customer and vendor payments

[former_member819228]

Hi,

Can someone please clear the concept for

customer/vendor payments with clearing, discount given and taken.

Thanks.

[former_member30]

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[sanilbhandari · Accepted solution]

Hi mehak_tariq

The process is very simple. Let us first take an example of Vendor Invoice of EUR 1000. The invoice is posted on 01st Jan 2021 with payment term as 1% discount if paid in 15 days from invoice date and none if paid in 30 days from bill date.

Now you will capture the invoice on 1st Jan 2021 with the below entries

Expense A/c Dr EUR 1000

To Vendor A/c Cr EUR 1000

Now if this invoice is paid on 12th Jan 2021, than there is 1% discount on vendor invoice amount. So based on the same, once the payment run is made using F110, a discount will be claimed and the below entries would be passed in system

Vendor A/c Dr EUR 1000

To Discount recieved Cr EUR 10

To Bank Outgoing Payment Cr EUR 990

This is the process. Now coming to specific SAP terms.

1) Open Item - Open item means the line item is open and it’s not cleared by a clearing transaction i.e. it’s an unfinished transaction in SAP. This allows us to check whether a particular vendor transaction has been paid or not. In the above example the vendor invoice booked is an open item till the same is not paid

2) Cleared Item - In the above example, the invoice has been paid before the due date of payment. The vendor invoice which was originally open will now show as paid and is called as cleared. A cleared item is produced when an open item is cleared by an accounting transaction such as a payment or reversal.

3) Discount Received - When the supplier and buyer enter into a commercial contract for supply of goods, the supplier appreciates early payment from buyer. In such a case, it grants a discount on invoice amount. In the above example the discount was granted as 1% on invoice amount of EUR 1000 since the payment was made on 12th of Jan 2021, in which case the net amount paid to vendor is less than the actual amount of invoice and is booked based on the payment term

In case of customer, we would grant a discount if our customer pays early or before due based on the commercial contract. So assume that a customer has an invoice sent to him on 1st of Jan, 2021 for EUR 1000 with payment terms as 1% discount if paid before 15th Jan and none if paid till 30th Jan 2021. In this case the accounting entry would be as below for invoice:

Customer A/c Dr EUR 1000

To Revenue A/c Cr EUR 1000

Now if the customer pays the invoice on 12th Jan 2021, a discount of 1% is applicable on invoice amount based on the payment terms. In this case, the accounting entry for incoming payment would be as under:

Bank Incoming Payment A/c Dr EUR 990

Discount Granted Dr EUR 10

To Customer A/c Cr EUR 1000

Discount recieved is an income and discount granted is an expense.

Hope this clarifies the same for you

Thanks & Regards

Sanil Bhandari

[joao_fazio57]

Greetings Mehak Tariq,

Open items are commonly part of the process which have not yet been properly completed. The transaction is considered Cleared after posting and has a balance sheet result of zero.

By standard behavior, SAP will generate the clearing document.

For better understanding:

Invoice posting into Vendor Account (AP) and Invoices issued to Customer (AR) must generates an open item.

After Payment, made (AP) or received (AR), Open items must be close and can be verified by analyzing the balance sheet account, with its result as 0.

You can check your open items through:

FBL1N - Accounts Payable

FBL5N - Accounts Receivable

There is a possibility that the Business Partner (BP) has both qualities, as a supplier and as a customer. Therefore, open AP items can be amortized and / or supplemented in view of the Open Items in the specific AR account. We used transaction FD02 for Vendor, and FK02 Customer. Remember to choose the "Clrg with vend" and "Clrg with cust" checkbox. SAP will perform the Clearing automatically through transaction F.13, or F13. And if necessary, specific currency.

Also I would like to suggest read this post:

https://blogs.sap.com/2012/03/28/automatic-posting-for-cash-discount-granted/

I hope I have been able to clarify. Have a great day!

João Ricardo C. Di Fazio