How do you Handle Vendor Installment payment terms in SAP R/3?

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Hi ,

This below info explains in detail about, How do you handle vendor installment payment terms in SAP R/3.

It would be very helpful for both MM/FICO Consultants.

Installment payment terms

1        VENDOR PAYMENTS IN INSTALLMENTS

2        INSTALLMENT PAYMENTS

2.1          CREATE ‘MAIN TERM’

2.2          CREATE ‘INSTALLMENT TERMS’

2.3          DEFINE INSTALLMENTS

2.4          ENTER THE NEW PAYMENT TERM IN THE VENDOR MASTER

2.5          TEST HOW THE PAYMENT TERM WORKS

3        AMOUNT SPLIT

3.1          TEST THE AMOUNT SPLIT

1    Vendor payments in installments

You want to make vendor payments in installments. How do you handle this in SAP R/3?

You have two alternatives:

1.  Use installment payment terms

2.  Activate document split

Of course you can also use partial payments or residual items, but these have nothing to do with payment terms.

2    Installment payments

Instead of entering several line items, you only enter the data for one item. The breakdown is carried out by the system automatically by means of the payment terms.

Configuration

IMG Menu	Financial Accounting → Accounts Receivable and Accounts Payable → Business Transactions → Incoming invoices/Credit Memos → Maintain Terms of Payment
Transaction Code	OBB8 or SM30 (Customizing Object V_T052)

You need to create four payment terms. First you create the ‘main term’ for the Installment. Here R001. This payment term is set to vendor master.

The Installments need also payments terms. Here you set the day limits for payments.

In IMG activity Define Terms of Payment for Installment payments you define the percentages and assign the Installment payment to the ‘main term’.

2.1    Create ‘main term’

Press New entries

Field name	Description
Payment terms	R001
Sales Text	Inst. pymnt terms 3 part. amnt
Account type: Customer	Selected
Account type: Vendor	Selected
Default for baseline date:	Document Date
Payment terms: Installment payment	Selected

 

  Choose   Save.

  Choose Back.

2.2    Create ‘Installment terms’

Press ‘New entries’

Field name	Description	Description	Description
Payment terms	ZR01	ZR02	ZR03
Sales Text	1st installment R001 (15 days)	2nd installment R001 (30 days)	3rd installment R001 (45 days)
Account type: Customer	Selected	Selected	Selected
Account type: Vendor	Selected	Selected	Selected
Default for baseline date	Document Date	Document Date	Document Date
Payment terms: Installment payment	Not selected	Not selected	Not selected
Payment terms: No. of days	15	30	45

  Choose   Save. 

Choose Back

2.3    Define Installments

IMG Menu	Financial Accounting → Accounts Receivable and Accounts Payable → Business Transactions → Incoming invoices/Credit Memos → Define Terms of Payment for Installment payments
Transaction Code	OBB9 or SM30 (Customizing Object V_T052)

2.4    Enter the new payment term in the vendor master.

Ensure that the key is entered in the vendor master record which represents the specified terms of Payment.

2.5 Test How the Payment term Works

Create vendor invoice with transaction FB60. For offsetting posting use account 476000 Office supplies and cost center 1000. Use tax code V0.

Simulate and Post

 

                  

   

   

 

2.5    Test how the payment term works

Create vendor invoice with transaction FB60.

For offsetting posting use account 476000 Office supplies and cost center 1000. Use tax code V0.

Add the net due date to the layout (    ) or from menu Settings / Layout / Current. You can see that the invoice is divided in three Installments with their own due dates. Save the document.

3    Amount split

If you have fixed Installments, you can use the Installment payment terms. However, if you need to change the amounts, this is not a good solution. Any change in Installment payment terms or invoice plans requires additional customizing. There is a way to use flexible amounts in the Installments. Enable Amount Split in the company code customizing.

Amount split enables the split of an invoice or credit memo final amount. A new tab Amount split will appear on the screens of the Enjoy transactions (FB60, MIRO). This method does not work for the old style transactions such as FB01.)

3.1    Test the amount split

Create a new invoice for vendor 200 (payment terms R001 in vendor master). Open tab Amount split.

You can split the amount according to payment method or terms of payment. If you have entered a payment method, this entry has priority over the payment method in the terms of payment.

If no split is made – Installments according to payment term.

Make following split: 15000 is paid immediately (payment term 0001) and the rest with payment term ZR02.

Simulate the document and Post

Thanks,

With Best Regards,

Prabhakar Rao

Senior Consultant SAP MM

HITACHI CONSULTING