sent to the Buyer from Orbian via email.
• Buyer reconciles the Amount due to Orbian (from the Orbian email) to the Amounts on the "Vendor Account
Payables Orbian" GL Account, where the Value Date is equal to the Due Date of the settlement (FBL1N - sorted
by Value Date).
• The following red (4) accounting entries are posted in the Buyer SAP system, representing the cash settlement
made to Orbian.

Notes:

• The Balance on the "Orbian Cash Clearing Account" represents the cash in transit, awaiting reconciliation at
Orbian.
• The "Bank Clearing account" and "Bank Account", and the process of accounting for the cash settlement, needs
to be validated by the Buyer.

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 2.5 Step 5 - Processing of cash settlement confirmation, via Bank Statement upload.

• This step in the process is not part of the Orbian specific process, but is assumed and shown here for clarity and
completeness.
• The following accounting entries, in red (5), are posted in the Buyer SAP system, via the Bank statement upload,
representing the cash settlement confirmation.
• (Recommended) The Buyer clears the related open items (using F-03), in the Bank Clearing account (May be
done daily, weekly or monthly).

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 2.6 Step 6 - Buyer processes their Orbian MT940 Account Statement - after Payment
Instruction has been cash settled by the Buyer to Orbian on Due Date

• 2 days after the PI amount is paid to Orbian (June 1) the Buyer receives their Orbian MT940 statement and
uploads it into SAP.
• The Orbian MT940 statement contains transactions representing the cash settlement received at Orbian from the
Buyer. One transaction for each Payment Instruction settled, allowing the Buyer to reconcile each Payment
Instruction individually, if necessary.
• The following accounting entries, in red (6), are automatically posted in the Buyer SAP system, arising from the
Orbian MT940 statement upload.
• (Recommended) The Buyer clears (using F-03) the related open items, in the Vendor Account Payables Orbian
GL account, using Value Date equal to Due date being processed (May be done daily, weekly or monthly).
• (Recommended) The Buyer clears (using F-03) the related open items, in the Orbian Cash Clearing account,
using Value Date equal to Due date being processed (May be done daily, weekly or monthly).

Note:

• The Value date of this accounting entry in SAP is automatically populated with the Due date of the Payment
Instruction being cash settled, as per the Orbian system.

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