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4. Entering and Managing Master Data

In This Chapter

Skillful use of master data is essential to getting the most out of the SAP® Business One application. Data describing business partners such as customers, vendors, and leads is master data. Descriptions of items that are kept in inventory or manufactured by the company are master data. When a new document, such as a purchase order, an invoice, a sales quotation, or a goods receipt, is created, master data provides much of the necessary information.

Master data also keeps track of predefined values and settings that are used by the automated wizards for payment processing, dunning activities, and material requirements planning (MRP). Default accounts assigned to vendors and customers are master data. The rest of the information that describes what is happening for a specific transaction is called transactional data.

Proper setup and management of master data allow everyone to use SAP Business One to maximum efficiency. If master data is set up accurately, creating a document such as a sales order becomes a lot easier. You only have to confirm that the default information is correct.

However, if master data is not accurate, business processes come to a halt while people figure out how to enter the correct information. This chapter offers guidance to help you understand, set up, and use master data properly so that you and your company get the full benefit of SAP Business One.

How Master Data Is Used in SAP Business One

If business were a game like chess, master data would be a description of each of the pieces. Instead of kings, queens, and rooks, you have customers, vendors, leads, and items. Transactional data describes specific moves that a piece has made. Instead of "rook moves to square a3", you have a task such as "create purchase order for vendor x". Documents such as purchase orders contain data that describes a set of moves that may involve master data records for several chess pieces. For example, a purchase order may include master data describing several items, the ship-to address of the correct warehouse, the preferred payment method, and the name of the contact at the vendor selling the items. All of this master data and more goes into a purchase order.

The reason that master data is so important in SAP Business One is that almost every document is created by starting with one or more master data records. What happens is that the player of the SAP Business One chess game tells the application: "Create a purchase order for this vendor" and the application takes the vendor information from the master data record and copies it into the newly created purchase order. If the data being copied is correct, the purchase order will be correct. If the data is not correct, the purchase order will have to be corrected somewhere down the road. Ensuring that master data is correct makes your work in SAP Business One easier.

Different Types of Master Data Records

In SAP Business One, the pieces on the board fall into two categories: business partners and items.

The business partner category includes:

  • Lead data: Describes people and organizations in the sales pipeline – your potential customers. Lead master data records are used as the foundation for sales and marketing. When you make the first sale to a lead, you change the business partner type to customer, turning the lead into a customer.
  • Customer data: Describes people and organizations to whom your company sells products and services. Customer master data records are used as the foundation for documents related to processing and fulfilling orders for customers and for the wizard for dunning customers.
  • Vendor data: Describes the people and organizations from which your company buys products and services. Vendor master data records are used to create documents related to purchasing and accepting delivery of goods and services and processing payments to vendors.

Because there is a great deal of similarity between the data for each of these types of master data records, SAP Business One uses windows with a common structure (see Figure 4-1) for each record type.


Figure 4-1: Business Partner Master Data window

Item master records are used to create sales quotations, purchase orders, bills of materials, and documents used to move goods in and out of your company. Figure 4-2 shows the structure of the Item Master Data window.


Figure 4-2: Item Master Data window

Item data includes how the item may be purchased or sold, the price of the item, the inventory level, and how purchasing of the item is forecast and planned. Item master data supports a two-way process. Some items in inventory are sold by your company. Other items are purchased by your company. Some items may be fixed assets that are tracked for accounting purposes.

Master data record deletion reminder. One important rule applies to all master data. If a master data record is involved in an accounting or inventory transaction (such as a purchase order, sales order, and so on), it cannot be deleted.

Predefined Values and Defaults

One kind of data used in business partners and items is the data that populates the drop-down lists and shows up in each window by default as the first choice to populate certain fields.

We call the data that populates the drop-down lists "predefined values". For example, when a list of countries is shown, where does that list come from? What about the list of vendors, customers, or items? Or what about different payment terms? All of this data describes various values that are used over and over again in master data records and that are crucial to reporting and to powering the automation performed by various wizards; for example, the payment wizard uses the payment terms information.

Default data is also crucially important. When a new master record is created, SAP Business One uses the settings for default data to determine what data the records start with. What is the most common method of payment? That should be the default payment method. What warehouse are most products shipped from? That should probably be the default warehouse. And so on.

Master Data and Documents

One of the most useful features of SAP Business One is the ability to create documents such as invoices, purchase orders, and such using master data records as a starting point. When creating a new document, you have to specify which master records will be the foundation, and then the appropriate fields are copied into the document. This feature helps reduce data entry errors and speeds up the creation of new documents.

Most of the documents in SAP Business One can be created from one or more master data records. This is possible because an initial document can be created from one kind of master data record but completed by adding others. For example, let's say that a purchase order is created for an item. The vendor information is drawn into that purchase order, and other items can be drawn in as well. This is covered later in this chapter and in greater detail in Chapter 10, which describes how to copy from one or several documents to create the next document in the process flow.

Master Data and General Ledger Account Determination

One of the most important aspects of master data for customers, vendors, and items is the control account determination that appears on the Accounting tab. The whole topic of account determination comes up because SAP Business One automatically creates accounting journal entries when various documents such as invoices are received.

When an A/P invoice is received and posted, for example, SAP Business One creates an accounting journal entry indicating an increase in accounts payable. The question that account determination answers is: To what account should that journal entry be posted? The Accounting tab of master data records allows you to set which account receives automatically created journal entries.

Usually, all of the automatically generated entries are posted to what is called a control account, which is an account that bundles journal entries from all sources together. Customers have a default accounts receivable control account; vendors have an accounts payable control account; and items have an inventory control account.

Proper general ledger (G/L) account determination is such a big deal and is mentioned so often in this book because it creates such a mess if it is done incorrectly. Hundreds of automatically generated incorrect journal entries must be reversed and reposted correctly, and much of that work has to be done manually. The point for this chapter is that G/L account settings are very important and must be set up correctly. This is an area in which your SAP Business One implementation partner provides a good deal of help.

How Master Data Is Used in Reporting

Master data plays a crucial role in allowing SAP Business One reports to be created to meet your needs. The Group field of the business partner master data record and Item Group and Item Type of the item master data record allow master data records to be classified in ways that help you keep track of and report on your business. Business partner and item master data records also have a set of general purpose properties, on/off switches if you will, that can be assigned values.

The reporting mechanisms in SAP Business One can use these classifications to select and aggregate data to help provide the right level of detail. If you want to report on how items introduced in a specific year fared, create an item property. If you want to separate retailers from wholesalers in reports, create a business partner property. You must consider the types of information you want in your reports to set up master data most effectively.

     

The Master Data Creation and Management Process

When you set up SAP Business One, you work with an implementation partner who is expert at making the application work for your business. As shown in Figure 4-3, there are two broad phases to creating master data – setting up the master data and then using it to run your business.


Figure 4-3: Master data process overview

Master data setup is a key part of implementation. This phase involves creating predefined values and defaults, making sure the control accounts are properly determined, and importing data.

Data import tip. SAP Business One allows you to import data automatically by using a tool called the data transfer workbench, which works on data from all core business areas, such as accounting, sales, purchasing, and logistics. The data transfer workbench tool transfers master data, such as business partner and item records, as well as transaction data from actual sales orders and invoices, because both master data and transaction data must be available in your SAP Business One application. For more information on the data transfer workbench, please refer to SAP Business One online help or consult with your implementation partner.

The creation of master data records is part of the daily work of the SAP Business One user. While SAP Business One does everything it can to help make sure master data is created correctly, mistakes are inevitable, and a regular quality control review is part of any sound master data management process. As business needs change, predefined values and default values may also need to be adjusted (for example, if the company is reorganized).

The following sections summarize how each of the tasks involved in managing master data is performed. For additional information on any of these topics, refer to online help or consult with your implementation partner.

     

Setting Up Predefined Values and Defaults for Master Data

In the ideal situation, when a user creates a new master data record or a document that draws data from a master data record, adjusting the data is a simple process of looking everything over and changing a few data items here or there if needed, preferably by using drop-down lists and other error-resistant methods. The rationale for creating this type of master data is to help SAP Business One make this ideal situation happen as frequently as possible. The predefined values appear in the drop-down lists for countries, groups of customers, and payment terms. The default data is the data that fills in fields as a first choice.

Each of these settings provides defaults that are used when master data records are created and controls various behavior in documents that use master data. For example, in the Inventory tab of the System Initialization window, you can select a checkbox to indicate that a given item should be added automatically to every warehouse. Please note that any change that you submit to the defaults already defined does not influence the existing master data record. The change is applicable for master data records that are created after the change was submitted.

There is no magic formula for getting predefined values and default data right. The correct values for each type of data vary from business to business and industry to industry. SAP Business One implementation partners are valuable in getting predefined values and default data set up correctly, but even in the best case, corrections and additions are inevitable. Expect to make a few adjustments as your understanding of SAP Business One improves.

Setting up predefined values and defaults happens in four places in the administration module of SAP Business One:

  • AdministrationSystem InitializationGeneral SettingsBP tab
    Defaults and settings such as credit and commitment limits, commissions, payment terms, payment methods, dunning terms, and approval procedures for business partner master records, as shown in Figure 4-4
  • AdministrationSystem InitializationGeneral SettingsInventory tabItems subtab
    Defaults and settings such as inventory management method, serial number assignment, and planning parameters
  • AdministrationSetupBusiness Partner
    Defaults and settings for predefined values such as countries, customer and vendor groups, custom properties, and address formats
  • AdministrationSetupInventory
    Defaults and settings for predefined values such as items groups, item properties, warehouses, units of measurement, customs groups, and shipping types

When working with business partner and item master data, it's helpful to know what fields are mandatory, particularly if you are importing master data from another application. Appendix B provides checklists for setting up business partner and item master data.


Figure 4-4: General settings for business partners

     

Creating Business Partner Master Data

With all of the predefined values and defaults in place, it is possible to create master data records quickly and efficiently. As we pointed out in the process overview of setting up master data earlier, it is likely that much of the data will be imported from existing sources and then massaged into shape. But after that is done, many people will be adding new business partner master records during the course of business as usual to keep track of new customers and vendors, and that's what we are going to review in this section. We will focus on:

  • The data that resides in each type of master record
  • How that data is used by other parts of SAP Business One

After we cover business partners, we will do the same for item master data in the next section.

Business Partner Master Data Window

The customer, lead, and vendor master data records share a common structure. Figure 4-1 showed the header information and the General tab. Figure 4-5 shows a customer master data record with the Accounting tab selected.

Note that in the following discussion we use the term "business partner" to describe both vendor and customer master data settings.


Figure 4-5: Business Partner Master Data window, Accounting tab

Each of the tabs in the master data record has the same header information and a footer that consists of a row of buttons along the bottom.

By using the online help on any of these tabs, you can get a description of each field. Here's an overview of key aspects of the header and tabs of the business partner master record.

The Business Partner Master Data header is divided into two groups of fields. The left side lists crucial information about the company. On the right are several fields summarizing the financial activity related to the customer. Here are some highlights:

  • Each business partner has a unique ID assigned by the user. If a business partner is both a customer and a vendor, you must create two business partner master data records: one customer type and one vendor type.
  • The Foreign Name shows the name of the company in its native language.
  • The Group specifies the user-defined category in which the customer falls. You choose from a drop-down list of groups defined in the predefined values mentioned earlier. Groups can be used for reporting and dividing up customers for other types of processing.
  • The Currency setting is very important because it determines the currency that will be used for documents created for this customer.
  • The orange navigation arrows next to the fields on the right side of the header allow you to drill down to see the detail of the documents that make up the summary numbers.
  • The graph icons on the far right of the header allow you to display graphs that summarize the activity for the customer.

The General tab, shown in Figure 4-1, provides a summary of various important aspects of a customer as well as key information about how your company works with the customer. Information ranges from contact information, such as phone numbers and e-mail addresses, to preferred shipping methods to information about which salesperson on your staff handles the account. Business partners, either customers or vendors, can be assigned to territories in the General tab and can also be marked as active or on hold. (Note that all business partners are considered active, even if they are not marked explicitly as active.)

In the Contact Persons tab, you can keep track of the contact details for people associated with the business partner and their contact details. One of those contacts can be set as the default, which means that one name appears when company information is displayed (for example, in the General tab of the customer master record).

The Addresses tab keeps track of multiple bill-to and ship-to addresses for each customer and allows one of each type of address to be set as the default. The ship-to address is used in the Logistics tab of the sales order.

The Payment Terms tab enables you to define all the parameters related to the calculation of the due date of invoices, and how and when the payments should take place (for example, four installments, the first due 30 days after the invoice is created, and holidays are not considered as business days for the payment date calculation).

The Payment System tab specifies the set of parameters that are required for efficient use of the payment wizard.

The Accounting tab, shown in Figure 4-5, displays the control account settings that were made as part of the crucially important G/L account determination. Other fields control dunning and enable you to assign one customer to a group that will be consolidated for billing.

The Properties tab allows you to set any of the 64 custom properties associated with each master record. Defining the meaning of these properties is part of the job of setting up predefined values. Properties can be used in reporting or to control other behavior of SAP Business One.

The buttons at the bottom of the customer record shown in Figure 4-5 allow changes to be accepted or discarded (OK or Cancel) or send you to see lists of activities related to the customer (Related Service Calls and Related Activities). The Activity button allows you to record a new activity, such as the results of a sales call or an appointment.

Lead Master Data

When you identify a potential customer, you can create a lead master data record using the Business Partner Master Data window. This enables you to document and track the presales activities with this lead. You can create the following documents for lead master data: sales quotation, sales order, sales opportunity, and activity.

When the lead takes the next step and buys a product or service, the lead becomes a customer. In this case, all you have to do is to change the type of the business partner master record from lead to customer. All the information you have added to the lead master data record is saved, as well as the documents you created for this lead.

For example, if you created a sales order for a lead, once the lead becomes a customer and buys the items in the sales order, you can use the sales order as the basis for creating a delivery document and later on an invoice.

     

Creating Item Master Data

Although item master data is completely different from business partner master data in content, both are set up in a robust yet versatile way. For example, item master records keep track of items that are sold, purchased, and inventoried by your business. Frequently the same items are purchased, inventoried, and sold. The information is the same; it is just used differently. Item master data records are also used to keep track of fixed assets for accounting purposes.

Item master data is at the heart of almost every process in SAP Business One. It is used in almost every module, including the sales, purchasing, production, MRP, inventory, and service modules.


Figure 4-6: Item Master Data window, Inventory Data tab

Figure 4-6 shows the Inventory Data tab of the Item Master Data window, the structure of which is similar to the Business Partner Master Data window. At the top of the window, a header provides the essential summary information about the item. Each tab on the window goes into greater detail about various aspects of the item.

What follows is a brief tour of the information in the header and on each tab, with an explanation of how the data on each page changes the behavior of SAP Business One.

The header of the item master data record contains general information about the item, including a unique ID number assigned by the user, a description (including a description in a foreign language), and settings to determine the type of the item, the group it belongs to, the price, and the applicable price list. Checkboxes on the right indicate whether the item is kept in inventory and whether it is offered for sale or purchase (in many cases both apply). The item can be marked as a fixed asset with another checkbox.

The General tab of the Item Master Data window has a mix of information about the manufacturer of the item, additional identifiers, shipping methods, and issue method.

The Purchasing Data tab indicates the vendor who sells the item, how to identify it in a catalog, the units of measurement used for the item for purchasing purposes, and the actual size of the item. For items with a purchasing history, you can click on the chart icon on the lower left of the tab to display a graphical purchase analysis.

The Sales Data tab contains similar fields to the ones in the Purchasing Data tab about units of measurement, packaging, and other parameters that determine how the item is handled. It also offers a graphical view of sales data for the item when you click on the chart icon in the lower left of the tab.

The Inventory Data tab, shown in Figure 4-6, tracks quantities in warehouses and sets inventory and management parameters, such as the following:

  • Valuation method, minimum and maximum inventory levels, and default warehouse
  • Indication whether the item quantities are managed in the warehouse
  • The actual inventory for the item in each of the warehouses

The Planning Data tab contains settings that control how the planning for purchasing or producing an item takes place. The order interval, order multiple, and minimum order quantity can be set here, as well as the required lead time in days.

     


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