Outgoing Payment Process in SAP

November 29, 2009 by mySAP
Filed under: Account Payable Process 


Outgoing Payment is the process of making outgoing payment to the vendors. This SAP process covers both manual and automatic payment.

Common Business Requirement

After invoices have been posted in SAP system, payment should be made timely so as to realize cash discounts and avoid late payment interest. In general, the company makes payments to vendors (including staff advances where staff advances are posted in SAP) via one of the following payment methods:

  • Cheque
  • Bank Transfer
  • Electronic Bank Transfer
  • Demand Draft
  • Cash

Generally, countries will base the decision on which payment method to use depending on whether the vendor is a local or foreign vendor.

Payment method will be maintained in the vendor master in SAP system. During invoice entry in the SAP system, the payment method is defaulted to the payment method maintained in the vendor master. If required, the default payment method can be manually overwritten during invoice entry in SAP.

Apart from paying vendor invoices, outgoing payment functions in SAP will also be used to make payment to tax authority if the tax authority is defined as a vendor in the SAP system. Otherwise, tax will be paid via outgoing payment function in the General Ledger (SAP GL) module.

For ad-hoc payment, the individual invoice to be paid will be manually selected for payment. For periodic payment, automatic payment run will be used where invoices due for payment will be selected by the SAP system based on parameters entered in the automatic payment program (F110 transaction). Before executing the automatic payment run, invoices should be reviewed to see if blocking/unblocking of the invoices is necessary. If payment is to be made using cash, the payment will be recorded using SAP Cash Journal.

Optionally, after executing automatic payment run in SAP, approval will be done in SAP before the payment file is sent to the bank. Also, after executing automatic payment run, the SAP system will email payment advices to vendors. If payment is not made via automatic payment run, payment advices are not sent to vendors thru SAP system. Email address is taken from vendor master data on general screen in SAP.

 

Cheque printing can be done during manual payment or automatic payment. Cheque lots need to be maintained in the SAP system in order to link cheque number to the payment document. Where electronic payment is involved, after the payment has been executed in the SAP system, a payment file will be generated and transmitted to the bank.

Depending on agreement with the customer, payment will either be made to customer for customer credit memo or credit memo will be used to offset against subsequent customer invoice.

 

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Comments

2 Comments on Outgoing Payment Process in SAP

  1. SAP Business Blueprint – Accounts Payable | mySAP Tutorial , Training , SAP Helps on Sun, 29th Nov 2009 9:26 pm

    2. [...] Outgoing Payment [...]

  2. beth on Tue, 15th Dec 2009 8:27 am

    3. What is the flow of general ledger postings for this process? Say a material PO was entered and was subsequently followed by a GR. the system requires a 3-way match between the PO, GR, and IR. How is the GR and/or IR recorded when it is waiting for othe three way match? Logically, the when the GR is posted it should Debit Expense and Credit AP. When the invoice is posted (following the GR) it should Debit AP and Credit Cash. But what happens when the invoice is posted first? Also, what are the GL entries for F110?

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