Document flow in SAP Business One: base and target documents, Copy From and Copy To, what each document posts, and when to close or cancel

Base documents and target documents.

When you create a document from an existing one, the existing document is the base document and the new one is the target document. B1 copies the business partner, items, quantities, prices and the rest, and keeps the link per row. From a row you jump back and forth with Go To → Base Document and Go To → Target Document in the menu bar.

There are two ways to copy. In the target document you choose the business partner, then Copy From and the type of document to draw; B1 lists the open documents of that business partner. In the base document you choose Copy To and the type of target document. To choose rows, quantities or freight instead of copying everything, the Draw Document Wizard opens. Not every type can be drawn into every other: the Copy From list shows only the allowed types, and only documents that are still open.

The sales chain.

• Sales Quotation: an offer to a customer or lead. Posts nothing.
• Sales Order: the customer's commitment. Raises the committed quantity and so lowers the available quantity; no journal entry.
• Delivery: the goods leave the warehouse. Lowers in-stock and committed quantities; with perpetual inventory it also posts the cost of the goods.
• A/R Invoice: the request for payment and the revenue. Always a journal entry. Based on a delivery it leaves stock alone; without a delivery it also issues the goods. The invoice is the only mandatory document in the sales chain.
• Return: the correction for a delivery that has not been invoiced. Puts the goods back into stock. A Return Request can come first when returns are agreed in advance.
• A/R Credit Memo: the correction for an invoice, in quantity and amount. Based on a return it corrects only the amounts, because the return already took care of the stock.
• Down payments: an A/R Down Payment Request posts nothing until it is paid; an A/R Down Payment Invoice posts to the accounts but not to stock. Both are drawn into the final A/R invoice.

The purchasing chain.

• Purchase Request: an internal request from a colleague for goods or services. Posts nothing.
• Purchase Quotation: a request for prices to one or more vendors, to compare offers. Posts nothing.
• Purchase Order: the order to the vendor. Raises the ordered quantity and so the available quantity; no journal entry.
• Goods Receipt PO: the goods come in. Raises the in-stock quantity; with perpetual inventory it posts the stock value.
• A/P Invoice: the vendor's invoice. Always a journal entry: the liability, tax and freight. Without a goods receipt PO it also receives the goods. As in sales, it is the only mandatory document.
• Goods Return: sends goods from a goods receipt PO back before they are invoiced. Lowers stock.
• A/P Credit Memo: the correction for an A/P invoice, in quantity and amount. A/P down payments follow the same pattern as on the sales side.

What each document posts.

With perpetual inventory, the usual setup, the logistic documents post the stock value and the invoices post the money. Roughly, with moving average valuation:

• Delivery: debit cost of goods sold, credit inventory, at item cost, not at the sales price.
• A/R Invoice based on a delivery: debit the customer, credit revenue and output tax. An A/R invoice without a delivery posts both entries in one.
• Return based on a delivery: the cost entry of the delivery reversed, at the item cost from that delivery.
• A/R Credit Memo based on an invoice: revenue, tax and customer reversed, and the goods back into stock at the cost from the invoice. Based on a return: only the financial part.
• Goods Receipt PO: debit inventory, credit the allocation account, at the price in the document. The allocation account stands in for the vendor until the invoice arrives; its balance is the value of goods received and not yet invoiced.
• A/P Invoice based on a goods receipt PO: debit the allocation account, credit the vendor, plus input tax. If the invoice price differs from the receipt, the difference goes to inventory and changes the item cost. Without a receipt: debit inventory, credit the vendor.
• Goods Return based on a goods receipt PO: the entry of the receipt, reversed.

Quotations, orders and requests never post. Without perpetual inventory, deliveries and receipts change only quantities, not the ledger. Which accounts are used comes from the G/L account determination; see G/L account determination in SAP Business One.

Closing or cancelling.

A document stays open until everything has been copied to a target document. When the rest will never be needed, you close or cancel it from Data in the menu bar. The two are not the same.

• Close (Data → Close). The document gets status Closed: the open remainder disappears and it can no longer be copied or changed, but it stays visible. Closing does not correct stock: a closed delivery does not bring goods back, a closed goods receipt PO does not take them out. With perpetual inventory, closing a goods receipt PO creates a clearing journal entry, for which B1 asks a posting date. Use Close for an order whose rest will never come.
• Cancel for quotations, orders, requests and down payment requests. This only sets the status to Cancelled. A purchase order that has been copied, even partly, cannot be cancelled; you close it.
• Cancel for deliveries, returns, goods receipt POs, goods returns, invoices and credit memos. B1 creates a cancellation document that reverses stock, accounting and tax, closes both documents for good and reopens the base documents so they can be copied again. This works only within the number of days set in Document Settings, and not for landed costs or down payment invoices.
• Delete is not an option for deliveries and invoices, and their accounting data cannot be changed after adding. The correction is always a new document.

Partial copies, open quantities and the Relationship Map.

A copy does not have to be complete. Copy three of ten ordered pieces into a delivery and the order stays open for seven; the next Copy From offers those seven. Only when everything is drawn does the base document close by itself. A sales quotation is the exception: it can be copied again after closing if Allow Copying Closed Quotations to Target Doc. is selected in Document Settings.

In a drawn delivery or invoice you can lower a copied quantity but not raise it; for more, add a new row. To see what is still open, use the Open Items List under Sales – A/R → Sales Reports or Purchasing – A/P → Purchasing Reports; from there you can also close documents.

The Relationship Map shows the whole chain at once. Right-click in an existing document and choose Relationship Map: you see its base and target documents and the journal entries linked to them, so you find the missing step without opening ten windows.

Common mistakes.

• An invoice without reference to an existing delivery. The goods leave stock twice. Always copy the invoice from the delivery.
• A credit memo where a return belongs, or the other way round. A return corrects a delivery that has not been invoiced; once there is an invoice, the correction is an A/R credit memo. In purchasing the same goes for goods return and A/P credit memo.
• Closing a goods receipt PO for goods that went back. The stock stays. Use a goods return.
• Orders that stay open forever. The rest of a partial delivery that will never come keeps counting as committed or ordered, and the available stock is wrong. Close them.
• Typing a document again instead of copying it. The link is lost, the base document stays open, and the Relationship Map no longer shows what belongs together.
• An empty Copy From list. The base document is already closed, belongs to another business partner, or is of a type that cannot be drawn into this document.

How KoonLearn approaches it.

KoonLearn, our training simulation for SAP Business One, is built around this chain. Its client, rebuilt for training on SAP Business One 10.0 FP 2608, has Copy From and Copy To: you choose rows and quantities, with the open remainder proposed, and a base document closes when everything has been drawn. An accounting engine of its own really posts, and the journal entry preview shows what a document will post before you add it.

In the end-user and key-user track, chapter 03 runs from purchase order to goods receipt PO, A/P invoice and payment, with goods return and A/P credit memo; chapter 04 from quotation to order, delivery, A/R invoice and incoming payment, with return and A/R credit memo. Scenario and troubleshooting tasks ask why a delivery posts at cost and not at the sales price, or why a goods receipt PO is missing from the Copy From list. The partner track adds freight and landed costs, the account determination behind purchasing, troubleshooting such as a partly received purchase order that has to be closed, and exam training in C_TB120 style. Chapter 03 Purchasing is free without an account, for both tracks: start the free chapter on learn.koonsystems.com. KoonLearn is exam preparation and practice, and it is not affiliated with SAP SE.

Sources: SAP Business One 10.0 help documentation (sales and purchasing process, Draw Document Wizard, closing and canceling documents, Relationship Map, down payments, Open Items List); SAP's How to Set Up and Manage a Perpetual Inventory System in SAP Business One 10.0; the KoonLearn chapter overview. SAP and SAP Business One are trademarks of SAP SE.