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Hi All,

In this blog post, I will introduce the frequently used functions in the 'Account Payable' module.

As usual, let's imagine a scenario, there is a food trading company and they want to purchase 500 bags (100 Euro per bag) of rice from the vendor. The vendor requests the food trading company to pay 10% of the total amount as the down payment. The vendor promised to give the food trading company a 3% discount if the company will pay the left amount in 10 days. After the food trading company paid the amount and received the goods, they found there are 2 bags of rice broken, so the vendor gave the food trading company a 200 Euro credit memo as the compensation.

# Basic Concepts

Before we start the configurations in the system, let's quickly go through the basic concepts.

a. Down Payment

As a 'Special G/L Transaction', 'Down Payment' (and 'Down Payment Request') will post to an alternative reconciliation account. This means we should maintain a special G/L account for 'Down Payment' and 'Down Payment Request' as the alternative reconciliation account and the account will not list with the other account payables in the balance sheet report.

There are different special G/L transactions and the system will use special G/L indicators to do the identification. In this blog post, the special G/L indicator 'F' ('Down Payments Request') will be used to do the identification.

The special G/L account will be maintained with type 'K' (vendor) and indicator 'A' ('Down Payment') and indicator 'F' ('Down Payment Request').

Transaction Code: OBYR

b. Credit Memo

'Credit Memo' in the 'Account Payable' module means we got credits back from the vendor for some reason and the credits will be reflected in the related vendor account.

c. Payment Term

'Payment Term' can be considered as a kind of payment condition. After the payment term is defined then it can be used in multiple transactions (like 'Purchase Order'), we will use this function to archive the discount requirement.

# Payment Term

We should maintain a 'Payment Term' record to achieve the discount requirement (3% discount, 10 days).

Transaction Code: OBB8

This payment term will be used for purchase order only in this blog post, so I selected 'Vendor' as the 'Account type'. As requested, the 'Term' is a 3% discount in 10 days.

# Purchase Order

Transaction Code: ME21N

We will create the purchase order directly (not from purchase requisition). The payment term (ZRVD) created in the above step will be used here (it can also be added to the vendor master data in transaction code BP).

There are two ways to do the down payment, one way is using transaction code F-47 ('Down Payment Request') and F-48 ('Down Payment'), another way is maintaining the downpayment information in the purchase order.

In this blog post, I will maintain the down payment information in the purchase order.

# Down Payment

After the downpayment information is maintained in the purchase order and the alternative reconciliation account is maintained, we can create the down payment request and down payment based on the purchase order.

Transaction Code: ME2DP

a. Input the purchase order number.

b. Create the 'Down Payment Request' document

Clicking the 'Create Down Payment' button.

The screen below will popup.

Select the 'Down payment request' radio button and 'OK'.

Check the fields and click the 'EXECUTE' button.

In the coming screen (transaction code F-4), fill the necessary fields, and continue.

Check the record and 'Post' it.

The 'Down Payment Request' document is created for the purchase order.

c. Create the 'Down Payment' document

We should come back to the transaction code ME2DP and input the purchase order information.

Clicking the 'Create Down Payment' button.

This time select the 'Down pmnt' radio button and continue.

Check the record and click the 'EXECUTE' button.

Filling the fields on the coming screen (transaction code F-48) and continue.

Check the record and 'Post' it.

After that, the down payment document is created for the purchase order.

# Goods Receipt

Transaction Code: MIGO

Input the purchase order number which was created in the previous step, check the information (material, movement type, plant, movement type) on the screen. If the information is correct then select the 'Item Ok' checkbox at the bottom of the screen and 'Post' the good receipt.

If the post is successful, a material document will be created.

The material document created for the purchase order. An accounting document will be created with the material document.

# Logistics Invoice Verification

Transaction Code: MIRO

Payment Term

As we maintained the 'Payment Term' in the purchase order to archive the discount requirement, we should maintain the baseline date of the incoming invoice to determine if the payment term condition can be met.

Input the 'Baseline Dt' field under the 'Payment' tab.

Down Payment

The 'Down Payment Clearing' button appeared at the top screen as we maintained the 'Down Payment' for the purchase order.

Enter the down payment amount on the popup screen. Save the change and back to the main screen.

After input and verify the data (purchase order number, amount, date, etc) on the main screen, click the 'Post' button.

The posted document can be displayed by transaction code MIR4.

Clicking the 'Follow-On Documents' button on the screen, the related invoice documents (one ) will be displayed.

One of the documents is for the down payment clearing (the G/L account '159000' was maintained as the alternative reconciliation account).

# Clear Open Item

The 'Account Payable' open items can be found from transaction code FBL1N.

To clear the open item, we can use transaction code F-53 ('Post Outing Payment').

After the outgoing payment is made, the open item is cleared and the related vendor payment document will be created.

At the beginning of the blog post, I mentioned the vendor will give the manufacturing company a 3% discount if they pay the amount in 10 days. From the payment document, we can see the discount is calculated (Down Payment discount: 5000 * 0.03 = 150, Full amount discount: 50000 * 0.03 = 1500, the left amount will pay to the vendor: 50000 * 0.03 - 5000*0.03 = 48500 - 4850 = 43650).

# Credit Memo

As mentioned at the beginning of the blog post, the vendor will give the food trading company a 200 Euro credit memo as there are 2 bags of rice broke.

We can add the credit memo to the vendor's reconciliation account by transaction code FB65 or transaction code MIRO.

In this blog post, I will use the transaction code MIRO to create the credit memo record.

Selecting 'Credit Memo' from the dropdown list, input the purchase order number, quantity, amount information.

After posting the change, a new invoice document will be created. This invoice document can be displayed in the transaction code MIR4.

In transaction code MIR4, click the 'Follow-On Documents' button.

In the document, we can see 200 Euro has been added to the debit side of the vendor account as the credit memo.


In the blog post, I used an example to introduce the common functions in 'Account Payable' modules. I advise you to do the configurations and postings by yourself, this will help you to have a better understanding of the functions.

Best regards,

Jason Lu

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