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Hi Friends,

In this document I’m going to explain about Gross Invoice Posting (RE) V/S Net Invoice Posting (RN) in  detail.

Gross Invoice Posting:

In Gross invoice posting system will ignore the cash discount at the time of invoice posting and posts the cash discount at the time of payment.

Net Invoice Posting:

In Net invoice system will consider the cash discount at the time of invoice posting and post the cash discount amount in to cash discount in to cash discount G/L account at the time of payment.

Before going in to detail about this topic first we have to understand Cash discounts

What  is Cash Discount?

Cash Discount is a discount given on  total amount of invoice posted, in those cases when payment is made within a stipulated period.

This cash discount is determined by payment terms entered in the purchase order for example.


Configuration path to define Payment terms:

SPRO —> Materials Management–> Purchasing–> Vendor Master–> Define terms of payment.

As shown below  you will enter the cash discount granted in percentage if you make payment within specified days from baseline date selected.

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In SAP LIV this gross invoice posting and net invoice posting is controlled by the definition of invoice document type as shown below.

Transaction code OBF4

RE – Gross Invoice Posting

RN – Net  Invoice Posting

Gross Invoice Doc.type: RE

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Example1: Gross  Invoice Posting

Create a PO via., ME21N as shown below by entering payment terms in header invoice tab of PO. tax code  is mandatory to work with payment terms.
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carry out goods receipt w.r.t Purchase order in transaction code MIGO.

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  The below are the postings at time of GR in accounting document.
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  Do Invoice posting w.r.t Purchase order in transaction MIRO.

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Observe the baseline date filled as per the setting in terms of payment.

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Check the document type in details tab and select ‘Gross Invoice receipt doc. type “RE” ‘
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The below is simulation screen in invoice posting and observe only vendor account and GR/IR clearing account as cash discount is not considered in gross invoice posting

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Below is the accounting document and postings at LIV.

Gross invoice doc. type, system ignores cash discount at the time of Invoice posting.

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Gross Invoice Settlement or outgoing payment to vendor

Transaction code F-53

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Observe the cash discount is 3% applied as per the terms of payment from payment base line date.

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Gross invoice doc. type, system posts cash discount at the time of payment.

Below is the posting and accounting document generated at the time of payment. 

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Example2: Net  Invoice Posting

Definition of Net Invoice Doc. Type: RN

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Create a PO via., ME21N as shown below by entering payment terms in header invoice tab of PO. tax code  is mandatory to work with payment terms.

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carryout Goods  receipt w.r.t. Purchase order for Net invoice posting.

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do Invoice posting w.r.t. Purchase order.

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in detail tab of MIRO select document type ‘Net Invoice Doc. Type: RN’

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In Net invoice doc. type system will post the cash discount at the time of Invoice posting itself.

Note: if the material is Moving average price (V) controlled then the discount amount is credited from stock account if sufficient stock exists for that material and debited to discount clearing account.

If the material is standard price (S) controlled then the discount is credited to gain from price difference account and debited to discount clearing account.

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account postings are as shown below

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Net Invoice Settlement or outgoing payment to vendor

Transaction code F-53

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if the payment is made later period than invoice posting then the discount actually applicable on payment date will be considered and the discount amount reduced is debited to ‘discount loss account’ and total  discount amount is credited to cash discount clearing account as shown below. 

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-End of Document

Thanks for reading and please rate the document and share your feedback and reviews.

Regards

Satish

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27 Comments

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  1. Arturo Schuler

    Thank you for sharing Satish, very useful.

    One question:

    I am implementing with Net Amount and it is working properly in Logistics (I followed your SPRO steps, customizing in OBXA, OBCP, OBA7 (RE and ES) and OBXV), but at time of Payment (F110, F-53, etc.) we are having the following issue:

    If the Vendor is subject to a Withholding Tax, and during MIRO I specified that an specific item is not eligible for Cash Discount, then during the payment run the system is calculating the W/tax base amnt as if all items of Invoice are eligible to Cash Discount…

    Example:

    We entered an invoice (through MIRO with PO) for a total of 51,000 usd that have two items:

    1.- 50,000 usd

    2.- 1,000 usd

    During MIRO we specified that only item 1 (50,000 usd) is eligible to a Cash Discount that would be of 3%.

    Cash discount is being calculated correctly with an amount of 1,500 usd (3% of 50,000).

    But during the Payment Run (F110) the Withholding Tax Base Amount calculated by the system is 49,470 usd (51,000 usd – (51,000*3%)).

    As during in MIRO the item 2 (1,000 usd) was entered specifying it is W/o Cash Discount then the expected result should be:

    A Withholding Tax Base Amount of 49,500 usd (51,000 – (50,000*3%)) instead of the 49,470 usd.

    Sorry to write it here, I already opened a discussion (Withholding Tax Base Amount calculated as if all items of Invoice are eligible to Cash Discount) but haven’t found any solution.

    Thanks and Regards,

    (0) 
  2. Chaitanya Budime

    Hello,

    Thanks for the explanation, its very informative. We are using Net Invoice Posting (RN) and document of type RN is not allowing us to create multiple vendor items in the accounting document- Error M8688. Is there is any way to handle this scenario.

    Thanks,

    Chandu.

    (0) 

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