As an accounts payable (AP) accountant, we have been used to creating and managing payment plans manually. When did you come to realize that this repetitive process actually costs us lots of time, and that maybe there is an automatic tool can help us to simplify it?—Yes! The Manage Payment Plans app is here for you to streamline the whole process. In this blog post, I want to show you the main use cases of Manage Payment Plans, how to use it, and how is a payment plan executed to make payment.
The app Manage Payment Plans is designed for centralized management of various kinds of payment runs, including both regular ones that run on daily, weekly and monthly basis; and irregular ones that run on a customized calendar.
You as an AP accountant can create payment plans for different company codes and with different payment methods, and classify them based on your predefined payment plan categories (e.g. differentiation between domestic and international payments). You can define your own customized calendar to set a payment plan that run on non-fixed dates. You can also choose to shift the next posting date for a fixed number of days if you want to expand the scope of items to be included in a payment run. It's also possible to reschedule a payment plan which is active and still has some jobs left to run. With all the applicability and flexibility of this app, you no longer have to manually and repetitively create payment plans and payment runs.
Can I have some typical use cases
Of course! You can use the Manage Payment Plans app to manage payment plans centrally, defining customized payment plans, and fulfill some special payment needs. Below I present a few use cases, highlighting how this app can help you streamline your payment plan workflows.
Use case #1: Creating and managing payment plans of subsidiaries centrally
Suppose you are the AP accountant of a large enterprise. In the past, you need to create payment plans centrally and distribute them to the corresponding subsidiary companies. The AP accountants from the subsidiaries then create payment runs manually based on the payment plan details. It requires quite a lot human efforts and time to do this task, especially for a large enterprise with complex payment process with different payment methods, payment schedules and so on.
With the Manage Payment Plans app, you can create payment plans centrally for the subsidiary companies by specifying payment method, company code, supplier and customer, and a highly customized payment schedule. After a payment plans for a specific subsidiary is confirmed and activated, payment run jobs will be created in the Schedule Accounts Payable Jobs app. You can check the status, planned start time, job log and other information of the payment plan. As the planned jobs runs automatically, the AP accountants from the subsidiary companies no longer have to create payment runs manually.
Use case #2: Defining a payment plan based on customized calendar
If the regular payment plans don't serve your needs well, you can customize your payment plans with the corresponding configuration activity--Define Payment Plan Customized Calendar. You define your own payment calendar by specifying a series of payment run sequence and run dates. You can choose your customized calendar when creating a payment schedule in the Manage Payment Plans app.
Use case #3: Shifting the next posting date for a fixed number of days
Generally, you can specify which day as the posting date for a payment run when you define a payment schedule. Up to a dozen of options are available for you to choose, including run date, run date plus X days, first day of the current month, etc. However, in some cases, you might have to make payments to your suppliers or collect payments from your customers ahead of the original due date.
By specifying to shift the next posting date by a fixed number of days, you can include more open items into the next payment run, thus making the payment in advance.
How to use Manage Payment Plans?
1. Fill in general information
General information includes name of the payment plan, payment method to be used, company code for whom the plan is made, payment run ID and the category of the payment.
When you create a payment plan, you can assign the plan to a category. In this way, you can categorize your plans based on the categories defined with the configuration activity Define Payment Plan Categories. For example, you can assign all the payment plans for a specific company code to a category. You can also use categories to differentiate between international and domestic payments.
For example, I define the following categories for my payment plans with the configuration activity Define Payment Plan Categories:
Define Payment Plan Category
When I set up a payment plan in the Manage Payment Plans app, I can choose from the list a category option that I have defined and assign the category to the payment plan.
Choose a Predefined Category
Payment Run ID
Payment Run ID uniquely identifies a payment run from others. When you check the details of a payment run job, in the Parameters section, you can see the identification of the payment run.
You can manually assign a payment run ID when you define a payment plan. Without a manually assigned one, an ID of five alphanumeric characters will be generated automatically during payment run. The automatically generated ID is explained as the following:
If a category is assigned to the payment plan, the first three characters are the category name. The last two are randomly-generated alphanumeric characters.
If a category is not assigned to the payment plan, all the five characters are randomly-generated alphanumeric characters.
For example, I assign a payment run ID "DEMO1" to the payment plan "DemoPlan", and in the Schedule Accounts Payable Jobs app, the payment run ID is the one that I assigned.
Manually Assign an ID
The Defined ID
By contrast, if I don't define a payment run ID or assign a category to the payment plan, an ID will be generated randomly during the payment run.
Without Assigned ID
A Randomly Generated ID
Payment Run Id and BCM Identifier
Payment runs that are intended for Cross-Payment Run Payment Media are identified by the payment run id, which should be reserved as the identifier for Bank Communication Management (BCM) beforehand. If your payment run generated by the payment plan is intended for BCM, please make sure that the prefix of the payment run ID (the first three letters) predefined with the configuration activity Define Payment Plan Categories is compatible with the identifier defined in the view Reservation for Cross-Payment Run Payment Media.
Reservation for Cross-Payment Run Payment Media
2. Select suppliers and customers
Choose the suppliers that you want to make the payment to or the customers that you want to collect payments from. Use search help to find the suppliers or customers, or you can simply enter an asterisk (*) to choose all the suppliers or customers.
Select Suppliers and Customers
3. Specify payment schedule parameters
You define parameters relevant for recurrence pattern, recurrence range and date specifications. In the following, I would like to explain to you some important ones.
Recurrence Type defines how often the regular payment plans should run and provides a customized calendar option for the irregular ones. Regular payment plans can run on daily, weekly, or monthly basis. Or you can also define a plan that run every two/three/four...days/weeks/months by specifying recurrence frequency. You can also choose your predefined customized calendar to set up a payment plans that run on non-fixed dates.
The payment plans can run based on factory calendar of different regions. You can choose the appropriate factory calendar when you set up a payment plan, and specify whether to run job on non-working days or move job to other dates. Remember: when you define the start date date and end date of the plan, make sure that the end date must be later than the last payment run date if you use a customized calendar.
Here you specify the posting date, documents entered on which dates are to be included into the payment run, and whether you want to shift the next posting date.
Next Posting Date Shift
In this field you specify whether you want to shift the next posting date for a fixed number of days. In this way, you can extend the scope of items to be included in each payment run. This might happen in cases where you need to make payment to your suppliers ahead of the schedule. Next, I'll use a example payment plan to explain what you can do with this parameter.
Suppose I am an AP accountant responsible dealing with payments. I create a weekly plan to make payment to my suppliers twice a week, on Tuesday and Friday. The plan starts on July 1 and ends on July 31. I select run date as the posting date for each payment run, and specify to shift the next posting date for 6 days.
Shift the next posting date for 6 days
In each week, the payment runs are executed on Tuesday and Friday to select the overdue invoices. If I don't shift the next posting date, the posting date of the next payment run will be the next run date.
Next Posting Date Without Shift
As I have defined the posting date the same day as the run date in my payment plan, after the payment run on July 1, the next posting date would be the next run date July 5, which means the invoices due by July 5 will be posted upon the payment run on July 5.
As a contrast, the following diagram shows the posting dates after I shift the next posting date for 6 days.
Shifted Next Posting Dates
When the next posting date is shifted, after the payment run on July 1, the next posting date would be shifted 6 days from the original next posting date July 5. That is to say, the next posting date now becomes July 11, which means the invoices due by July 11 will be posted upon the payment run on July 5th, the invoices due by July 14 will be posted upon the payment run on July 8,... and so on. If we compare it with the case where posting date is not shifted, we can find that the scope of invoices to be selected into each payment run has been extended. In this way, you can pay your suppliers ahead of schedule. This might be necessary in certain cases, but please be ware that this means your cash flow will be narrowed.
Note: If you use customized calendar to define your payment plan, the next posting date could not be shifted.
How is a payment plan executed?
When a draft payment plan is created, it is inactive. No payment run jobs will be created. You can edit the plan anytime.
When a saved draft plan is activated, payment run jobs will be created in the Schedule Accounts Payable Jobs app. The jobs will run at scheduled time and payment will be created. You can check the finished payments in the Manage Automatic Payments app.
In some cases, you may want to change the parameters of an active plan. You must deactivate it before you can make any changes.
When a plan has finished all of its scheduled payment runs, it becomes inactive. No jobs will be created or run anymore. You can reuse it by changing the parameters based on your needs.
The following diagram shows the lifecycle of a payment plan.
Lifecycle of a payment plan
From this blog post I hope you have get the basic know-how of the app Manage Payment Plans. The app is available as of SAP S/4HANA Cloud 2111 or SAP S/4HANA 2021. Want to know more about this app? Check the documentation on SAP help portal:
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