Lease in Accounting | Quarterly periodic posting

[SAPSupport]

Hi all,

How can we invoice/pay quarterly in a lease contract for each Object/Condition?

We receive Supplier Invoice and we are using scanning, how the system will work out the postings from S4 (Periodic Postings) and the invoice we receive? This seems to be a limitation in the system.

Regards

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[SAPSupport · Accepted solution]

Hi there,

Thank you for your question!

What you are looking for is the Frequency Terms (in App 'Manage Contract') or Rhythm Terms (in App 'Contract Management'). You can adjust these terms on a contract basis, or even create and assign separate frequency terms to all conditions independently.

You can adjust the frequency unit (i.e. Days/Months/Years) and the number of this frequency, which would impact how the specific condition is considered during periodic posting. For example, a frequency of '1 in Months' would generate a periodic posting entry of that condition once every month - a '3 in Months' would consider that condition only every 3 months (so quarterly).

You can explore these various settings and simulate the changes during periodic posting to see which constellation of parameters fall in line with your specific business requirements.

I also recommend reading through the best practices and test scripts available for the Contract and Lease Management related scope items available via the Process Navigator to learn more about these concepts.

[Andre_Depaula]

Handling invoices and payments on a quarterly basis for lease contracts in systems like SAP involves setting up the correct financial and contract management processes. You will typically use functionality related to contract management and recurring invoicing. Here's a structured approach to achieve this:

1. Contract Setup

• Lease Agreement Details:

  • Set up the lease contract in your system, ensuring all terms and conditions are accurately reflected. This includes the total lease amount, the quarterly payment schedule, the lease duration, applicable taxes, and any other specific terms.

• Specify Objects/Conditions:

  • Clearly define any objects or conditions associated with the lease. Objects might refer to specific assets being leased, and conditions could be any terms that affect how the lease is billed or paid (e.g., maintenance clauses, insurance).

2. Periodic Billing Plan

• Create a Billing Schedule:

  • Establish a billing schedule within your contract management system that aligns with the quarterly payment terms. This schedule should automatically trigger invoices at the start of each billing period.

• Assign to Objects/Conditions:

  • Ensure that the billing schedule is linked to each specific lease object or condition. This might involve creating sub-items or line items within your contract that reflect individual lease components.

3. Invoicing Process

• Automate Invoice Generation:

  • Configure the system to automatically generate invoices based on the billing schedule. Ensure that invoices accurately reflect the terms for each object or condition, including any recurring fees or variable costs.

• Verify Invoice Details:

  • Implement a process to review invoices for accuracy before they are sent out. This process might involve checks for proper billing amounts, correct application of taxes, and any adjustments based on conditions.

4. Payment Process

• Establish Payment Terms:

  • Define clear payment terms in the system, such as due dates and accepted payment methods. Ensure these terms are communicated to the lessee.

• Automate Payment Reminders:

  • Set up automated reminders for upcoming or overdue payments to ensure timely collection. This can be accomplished through email notifications or dashboard alerts.

5. Integration with Financial Systems

• Link to Accounts Receivable:

  • Integrate your contract management and invoicing system with your financial systems (e.g., SAP S/4HANA), so that payments are reflected in accounts receivable and financial records are automatically updated.

• Reconciliation Process:

  • Implement a reconciliation process to ensure that payments received align with the invoiced amounts and that the ledger is up-to-date.

6. Monitoring and Reporting

• Track Payment Status:

  • Use reporting tools to monitor payment status and aging payments. This helps in managing cash flow and addressing any payment disputes or delays.

• Lease Performance Reports:

  • Generate periodic reports to evaluate the performance of lease contracts, considering metrics like payment timeliness and total revenue from leased objects.

7. Adjustments and Compliance

• Adjustments for Lease Changes:

  • Be prepared to adjust the billing schedule in response to changes in lease terms, such as modifications to the leased objects or conditions.

• Compliance with Accounting Standards:

  • Ensure all processes comply with relevant accounting standards, such as IFRS 16 or ASC 842, for lease accounting.

By following these steps, you can effectively manage quarterly invoicing and payments for lease contracts, ensuring compliance and accurate financial tracking for each object or condition within the lease.