SAP Vendor Down Payment Process

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SAP Vendor Down Payment ProcessIn this tutorial we discuss the SAP vendor down payment process as part of our free online SAP FI training. Down payments are sometimes also referred to as advance payments. A down payment is a payment made or received before the physical exchange of goods and services. Once the receipt or delivery of goods and services occurs, the down payment clears against the final invoice.

In this tutorial, we describe the below steps involved in setting up the SAP vendor down payment process in the following sections:

  1. Create Alternative Reconciliation General Ledger Account
  2. Link Alternative and Standard Reconciliation Accounts

Once we have completed set-up for the process, we will execute the SAP vendor down payment process to demonstrate the steps.

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Create Alternative Reconciliation General Ledger Account

A vendor down payment needs to be recorded as an asset on the balance sheet. In order to support this requirement down payments are posted as special general ledger (G/L) transactions. An alternative reconciliation account is required to post such transactions. When a down payment is posted to the vendor account, the system updates the alternative reconciliation account instead of the standard AP trade reconciliation account.

To create a new G/L account for this purpose, use transaction code FS00. Enter the required fields, including the following information:

  1. Account texts should be similar to Advance to Vendors
  2. Account group Assets
Create G/L Account Initial Screen
Create G/L Account Initial Screen

Press Enter to check for errors then Save the G/L account .

This account represents the alternative reconciliation account that will be selected when a down payment is processed.

Link Alternative and Standard Reconciliation Accounts

To facilitate the recording of the down payment as a special G/L transaction, a link must be created between the standard reconciliation account and the alternative reconciliation account. To create this link, use transaction code OBYR or use the customizing path below in transaction code SPRO:

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Financial Accounting – Accounts Receivables and Accounts Payable – Business Transactions – Down Payment Made – Define Alternative Reconciliation Account for Down Payments

On the special G/L maintenance initial screen, double click on special G/L transaction indicator A – Down payment on current assets. Enter the relevant chart of accounts in the pop-up next screen and hit Enter.

Maintain Special G/L Initial Screen
Maintain Special G/L Initial Screen

Link the standard AP trade reconciliation account with the alternative reconciliation account number you created in the last step. In our example, 100501 is standard reconciliation account and 200150 is the alternative reconciliation account.

Link Reconciliation Accounts
Link Reconciliation Accounts

Click the Save button .

If we make a normal payment against an invoice, the standard account 100501 will be leveraged. However if we make an advance payment, we use special G/L indicator A and the system will automatically use the alternative account 200150 due to this linkage.

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Execute SAP Vendor Down Payment Process

Now that we have completed the set-up for the SAP vendor down payment process, let’s walk through a demonstration. We will execute the process in sections as follows:

  1. Post Down Payment
  2. Post Invoice Against Down Payment
  3. Transfer Posting
  4. Clear Normal Items

Post Down Payment

If the vendor send a request for a down payment, but the payment is not yet ready to be made, you may enter a down payment request as a noted item with no accounting impact. If the payment is ready to be made, you can enter the down payment straight away.

Menu path Accounting – Financial Accounting – Accounts Payable – Document Entry – Down Payment – Down Payment
Transaction code F-48 – Down Payment

In the initial screen of transaction code F-48 enter the relevant required information and be sure to enter special G/L indicator A as highlighted below:

Post Vendor Down Payment Initial Screen
Post Vendor Down Payment Initial Screen

Post the vendor down payment. The accounting document will look similar to the below, with a debit to the vendor account and credit to the bank account entered in the initial screen:

Down Payment Document
Down Payment Document

Now let’s see the vendor line item report using transaction code FBL1N. In the report selection screen, select the Open items radial button and the Special G/L transactions tickbox. Execute the report and you can see the advance payment you just created, appearing as a debit to the vendor account as shown below:

Vendor Line Item Report
Vendor Line Item Report

Post Invoice Against Down Payment

Now we will post the vendor invoice, signifying that the goods have been delivered or the service has been rendered. This will be offset against the down payment and, if no further payment is required, cleared in the next step.

Menu path Accounting – Financial Accounting – Accounts Payable – Document Entry – Invoice – General
Transaction code F-43 – Invoice – General

Post the invoice for the same vendor to which the down payment was issued in the previous step. The accounting document will look similar to the below, with a credit to the vendor account and debit to the inventory or expense account:

Vendor Invoice Document
Vendor Invoice Document

Again, let’s see the vendor line item report using transaction code FBL1N. In the report selection screen, select the Open items radial button and both the Normal items and Special G/L transactions tickboxes. Execute the report and you can see both the invoice you just created and the advance payment from the previous step remain as open items on the vendor account:

Vendor Line Item Report
Vendor Line Item Report

Transfer Posting

Next, we must transfer the down payment amount from the alternative reconciliation account to the standard reconciliation account. That is to say, we will move the advance payment from the special G/L to the normal G/L.

Menu path Accounting – Financial Accounting – Accounts Payable – Document Entry – Down Payment – Clearing
Transaction code F-54 – Clearing

In the initial screen of transaction code F-54 enter the following information:

  1. Document and posting dates
  2. Company code
  3. Vendor account
  4. Vendor invoice number created in previous step

Click the Process down pmnts button to see the advance payments.

Transfer Posting Initial Screen
Transfer Posting Initial Screen

All advance payments for the vendor account are displayed. Select those that you would like to include in the transfer posting. Click the Save button .

Select Down Payments for Transfer Posting
Select Down Payments for Transfer Posting

Take a look at the vendor line item report using transaction code FBL1N. In the report selection screen, select the Cleared items radial button and the Special G/L transactions tickbox. Execute the report and you can see that the down payment document you posted in the first step is cleared by the transfer posting you just made:

Vendor Line Item Report
Vendor Line Item Report

Clear Normal Items

Finally, we only need to clear the vendor invoice against the normalized advance payment we transferred in the previous step.

Menu path Accounting – Financial Accounting – Accounts Payable – Account – Clear
Transaction code F-44 – Clear

In the initial screen of transaction code F-44 enter the vendor account and company code, then click the Process open items button . In the open items clearing screen, all open amounts remaining on the vendor account will be displayed. Double click the amounts of the documents you want to clear. The amounts will turn blue and they will net to 0.00, as demonstrated below:

Clear Vendor Open Items
Clear Vendor Open Items

Click the Save button .

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Let’s look at the vendor line item report one last time via transaction code FBL1N. In the report selection screen, select the Cleared items radial button and the Normal items tickbox. Execute the report and you can see that the vendor invoice you created in step two and the normalized transfer posting you made in the last step are now cleared. At this point the SAP vendor down payment process is complete!

Vendor Line Item Report
Vendor Line Item Report

Did you like this tutorial? Have any questions or comments? We would love to hear your feedback in the comments section below. It’d be a big help for us, and hopefully it’s something we can address for you in improvement of our free SAP FI tutorials.

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1 thought on “SAP Vendor Down Payment Process”

  1. I DID F-48, I WANT TO CUT THE CHECK THAT DOWN PAYMENT.
    I DO NOT HAVE F-54,NOR F110 NOR FBZ5…
    I ENDED UP MANUAL CHECK CREATED, BUT I CAN NOT PRINT THE CHECK.
    ENDED UP HANDWRITING THE CHECK.

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