The AcquisitionPayment Business Process

1
The Acquisition/Payment Business Process

• Chapter 9

2
Chapter Learning Objectives

• Identify activities and documents common to
  acquisition/payment business processes for
  various enterprises
• Identify the components of the REA ontology in
  the acquisition/payment business process
• Explain how the acquisition/payment business
  process fits into an enterprises value system
• Explain how the acquisition/payment business
  process fits into an enterprises value chain
• Create a REA business process level model for an
  enterprises acquisition/payment business process
• Identify common information needs within the
  acquisition/payment process
• Create queries to meet common information needs
  in the acquisition/payment process

3
Acquisition/Payment Process in an Enterprise
Value System
4
Acquisition/Payment Business Process in
Enterprise Value Chains
Partial value chain for a manufacturer
Partial value chain for a distributor
5
REA Acquisition/Payment Business Process Level
Pattern
6
REA Acquisition/Payment Business Process Level
Pattern Operating Assets
7
Acquisition/Payment Process Events

• Instigation Events in the Expenditures
• Usually internally instigated triggered by an
  identified need
• Internal agents -- department supervisors and
  purchasing agents
• External agents -- suppliers
• Resources -- type

8
Purchase/Requisition Event

• Purchase Requisition Event
• Internal agent -- department supervisor
• Resources - type

9
Acquisition/Payment Process Events

• Mutual Commitment Events in the Acquisition/
  Payment Process
• Involve the enterprise and an external business
  partner agreeing to exchange resources at a
  defined future time
• Internal agents -- purchasing agents
• External agents -- suppliers
• Resources -- type

10
Acquisition/Payment Process Events

• Economic Increment Events in the Acquisition
  Cycle
• Represent the receipt of goods or services for
  which the enterprise will give up some other
  resource
• Resources vary for different types of businesses
• Inventory, Services, Temporary use of asset
• Internal Agents -- purchasing agents and
  receiving clerks
• External Agents -- suppliers or vendors

11
Acquisition/Payment Process Events

• Economic Decrement Events in the Acquisition
  Cycle
• Almost always is a Cash Disbursement event
• An economic decrement event whereby the
  enterprise transfers ownership of cash (or
  equivalent) to a supplier
• Resource is typically cash
• Internal agents -- cashiers, accounts payable
  clerks, or other financing personnel
• External agents -- suppliers or vendors

12
Acquisition/Payment Process Events

• Economic Increment Reversal Events
• Events in which previous economic increment
  events are reversed or negated
• Resources, Internal Agents, and External Agents
  are the same as those for economic increment
  events

13
Acquisition/Payment Process Relationships

• Fulfillment relationships
• Between Purchase Requisition and Purchase Order
  events
• Between Purchase Order and Purchase (or Rental or
  Service Acquisition) events
• Duality relationships
• Between Purchase (or Rental or Service
  Acquisition) and Cash Disbursement (or
  Disbursement of Bartered Goods/Services) events
• Reversal relationships
• Between Purchase and Purchase Return events
• Participation relationships
• Between each event and each internal and external
  agent

14
Acquisition/Payment Process Relationships

• Proposition relationships
• Between Purchase Requisition event and Inventory
  (or Inventory Type or Service Type)
• Reservation relationships
• Between Purchase Order, Rental Contract, or
  Service Contract and Inventory (or Inventory Type
  or Service Type)
• Also between Purchase Order, Rental Contract, or
  Service Contract and Cash
• Stock flow relationships
• Between Purchase (or Rental or Service
  Acquisition) and Inventory (or Inventory Type or
  Service Type)
• Between Purchase Return and Inventory (or
  Inventory Type)
• Between Cash and Cash Disbursement

15
Resource Query Types

• Detailed status information at one or more points
  in time for each resource instance
• Detailed status information at one or more points
  in time for only those resource instances meeting
  specified criteria
• Summarized status information at one or more
  points in time for all resource instances
• Summarized status information at one or more
  points in time for only those resource instances
  meeting specified criteria

16
Event Query Types

• Detailed information about each event instance
• e.g., what happened, when and where did it
  happen, etc.
• Detailed information about each event instance
  that meets specified criteria
• e.g. events of a specified type that occurred
  during a specified time period or that occurred
  at a specified location
• Summarized information for all instances of an
  event type for a specified time period
• e.g. total of the event instances during a
  specified time period
• Summarized information for only those instances
  of an event type for a specified time period that
  meet specified criteria
• e.g. average dollar value of the event instances
  for a specified location during a specified time
  period

17
Agent Queries

• Detailed status information at one or more points
  in time for each agent instance
• Detailed status information at one or more points
  in time for only those agent instances meeting
  specified criteria
• Summarized status information at one or more
  points in time for all agent instances
• Summarized status information at one or more
  points in time for only those agent instances
  meeting specified criteria

18
Duality Relationship Query Types

• Identification as to whether a specified exchange
  is completed
• Identification of completed exchanges for a
  specified time period
• Identification of incomplete exchanges for a
  specified time period
• Calculation of the amount of claims, e.g. prepaid
  expenses, payables, unearned revenues, or
  receivables, either in total or for a specified
  exchange event
• Calculation of the total or average length of the
  timing difference(s) between the events involved
  in one or more exchanges

19
Querying for Accounts Payable

• Conceptually
• Dollar value of acquisitions of goods and
  services (except employee labor) not yet paid in
  full
• Practically
• Total of acquisitions through balance sheet date
  minus total of cash disbursements through balance
  sheet date that applied to acquisitions. Also
  minus purchase returns/discounts through balance
  sheet date.
• MUST include ONLY ending date constraint (balance
  sheet items reflect cumulative data from
  beginning of company through balance sheet date).
• Use acquisition date to determine which
  acquisitions to include.
• Use cash disbursement date and duality
  relationships to determine which cash
  disbursements to include. Be sure to aggregate
  cash disbursements that apply to the same
  purchase before subtracting from purchase amount
• Note Acquisitions Cash disbursements from
  Vendors is not acceptable as it is theoretically
  less sound than using the duality relationships
• Likely need for outer join and Nz function in
  Access (for acquisitions with no matching cash
  disbursements)

20
Stockflow Relationship Query Types

• What resources or resource types were increased
  or decreased by an economic event?
• What quantity of a resource or resource type was
  increased or decreased by an economic event?
• What dollar value of a resource or resource type
  was increased or decreased by an economic event?
• When did an event increase or decrease a specific
  resource or resource type?
• Where did an event increase or decrease a
  specific resource or resource type?

21
Fulfillment Relationship Query Types

• Identification of unfulfilled commitments or
  instigation events
• Identification of fulfilled commitments or
  instigation events
• Identification of commitment events that were not
  preceded by instigation events, or identification
  of economic events that were not preceded by
  commitment events
• Calculation of length of time between instigation
  and commitment events or between commitment and
  economic events
• Identification of causes of commitments and/or of
  economic events
• Identification of results of instigations and/or
  of commitment events

22
Proposition Relationship Query Types

• What resources or resource types does the
  instigation event propose to increase or
  decrease?
• What quantity of a resource or resource type is
  the proposed increase or decrease for an
  instigation event?
• When did an instigation event propose to increase
  or decrease a specific resource or resource type?

23
Reservation Relationship Query Types

• What resources or resource types is a commitment
  event agreeing to increase or decrease?
• What quantity of a resource or resource type is a
  commitment event agreeing to increase or
  decrease?
• What dollar value of a resource or resource type
  is a commitment event agreeing to increase or
  decrease?
• When did an event commit to increase or decrease
  a specific resource or resource type?
• Where did an event commit to increase or decrease
  a specific resource or resource type?

24
Participation Relationship Query Types

• Which agent(s) participated in a specified event?
  
• How many events of a specified type has a
  specified agent participated?
• What is the total dollar value of events of a
  specified type in which a specified agent has
  participated for a specified time period?
• When did a specified event in which a specified
  agent participated occur?
• Where did a specified event in which a specified
  agent participated occur?

25
Multiple-Relationship Acquisition Cycle Queries

• Which purchase orders have been partially filled?
  
• requires stockflow, reservation, and
  fulfillment-purchaseorder-purchase relationships
• What is the total dollar value of accounts
  payable for a specified supplier at a point in
  time?
• requires duality, participation-supplier-purchase,
  and participation-supplier-cash disbursement
  relationships
• On which requisitions has a specified vendor been
  recommended as the recommended supplier?
• requires proposition and participation-purchasereq
  uisition-supplier relationships

26
Multiple-Relationship Acquisition Cycle Queries

• Which purchase agent ordered a specified
  inventory type from a specified supplier?
• requires reservation, participation-supplier-purch
  aseorder, and participation-purchaseagent-purchase
  order relationships
• What is the total dollar amount of purchases of a
  specified inventory type that have been made from
  suppliers in a specified region?
• requires stockflow-purchase-inventory and
  participation-supplier-purchase relationships

27
Summary

• We discussed the acquisition/payment process and
  how it fits in at the value system and value
  chain levels
• We discussed the extended REA pattern at the
  business process level
• We examined documents typically used to represent
  events and discussed related resources and agents
• We examined examples of relational database
  tables for the acquisition cycle and discussed
  data input into those tables
• We systematically discussed types of queries for
  the acquisition/payment process that may be
  needed to support decision-makers in various
  functional areas
• We provided selected examples of queries of
  various types