Reduce Your Company's Spending With Automatic Clearing of Vendor Down Payments

2/13/2014
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Reduce Your Company's Spending with Automatic Clearing of Vendor

Down Payments
by Gaetano Altavilla, S enior SAP Solut ions Architect, Inst ructor, Project Manager, and Team Leader
November 25, 2013
SAP experts/SCM
See how to use the down paym ent process with the automatic clea ring option with the mate rials mana gement
(MM) and Fina ncial Accounting (FI ) modules in SAP ERP Central Component (SAP ECC) 6.0. These solutions have
already been imple mente d in production envi ronme nts for MM and FI in SAP ECC 6.0. Howeve r, the processe s
also apply to previous versi ons of SAP ECC.
Lea rning Obje ctive s
Reading this artic le, y ou will learn:
The business process of vendor down payment s managed in SA P
The main cust omizing settings to be done in the system from an FI point of view
How to monitor purchase order doc ument s wit h down pay ments
Key Concept
Many companies require a down pay ment when selling complex equipment . The down payment is processed through
mat erials management (MM) and Financial Acc ounting (FI) modules and figured into future invoice documents. The
automati c dow n payment proce ss can improve company cash flow, reduce the risks of unplanned c osts, and improve
vendor relationships. The entire process can be monit ored using the trans actions purchase order (PO) history to
dis play and c hange a PO.
SAP introduced new func tionalities to SAP E RP Central Component (SAP ECC) 6.0 enhancement pac kage 4 to clear down
pay ments automatic ally at the time of invoice verific ation. Users can now record down payment data in purchase orders
(POs) at the header and item levels (for ex ample, down pay ment category, down payment amount, and down payment
percentage). In addition, the down pay ment clearing function enables users to clear down payments that they have posted
wit h referenc e to a PO without going t o the relevant Financial Accounting (FI) transactions (trans actions F-47 and F-48)
directly in Logist ics Invoic e Verification (LIV). These functions are available for material settlement and service settlement in
POs .
The main business activities to be performed in the S AP sy stem are s hown in Fi gure 1.
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Fi gure 1
Mai n activiti es involve d in the vendor down paym ent process
The Down Payment Process

In the down payment process, you creat e a P O in materials management (MM), which is filled upon receipt of a down
pay ment. After you post a goods receipt, you create t he logistics invoice verificat ion in MM. The system aut omatically
clears t he goods received and goods invoiced. After t he customer mak es a down payment, it mus t be cleared to provide an
acc urate final invoice amount. Clearing of the down payment can be done automatically or manually. The final payment c an
then be made.
In the S AP sy stem, the purchasing department creates a PO document with down payment dat a using transac tion ME21N
or by following menu path Logistics > Materials Management > Purchas ing > Purc hase Order > Create > Vendor/S upply ing
Plant Known (Figure 2).
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Fi gure 2
PO detai ls involve d in the vendor down paym ent process
In this case, you can c hoose to enter the down payment amount or percentage along with t he due dat e for the payment in
the PO line item. You c an also choose the down payment cat egory from the following values, which c an be used only to
classify the down payment:
Mandatory down pay ment As per negotiation, a down payment is required for this transac tion
Voluntary down pay ment The company is willing to pay a down payment wit hout any reques t from the vendor
Aft er saving the P O doc ument , you can monit or it with a new program. Use trans action ME2DP or follow menu path
Logistic s > Materials Management > Purchasing > Purchase Order > Reporting > Down-P ayment Monitoring for PO
(Fi gure 3). Usually, the FI team uses this trans action for monitoring and proc essing the down payment.
Fi gure 3
Monitor PO documents wi th down pa yments
The syst em shows t he following details for each document:

Down pay ment not y et process ed
Down pay ment processed and payment made
Down pay ment has been c reated at header level
Aft er selecting the appropriate document, y ou can create a down payment reques t or post a down pay ment. Note that the
down pay ment document is vis ible in the PO history. To create a down payment reques t, enter t he PO details in the fields
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shown in the screen in Figure 3. Click the execute ic on

. The s ystem then calls transact ion F-47 in the back ground.
You can also follow menu pat h Acc ounting > Financial Accounting > Ac count s Pay able > Doc ument Entry > Down
Pay ment > Request. The system provides the down payment details in t he Down Payment Request: Header Dat a screen
(Fi gure 4). V erify that the down payment information is correct and press Enter. The nex t screen (Figure 5) includes a
status message indicating that the down pay ment request has been pos ted t o the PO.
Fi gure 4
Cre ate a down paym ent request (he ader data)
Fi gure 5
Dow n payment reque st li ne item da ta sa ved to the PO docume nt
To post a down pay ment, use trans action F-48 or follow menu pat h Acc ounting > Financial Accounting > Ac count s Pay able
> Document Entry > Down Payment > Down Payment (Figure 6).
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Fi gure 6
Hea der detail s of FI ve ndor down payme nt document
Aft er you ent er the down pay ment data, as s hown in Fi gure 6, click t he Request s but ton.
The list of t he down payment requests appears (Figure 7).
Fi gure 7
Choose the appropriate vendor dow n payment reque st
Aft er selecting the appropriate vendors down payment request, click the Creat e down pay ments butt on. In the next screen
(Fi gure 8) click t he save ic on (not pictured).
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Fi gure 8
Save the vendors down payme nt posting
The accounts payable department t hen c reates an incoming invoic e for the PO. Use transac tion MIRO (Enter Inc oming
Invoice) or follow menu path Logistics > Materials Management > Logistics Invoice V erification > Document Entry > Enter
Invoice (Figure 9).
Fi gure 9
Invoice verificati on (basic data and l ine-i tem detail s)
Aft er entering the PO, you s ee an information message that down payments exist for this PO. Note t hat t he sy stem
dis plays the Down Payment Clearing but ton at the header level. This button shows the status of clearing:
Red stands for an error in down payment clearing.
Yellow s hows that clearing amount s have not been entered for all down pay ments .
Green shows t hat c learing amounts have been entered for all down pay ments .
Select all the down pay ments that you want to clear. Click the save icon (not pictured) to save the invoice document. The
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down pay ment clearing document is post ed as a separat e doc ument together with the invoic e doc ument .
Customizing Prerequisites
From an MM point of view, no spec ific customizing steps need to be performed in the syst em because you can use the
standard SAP settings c an be used for this solut ion. You c an us e transact ion c ode FBKP for the main FI customizing
steps relevant for vendor down payment s. After y ou ex ecute this transaction, t he sy stem lists the options shown in Figure
10.
Figure 10
Options for FI customiz ing steps for vendor down paym ents
Automatic Postings
Click the Aut omatic pos tings butt on for the list Group wit h an Account Key. In the next screen (not shown here), selec t
Down Pay ments . Select t he group for down payment s, which is ANZ. The syst em display s the details listed in t he sc reen
shown in Figure 11.
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Figure 11
Mai ntain accounts for a utoma tic postings re levant to down payme nt
Users can specify general ledger (G/L) accounts for automatic postings only for tax es.
Select t he options highlight ed in Figure 11 by double-clic king the line item and specify ing t he ac count s for the output tax
(Fi gure 12) and the input tax (Fi gure 13) relevant for down pay ment to automat ically det ermine the right acc ount to be
ass ociat ed with the tax code.
To specify ac count s for the output tax , ent er the acc ount for t he Chart of Acc ounts and trans action MV A combinat ion
(Fi gure 12). To specify accounts for t he input t ax, enter the account for the Chart of A ccounts and transact ion V VA
combinat ion (Figure 13).
Figure 12
Automati c posting detai ls for output tax cl earing
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Figure 13
Automati c posting detai ls for input ta x cle aring
Special G/L
In a standard SAP system, the Special G/L indicator is used to distinguis h the down payment and ac count s rec eivable
dat a for the same account ty pe (e.g., vendor).
To specify the rec onciliation acc ounts and special G/ L acc ounts for the down payment request and down payments, c lick
the Spec ial G/L link shown in Figure 10.
In the s creen that appears (Figure 14) define configuration set tings for a down pay ment request. E nter K in the A ccount
type F in the Spec ial G/L ind. , and INT. in the Chart of Accounts. Press Enter to save the data.
Figure 14
Define a ccounting confi guration for a down payme nt re quest
To define configuration sett ings for a vendors down payment, enter INT in the Chart of Accounts, K in the A ccount Type,
and A in the Special G/ L ind.
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Figure 15
Define a ccounting confi guration for a vendors down payment
Posting Keys
The post ing k ey defines whet her t he it em is a debit or credit, as well as whic h acc ount type (cust omer or vendor) is
pos ted. By default , the SAP system lis ts the relevant post ing k eys used for vendor down payments. To ac cess this list use
cus tomiz ing t ransaction OB41 or follow IMG menu path SPRO > Financial Acc ounting > Financial Accounting Global
Set tings > Document > Line Item > Cont rols > Define P osting Key s (Fi gure 16).
Figure 16
Posting keys relevant for ve ndor down payme nts
Document Types
The document type class ifies the accounting documents and stores att ribut es that control the entry of t he document (for
example, the type of number range). In a st andard SAP syst em, t he document types relevant for down payment are KA
and KZ (KA is used for down payment request s, and KZ is us ed for vendor payments), as shown in Figures 17 and 18. If
nec essary, you can also use your own document ty pes, such as ZA and ZZ. Use customizing trans action OBA 7 or follow
IMG menu path SPRO > Financial Ac count ing > Financial Accounting Global S ettings > Document > Document Header >
Define Document Ty pes.
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Figure 17
Display a document type for a dow n payment reque st
Figure 18
Display a document type for a dow n payment posti ng
Clearing Procedure
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In the S AP sy stem the s tandard clearing procedures for out going payments, and also for vendor down payments, are
completed wit h transact ion c ode A USGZA HL. In the screen in Figure 19 (which you acc ess by clicking the Clearing
Procedure link in Figure 10), define t he Posting keys that are used for debit/ credit clearing entries in a vendor account if
the line item to be cleared has a spec ial G/L indicat or.
Figure 19
Define posting keys for debi t/cre dit cleari ng procedures i n a vendor account for special
G/L
Field Status Group

To define which fields are required entry fields and which are hidden during document entry, click the Field Stat us Grps link
in Figure 10. In t he sc reen that appears (Figure 20) set t he PO field as optional.
Figure 20
Fie ld status group deta ils for a PO at posting key/special G/L level
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Assign the Company Code to the Field Status Variants

To assign your company code to the appropriate field status variants , use cust omizing transac tion OBC5. In t he sc reen
that appears (Figure 21) ent er the appropriate value in the Fld stat .var. column. A field status variant consists of field
status groups . Wit hin each field status group, y ou can define an att ribut e of a field: optional, mandat ory, or suppres sed
ent ry. Use transac tion code OBC4 to define these attributes in customizing.
Figure 21
Assign company code to field status va riants (in this case , 0001)
Classify G/L Accounts for Document Splitting

I recommend t hat y ou perform this cust omizing st ep only if you have activated the online document-split ting option in your
sys tem. In this case, each document is assigned to an accounting transact ion variant, and eac h doc ument line item is
ass igned to an item cat egory . Additionally, you determine for each business transac tion variant which item c ategories can
or must be posted here. Follow customizing menu path IMG > Financial Accounting (New) > General Ledger Accounting
(New) > Business Transactions > Document Splitting > Class ify G/L Ac count s for Document Split ting (Figure 22). In this
cas e, the item cat egory 03100 Vendor: Special G/ L Transact ion s hould be determined for account 159010 in chart of
acc ounts INT.
Figure 22
Cla ssify G/L accounts for document spl itting
Automatic Clearing Process

To activate t he automat ic clearing opt ion, use t ransaction code SFW5 to s witch on t he busines s function LOG_MMFI_P2P
as shown in Figure 23. Note that SAP added this funct ionality t o MM beginning with enhancement pac kage 4. After y ou
act ivate this func tion, all relevant automatic c learing functionalit ies are available in the PO and LIV .
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Figure 23
Activate the business functi on LOG_MMFI_P2P
Not e that if you want t o use down payment c learing with SA P General Ledger acc ounting, y ou need to follow menu path
Cus tomiz ing for Financial Ac count ing (New): IMG > Financial Acc ounting (New) > General Ledger Accounting (New) >
Bus iness Transactions > Document Split ting > Classify G/L Accounts for Document Splitting. In the screen that appears
(Fi gure 24) enter the s pecial G/L account with an item cat egory of 3100 (Vendor: Special G/L Trans action) that is post ed
during down payment clearing. If you s elect the Overrd. indicat or, y ou specify that the internal derivations of t he it em
cat egory should be overridden by the derivation by ac count s.
Figure 24
Cla ssify G/L account for document spli tting (in case of down pa yment clea ring with the
SAP Gene ral Ledger accounting)
To extend the document-split ting rule that you use when posting the invoice from LIV (via transact ion MIRO) follow menu
pat h IMG > Financial Ac count ing (New) > General Ledger Acc ounting (New) > Business Trans actions > Document S plitt ing
> Classify G/ L Acc ounts for Document S plitt ing > Extended Document S plitt ing > Define Document Splitting Rule (Fi gure
25). Select t he Header data folder and clic k the For Each Logic al Transac tion radio butt on in the Further subdivide
doc ument group sec tion.
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Figure 25
Ena ble the document-spl itting rul e separate ly for each logical activity
Double-c lick the folder Item categories to be edited. In t he pop-up screen that appears, add category 3100 (Vendor: Special
G/L Transaction) t o the list of respec tive Basis item categories, as shown in Figure 26.
Figure 26
Add a ba se item ca tegory for a down pa yment
Not e that if you have activated automatic down payment clearing, you cannot us e down pay ment clearing in transact ion
MIRO. To activate down payment clearing during a goods rec eipt/ invoice receipt (GR/ IR), follow menu pat h IMG > Public
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Sec tor Management > Funds Management Government > Act ual and CommitmentUpdate/ Integration > Integration >
Configure Aut omatic Clearing of Down P ayments/Down Payment Requests (Figure 27). Select the box shown under the DP
Clr column.
Figure 27
Activate down paym ent cleari ng during a GR/ IR
If the DP Clr box is selected, the sys tem c lears a down payment automatic ally when a GR/ IR is created and references it.
If the DPR Upd box is s elect ed, t he sy stem updat es a down payment request (DPR) to the P O his tory, and if a user
creates a down pay ment referencing that DPR, the DPR is automat ically cleared.
Gaetano Altavilla
Dr. Gaet ano A ltavilla is a c ertified associate s enior SAP solut ions architect, inst ructor, project
manager, and team leader loc ated in Naples, Italy. His foc us is on pre-sales, delivery of SAP
applicat ion s olutions for large international corporations and SAP K nowledge Management in
EME A. In his 14 years of IT experience, working for many multinational companies, s uch as
Procter & Gamble and Hewlett -Pack ard, he has covered a wide range of ERP logis tics areas ,
foc using on MM, WM, SD, LES, PP, PP-PI, and PLM (QM, PM, P S) modules , as well as
CRM (TFM), SRM (EB P), and SCM (AP O) components. Dr. A ltavilla holds a degree with firstclass honors in mathematics from the University of Naples and he is certified in many SA P
modules: SAP Logis tics Bootc amp, SAP MM, SD, LE, PP, PM, QM, PS , SRM, SCM (APO),
CRM, FI, CO, and S olution Manager. He also has experience in AB AP/4 and A LE/IDOCs. He
has part icipated in numerous industry conferences, such as the SAP S kills Conferenc e in
Walldorf at S AP AG.
See more by t his author

You may contact the aut hor at Gaetano_altavilla@hotmail.com.
If you have c omments about t his article or publication, or would lik e to submit an artic le idea,
please c ontac t the edit or.
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2/13/2014

Reduce Your Company's Spending with Automatic Clearing of Vendor

Mai n activiti es involve d in the vendor down paym ent process

The Down Payment Process

PO detai ls involve d in the vendor down paym ent process

Monitor PO documents wi th down pa yments

The syst em shows t he following details for each document:

shown in the screen in Figure 3. Click the execute ic on

Cre ate a down paym ent request (he ader data)

Dow n payment reque st li ne item da ta sa ved to the PO docume nt

Hea der detail s of FI ve ndor down payme nt document

Choose the appropriate vendor dow n payment reque st

Save the vendors down payme nt posting

Invoice verificati on (basic data and l ine-i tem detail s)

Automati c posting detai ls for output tax cl earing

Automati c posting detai ls for input ta x cle aring

Define a ccounting confi guration for a down payme nt re quest

Define a ccounting confi guration for a vendors down payment

Posting keys relevant for ve ndor down payme nts

Display a document type for a dow n payment reque st

Display a document type for a dow n payment posti ng

Field Status Group

Assign the Company Code to the Field Status Variants

Classify G/L Accounts for Document Splitting

Cla ssify G/L accounts for document spl itting

Automatic Clearing Process

Activate the business functi on LOG_MMFI_P2P

Add a ba se item ca tegory for a down pa yment

Activate down paym ent cleari ng during a GR/ IR

See more by t his author

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Reduce Your Company's Spending With Automatic Clearing of Vendor Down Payments

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