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Author's profile photo Manjushree Patil

Received Down Payments in SAP Business ByDesign

This blog explains about down payment requests, which SAP Business ByDesign does not support down payment invoices, but down payment requests are supported. For more information about the down payment process and business background, refer, Down Payments Received in Financials.

The workaround described in this document was created/designed based on project experience in Bosnia, Croatia, and Slovenia, countries/regions where down payment invoices are required for tax purposes.

Other workarounds are possible; however, the aim of this document is to provide guidance on how to approach similar requirements in other countries.

The following scenarios are possible for down payment invoicing:

  1. The down payment is created, and invoicing is done within a single month.

In this case, you create a sales order, and the payment is received in the company bank account (posting on pre-payment account). The goods are delivered, and your company issues the customer invoice, all within the same month. The final customer invoice (with details of the down payment) is cleared.

  1. The down payment is received in one month and the invoice in the next month.

In this case, you also create a sales order, and the payment is received in the company bank account (posting on pre-payment account). However, if the goods are not in stock in the given month, in this instance, it will be necessary to issue a down payment invoice at the end of the month. This down payment invoice then needs to be reported in a special category in the monthly VAT return for that month. The goods are then delivered, and the customer invoice is issued during the next month and the final customer invoice with the down payment is cleared.

Note: It may be the standard business practice to propose a cash discount in cases where a full down payment is made. Depending on local legal requirements, this must be handled as an income reduction because it is already included in the invoice calculations (like a normal discount).

Business Scenario

The following diagram outlines the steps in the Order-to-Cash (Sell-from-Stock) business scenario.

Down Payment is required when the retail Company sells products from stock, hence following are the steps for the same.

  1. Create the sales order for example, for a new private customer – (block sales order for delivery).
  2. Receive the payment
  3. Create the down payment request and clear the payment.
  4. Process the outbound delivery.
  5. Create the customer invoice and clear the down payment.

Steps for Business Scenario.

Below steps details the paradigm of business scenario in SAP Business ByDesign,

1.Create a sales order, for example, for a new private customer. Block the sales order for delivery.

1.Sales order created with option for pre-payment with 8% discount.

2.Block sales order for delivery

3.No down payment request is created.

Example: Sales Order

  • Customer GCBEP-2021: 000,00 €
  • Tax base amount = 833,33 €
  • Tax amount = 166,67 €
  • Block sales order for delivery (down payment)
  • Payment Term: 8 % discount with pre-payment due immediately.

2.Receive the Payment

4.Customer makes a down payment.

Note: If delivery takes place within the next month, the customer requires a down payment invoice

5.The down payment invoice (amount = 920 €) must be created in any case, as the down payment information must be noted on the final customer invoice, printed, and the open tax item is created.

6.Clearing of down payment request with down payment must be completed manually

Example: Bank Statement:

  •  Incoming Bank Transfer for Customer GCBEP-2021: (1000 € – 8%) 920,00 €

3.Create down payment request and clear

 Example:Down Payment Request:

  • Document : ATDP-1-2022
  • Customer GCBEP-2021: 920,00 €
  • Tax base amount = 766,67 €
  • Tax amount = 153,33 €

Clearing

  • Down Payment Request with Payment
  • Customer AP99D: 920,00 €
  • Open Tax item created with tax due date = posting date of clearing   153,33 €

4.Process Outbound Delivery

7.Fulfill sales or service order.

8.Create invoice request

Example:Sales Order:

  • Customer GCBEP-2021: 1.000,00 €
  • Unblock sales order for delivery (down payment receipts)
  • Enter 7,999% discount, that is,766,67 €
  • Tax base amount = 766,67 €
  • Tax amount = 153,33 €

You enter the discounts on sales order or customer invoice as a percentage of the net value  to avoid rounding differences. The discount must be adapted accordingly. Alternatively, you can create a surcharge on the item.

Goods Confirmation:

  • Customer GCBEP-2021:
  • Standard cost: 600,00 €

5.Create Customer Invoice and clear down Payment

9.The invoice is always the invoice of all items delivered with net values from the sales order.

10.Depending on the decision of the customer, the payment terms are: 8 % discount and Net due

11.Down payment information including tax needs to be printed on the invoice (according to legal             requirements)

Example: Customer Invoice:

  • Customer GCBEP-2021: 920,00 €
  • Tax base amount: 766,67 €
  • Tax amount = 153,33 €

       Clearing:

  •  Customer GCBEP-2021: 920,00 €
  • Open tax item created with tax due date = posting date: 153,33 €
  • Undo tax from down payment

Scenario Variants

 The following variants exist for the described scenario and the following differences apply depending on the variant:

Scenario variant: Business transaction are run in the same month.

  • You do not create a down payment request. Therefore, no clearing is performed, and no open VAT item is created.
  • After the goods delivery, the customer invoice you create does not refer to a down payment request and consequently does not print a pre-payment amount on the customer invoice. An open VAT item is created, and the invoice is updated with this information.

Scenario variant: Business transaction runs across more than one month

  • You create a down payment request for the previous month and send to the customer.
  • You clear the down payment request with pre-payment to create an open VAT item back to the previous month.
  • After the goods delivery, the customer invoice is created which refers to the down payment request and consequently prints the pre-payment amount on the customer invoice. An open VAT item is created and the original tax entry from the down payment is undone.

  Postings

This section outlines the postings that are made, based on the example described in section3(Steps for Business Scenario).

Summary

By following required business scenario variant and steps, workaround for down payment invoices needed for tax purposes are met.

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