SAP Business : Down Payment to Vendor

December 15, 2009 by mySAP
Filed under: Account Payable Process

This SAP business process covers processing down payment request, down payment to vendors as well as handling letter of guarantee.

Common Business Requirement

Where agreement with the vendor is such that a payment must be made before receipt of goods or services, down payment will be made. Basically, there are three ways to make down payment:

Post down payment directly.
Post down payment request and then post down payment with reference to down payment request. Down payment request creates a noted item against the vendor.
Post down payment request and pay via the automatic payment program via F110 transaction.

Normally, letter of guarantee will be posted via statistical posting function.

When invoice pertaining to existing down payment or letter of guarantee is posted, the SAP system issues a message informing about the existing down payment or letter of guarantee. Thereafter, down payment should be cleared or letter of guarantee reversed.

Detail Analysis

Special GL Indicator for Vendors

Down payment to vendors will be made via special GL indicators. Special GL indicators allow posting to be linked to the vendor account even though the actual GL account which is being updated is the down payment GL account. When down payment to vendor is posted, the down payment GL account is debited and the bank outgoing clearing account is credited.

Even though the down payment GL account is updated, when viewing vendor line items, the down payment will be reflected as a special GL transaction item.

When down payment is cleared against the invoice, the vendor account is debited and the down payment account credited. Hence, after clearing, the balance in the down payment GL account is zero and the amount of down payment made is transferred to the vendor account to offset the amount payable to the vendor.

Statistical Postings

Letter of guarantee is handled via statistical posting. When posting the letter of guarantee, a special GL indicator must also be entered. The statistical posting will debit a balance sheet guarantee GL account and credit a balance sheet guarantee offsetting GL account. In this way, the net impact on the balance sheet is zero. When viewing vendor line items, the letter of guarantee is shown as a noted item.