Down Payment in Purchase Orders - SAP S/4HANA Public Cloud

[KeLaw]

What impact does the functionality of the down payment fields in the Purchase Order (header and item) in SAP S/4HANA Public Cloud have on accounting processes? 

How do the accounting processes differ depending on whether down payment type M (Mandatory Down Payment), N (No Down Payment) or V (Voluntary Down Payment) is selected?

[Jeremy_Deo]

Hello dear user,

And thank you for asking your question in the SAP Community blog.

In SAP S/4HANA Public Cloud, the down payment fields in the purchase order (both header and item level) have a direct impact on how accounting handles supplier payments and invoice processing.

You can choose between three down payment categories: M (Mandatory), V (Voluntary), and N (None). Each one changes how the PO behaves from both a process and accounting point of view.

M - Mandatory Down Payment

If you set the PO to “M”, you’re telling the system that a down payment is required before the supplier’s invoice can be posted.

• The accounting team will need to post a down payment first (using the “Manage Supplier Down Payments” app, for example).
• Only once that’s done, the invoice can go through.
• When the invoice is posted, the system automatically clears the down payment against the invoice amount.

This setup is usually used for high-value or capital-intensive purchases, where you want to secure commitment before processing the invoice.

V - Voluntary Down Payment

This option gives you more flexibility. You can make a down payment, but it’s not required.

• The invoice can be posted with or without a down payment being made.
• If a down payment is made, it’ll still be cleared automatically during invoice posting—same as with type M.
• If not, the invoice just posts as normal.

It’s useful when down payments are based on supplier negotiations or aren't always known in advance.

N - No Down Payment

Pretty straightforward: no down payment expected or involved.

• The PO will follow the standard procurement and accounting process—goods receipt, then invoice receipt, then payment.
• There’s no down payment posting, and nothing to clear.

In short:

• Use M when you want financial control and need to ensure payment happens upfront.
• Use V for flexible cases where a down payment might happen.
• Use N when you’re just doing a regular purchase with no prepayment.

I hope this will help answer your question.

Best regards,

Jeremy

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