We will now begin the lecture on purchase settlement and sales settlement
The lecture agenda is as follows
Purchase settlement, which is carried out between SERVEONE and suppliers for delivered orders,
and sales settlement, which is carried out between SERVEONE and clients
They are divided into these two categories
We will go over each of these settlement processes
Before we begin the lecture, let me introduce myself
I joined the company in 2014 and have been working in purchasing for 10 years
I am currently in the Purchasing Analysis Team, handling purchasing planning
My name is Sungjin Cho, Manager of the Purchasing Analysis Team
It is an honor to deliver this lecture,
and I will do my best in presenting it
First, an overview of purchase settlement
By definition, purchase settlement means
confirming as debt the purchase of product inventory supplied by a vendor
In business terms, it means confirming the amount payable to the vendor
and issuing a purchase tax invoice
The timing of purchase settlement differs by delivery type
You can think of the settlement point as the moment
when product ownership and management authority are transferred to SERVEONE
For direct delivery, the purchase settlement point is when the vendor completes delivery to the client
For non-stock and center stock, it is when the goods are received at the hub
For VMI, it is when the goods are shipped out
For non-stock, center stock, and VMI,
because they pass through our hub,
no separate proof of receipt is required
However, for direct delivery, SERVEONE must confirm the physical movement,
and proof of delivery must be uploaded when the vendor marks delivery complete
Later, at the purchase settlement stage, the validity of this document is reviewed
Related processes will be explained later in delivery proof monitoring
Next, let’s look at the business process of SERVEONE
handling purchase settlement with vendors
Here is the basic process of purchase settlement
As mentioned earlier, direct delivery is settled at the delivery completion point,
non-stock and center stock at the hub receipt point,
and VMI at the hub shipment point
Once the purchase settlement target is confirmed,
settlement is carried out automatically or manually
On D+1, the Business Management Team closes all purchases in bulk,
and the purchase invoice is issued in reverse
Although the process allows for manual settlement,
99% of purchase settlements are processed automatically,
so there is no need to focus much on manual cases
Finally, when the vendor approves the reverse-issued invoice within the deadline,
the purchase settlement process is complete
Next is the settlement schedule
Each month, the closing schedule is set so that all tasks by management unit
must be finalized within three business days of the end of the month
However, if the first business day of the following month falls on a public holiday,
the Business Management Team will share the adjusted schedule in advance
Please keep this in mind when carrying out your tasks
For closing, the vendor must complete delivery
for the customer’s SO by month-end,
and all hub inbound and outbound processing must also be finalized
Purchase settlement is automatically closed in the system by the first business day of the following month
Next, the Business Management Team issues reverse-issued purchase tax invoices for each vendor
on the second business day
In principle, purchase settlement closing must follow the monthly closing schedule,
and the Business Management Team
automatically performs system-based purchase settlement for each vendor
Unlike normal invoices, the tax invoice is reverse-issued not by the vendor (the seller)
but by SERVEONE (the purchaser)
They are issued individually depending on the tax code, settlement currency, and settlement type
All reverse-issued tax invoices must be approved by the 10th of each month
If the 10th is a public holiday, approval must be completed by the next business day
If approval is not completed within the deadline,
a 1% penalty will be charged equally to both parties
The vendor’s primary contact, the purchasing manager,
must encourage their vendors to approve invoices by the closing date
Next is our payment terms
This is one of the most frequently asked questions in the field
and is a very important part of your work
In fact, for purchase settlements, since orders that have been delivered
are automatically processed in the system,
there’s nothing you need to separately manage or worry about missing
However, when it comes to payment terms, they involve company policy
So it’s essential that you keep them in mind when communicating with our partners
Our company makes payments to partners exclusively
through the issuance of purchase card notes, without exception
And depending on the type of settlement,
the issue date of the tax invoice and the purchase card can differ
Monthly settlement is done once a month at month-end,
while bi-monthly settlement is carried out twice a month, on the 15th and at month-end
In terms of tax classification, taxable and tax-exempt are grouped together,
while zero-rated differs only in the invoice issue date depending on the settlement type
Regardless of whether a supplier is subcontracted or not,
a promissory note with a 14-day maturity from the invoice issue date is issued
For taxable and tax-exempt cases, the maturity period differs depending on subcontract status
For subcontractors, it is 60 days from the invoice issue date,
while for non-subcontractors, it is 120 days
These conditions can be mixed and somewhat complicated
Therefore, purchasing managers must be able to distinguish
the purchase card issue date and the invoice issue date
based on whether it’s monthly settlement, taxable/exempt, and subcontracted or not
You must also ensure that partners are clearly informed of these rules
Since the same details are posted on the partner portal,
please guide partners to refer to that information as well
As mentioned earlier, this part is policy-based,
so it may change in the future
Therefore, purchasing managers must always keep themselves updated
Now let’s look at common purchase settlement errors
The first is when a purchasing manager misregisters the tax code,
causing a mismatch between taxable and exempt items
The second is when a sales manager changes the distribution route after the purchase settlement is closed,
resulting in taxable or exempt status being misprocessed as zero-rated
To prevent this, purchasing managers must register products
with the correct tax status in their category,
and sales managers must finalize any route changes
before the settlement closing
to prevent from the mismatch
As you know, tax codes are taxable, exempt, and zero-rated
General transactions are taxable,
some products are exempt from VAT reporting,
and exports are zero-rated where VAT is reported and refunded
Taxable and zero-rated codes
are straightforward,
but exempt items must be handled carefully by purchasing managers
Representative exempt items include books, flowers, salt, rice, kimchi, and honey
When registering these products,
managers must set the tax code as exempt
Most purchasing managers in these categories
already know this,
but sales or operations managers may not,
so errors can be discovered by clients
at the settlement stage,
leading to correction requests
To avoid delays and losses,
knowing the main exempt categories
and applying correct tax codes is essential
Next is Delivery Evidence Monitoring
Currently, SERVEONE performs automatic purchase settlements
for completed orders to improve efficiency through a system-based process
However, since payments are being made,
it is necessary to verify whether the transactions are real
This task is called Delivery Evidence Monitoring,
which involves checking the validity of delivery evidence uploaded by suppliers
If any documents are found invalid, payment to the supplier is put on hold
The detailed process will be explained in the following section, together with the Arena screens by task owner
The eligibility of delivery evidence is reviewed, and it is either approved or rejected
The purpose of monitoring is to check the validity of supporting documents
and, based on this, either proceed with or withhold payment
in order to ensure the authenticity of transactions
In the next section, I will explain the key tasks by role
Looking at the key tasks by role,
the operations manager monitors eligibility for each order
and, through correction and re-upload with the supplier,
confirms the final list of payment-withheld orders
Next, the division analyst submits the request for payment hold,
after which the business management team withholds the payment
After that, the purchasing manager reviews the withheld orders,
guides the supplier, and checks for valid supporting evidence
If proper delivery completion is confirmed, a release request is submitted,
and if not, the order is processed as a return
There are exceptions to monitoring, orders through hub delivery that guarantee authenticity
such as non-stock, center stock, and VMI orders,
orders from linked or overseas partners that do not use the partner front,
first SSCS orders where purchase settlement follows sales settlement,
and mobile delivery completed orders are not subject to delivery proof monitoring
Here is a process map showing the workflow by each responsible party
Being aware of this will help you in your tasks
Lastly, the operations manager
performs delivery proof monitoring according to the eligibility criteria
based on the supplier’s shipping method
They check whether the uploaded documents, such as transaction statements
or other forms of proof, match the actual order
If the uploaded proof differs from the order,
or if receipt cannot be confirmed
and authenticity is not verified, they request the supplier to provide new proof
Since verification requirements vary depending on the type of documentation,
please review them carefully and keep them in mind
Next, let’s look at sales settlement between SERVEONE and its clients
Unlike purchase settlement, which is automatically processed in the system,
sales settlement involves more manual work,
as operations managers handle much of the preparation and invoice issuance manually
However, since each operations manager in charge of their respective unit already oversees this process in detail,
they are far more knowledgeable about it than I am
Therefore, for sales and purchasing managers,
it’s sufficient to simply understand the overall flow of the process
Looking at when sales settlement takes place,
it comes at the very last stage of the overall flow I showed you at the beginning of this lecture
By definition, sales settlement means
recording and organizing SERVEONE’s sales
In practice, it represents the final stage where SERVEONE’s revenue is actually realized,
making it an extremely important process
Now let me walk you through the sales settlement process
The process goes as follows
Managing undelivered orders
Processing receipts in the system and prompting customers for settlement
Preparing closing statements and coordinating with customers
Finalizing mutual closing statements and managing the review month for system settlement
Processing sales and issuing tax invoices
The first step is managing undelivered orders
This involves handling undelivered orders directed to both customers and suppliers,
as well as internal follow-ups to ensure completion
The operations manager encourages customers
to complete pending pre-receipt orders,
confirms delivery schedules with suppliers,
and pushes for undelivered orders to be finalized
Internally, the operations manager also reviews whether there are
any unprocessed pre-receipt orders from either customer or supplier requests
Along with clearing undelivered orders, they also check incomplete receipt items
and urge customers to finalize receipt processing
As shown in the table, in some cases sales settlement is possible
when orders are automatically received at the supplier’s hub upon delivery completion
However, in cases of semi-automatic or manual receipt types,
where the customer must perform the receipt in the system, sales settlement can only proceed after customer confirmation
For this reason, operations managers must actively check
and follow up with customers on unprocessed receipt items
In the case of semi-automatic or manual receipts,
customers must complete the receipt process themselves through the customer front
Once all receipts are finalized, the operations manager prepares the monthly closing details in the customer’s requested format
and goes through a mutual confirmation process with the customer
After the monthly closing list is confirmed,
the next step is inspection month management for system-based sales settlement
The inspection month refers to the settlement month automatically calculated based on the receipt date
It is also called the expected settlement month
For sales settlement to be processed in the system,
the inspection month must match the current settlement month
Handling previous and next month after closing confirmation
means inspection month control
There are two cases in inspection month management
The first case is when the settlement date is the 25th
For example, if an order is delivered on April 25,
the inspection month is automatically set to April based on the unit’s settlement date
On the other hand, if an order is delivered on May 25,
the inspection month is automatically set to June based on the unit’s settlement date
Therefore, in both cases,
adjustments are required to process the settlement in May
In the first case, for orders with an inspection month of April,
you need to carry them over and change the inspection month to May
For orders with an inspection month of June, you need to backdate them
so the inspection month is adjusted to May
Through inspection month management, once the orders for the current month’s sales settlement
are ready for processing,
you can check and process the sales settlement targets in SMRO
You can also check incomplete sales settlement targets and process them,
or check completed sales settlement targets and cancel them if needed
However, canceling a sales settlement requires meeting the following conditions
The sales settlement must have been completed for each order,
and the sales settlement for the business unit must also be closed
If a specific order has already been settled on the purchasing side,
but not yet with the customer,
it will result in unsettled sales and creat consignmen inventory
Consignment inventory occurs when the purchase settlement is completed, meaning the liability is confirmed,
but the sales settlement is incomplete,
so the receivable is not confirmed
Consignment inventory is tracked monthly across the Operations, Sales, and Business Management teams
to monitor reasons and completion status
The management process works as follows
After unsettled cases are aggregated, settlement processing is blocked,
and for Sales and Operations staff,
a To-do list of unplanne settlements is generated
The Operations team enters the reasons and plans for unsettled items into the system
Once the Sales team gives final confirmation,
the settlement block is released, and sales settlement can proceed
Sales settlements that cannot be completed are carried over to the following month,
and any orders still unsettled are cleared on a quarterly basis
As shown in the reference data, reasons for unsettled cases are categorized,
and to minimize consignment inventory and maintain accurate records,
it is important to enter the actual cause precisely
Once sales settlement is completed in SMRO, a tax invoice is issued
When SERVEONE, as the seller, issues an invoice to the buyer, this is called standard issuance
The opposite case is called reverse issuance
Additionally, if a standard issuance is requested outside of SMRO by the customer
and processed through UCESS DI or SmartBill,
this is called external ASP issuance
As shown in the table, while the buyer is involved in the issuance process,
the final electronic signature on the tax invoice is made by the seller
So, the seller holds ultimate responsibility,
and even in cases of reverse issuance, SERVEONE must carefully review all details
The ability to amend a tax invoice depends on the situation
There are two common cases where amendments are required
when details such as supply date, item name,
or supply amount need to be corrected
If the invoice is only in the registered state, amendments are possible
However, once it has been fully issued, amendments are no longer allowed
In that case, the issued tax invoice must first be canceled, and then a new one must be re-issued
This applies to the registration and issuance process of a regular tax invoice
For reverse-issued or third-party ASP-issued tax invoices, only cancellation is possible
If a tax code change is required,
first cancel the sales settlement,
then update the tax code, and finally re-issue the sales settlement tax invoice
It is therefore essential to strictly comply with this process
Finally, let’s look at the Sales Settlement Discrepancy Handling Process
In principle, once the monthly sales targets are processed,
the corresponding tax invoices are issued
So, the sales settlement targets and tax invoice targets should always match
However, discrepancies can occur due to reasons such as
delays in reconciliation with the client, retroactive price adjustments, or order production
When these discrepancies occur,
a process correction task must be carried out
The process correction differs depending on whether it is handled on D+2 or D+3,
so please follow the appropriate process when carrying out the task
That concludes the lecture on SERVEONE\'s MRO Process, Purchase Settlement
and Sales Settlement
Thank you