There are circumstances in the R3 environment that need settings to function properly. You’ll discover that some of these activities are a part of the typical setup as you learn more about S4 HANA. One of the procedures is the customer down payment.
Since there are still a few years left before R3 is totally phased out, I wanted to share with you how to upgrade your R3 system in the event that you must submit a customer down payment.
When customer advances are collected to fulfil sales orders before the actual sale has taken place, the SAP customer down payment process is necessary. These customer advances represent a liability for the company that will be paid off by subsequent sales. The processes necessary for the setup and processing of the SAP customer down payment process are described in this blog.
I’ve divided this up into three separate steps:
- Create an Alternative Reconciliation General Ledger(GL) Account
- The Alternative and Standard Reconciliation Accounts should be connected.
- Execute the SAP Customer Down Payment after that.
- Advance Receipt Post
- Against an advance receipt, post a sales invoice.
- Transfer Message
- Discard Regular Items
1. Customers’ prepaid invoices must be included as liabilities on the balance sheet. Down payments are recorded as special general ledger (G/L) transactions to meet this need. To publish such transactions, an alternative reconciliation account is necessary. Instead of updating the conventional AR reconciliation account when a down payment is received from the customer, the system updates the alternative reconciliation account.
- This is how to set up a new GL Account.
i. Texts for accounts should resemble those for “Advance from Customers.”
ii. Account type must be configured as D-Customers.
iii. Acocunt 430000 will be formed for this example.
2. The normal reconciliation account and the alternative reconciliation account need to be linked in order to make it easier to record the down payment as a specific G/L transaction. Use the OBXR transaction code or the SPRO customising path described below: Financial Accounting – Accounts Receivable and Accounts Payable – Business Transactions – Down Payment Received – Define Reconciliation Accounts for Customer Down Payments to build this relationship.
- Double-click on the line marked Special G/L Transaction Indicator A – Down Payment on the Special G/L Maintenance Initial Screen. In the pop-up screen that appears, key in the appropriate chart of accounts and press Enter.
- Link the alternative reconciliation account number you created in the previous step to the conventional AR reconciliation account. In our illustration, the alternate reconciliation account is 430000, while the normal reconciliation account is 240002.
- The typical account 240002 will be leveraged if a regular payment is made against an invoice. However, if a payment in advance is received, utilise the special G/L indicator A, and the system will use the substitute account 430000 on its own as a result of this linkage.
3. Let’s go through a demonstration now that the setup for the SAP customer down payment process is complete. The stages to carry out the process are listed below:
- Advance Receipt Post
- When the customer’s advance payment is accepted, the process starts. As a down payment on accounts receivable, post the advance receivable.
- Accounts receivable, financial accounting, document entry, and down payment (F-29)
- Enter the necessary data in the transaction code F-29’s opening screen, making sure to include the unique G/L indicator A as indicated below.
- Here is what the Accounting Document will look like following the posting of this Down Payment.
- Use transaction code FBL5N to view the customer line item report right away. Select the Special G/L transactions tickbox and the Open items radial button on the report selection screen. When you run the report, you will see the recently produced advance receipt appear as a credit to the customer account as seen below:
- Against an advance receipt, post a sales invoice.
- Post the sales invoice now, indicating that the service or the delivery of the goods has been completed. If no more payments are needed, this will be deducted from the down payment and cleared in the following stage.
- Accounts payable, financial accounting, document entry, general, and invoice (F-22)
- Post the sales invoice for the identical client who provided the advance in the previous step. A debit to the customer account and a credit to the sales account will appear on the accounting sheet, which will resemble the example below:
- Please use transaction code FBL5N to view the customer line item report once again. Choose the Open items radial button, as well as the Normal items and Special G/L transactions tickboxes, on the report selection screen. When you run the report, you’ll see that the advance receipt from the previous step and the invoice you just made are still open items on the client account:
- Transfer Message
- The advance receipt amount must then be moved from the alternate reconciliation account to the primary reconciliation account. In other words, the down payment will be transferred from the special G/L to the regular G/L.
- Accounts Receivable, Financial Accounting, Document Entry, Down Payment, and Clearing (F-39)
- Enter the following data on the transaction code F-39’s opening screen:
- Document and posting dates
- Enterprise code
- client account
- generated in the preceding stage, sales invoice number
Select “Process down pmnts” from the menu.
to view the payments in advance.
- Initial Transfer Posting Screen
The customer account’s advance receipts are all visible. Choose the people you want to include.
- View the customer line item report by entering the transaction code FBL5N. Select the Special G/L transactions tickbox and the Cleared items radial button on the report selection screen. When you run the report, you’ll be able to see that the transfer posting you just completed has cleared the advance receipt document you submitted in the first step:
- Discard Regular Items
- Final step: Transfer the normalised advance payment we received in the previous phase against the customer invoice.
- Accounts Receivable — Account — Clear — Financial Accounting (F-32)
- Enter the customer account and company code on the transaction code F-32’s opening screen, then click the Process open items button.
All open sums still on the client account will be shown in the open items clearing screen. You can clear a number of documents by double clicking on them. The sums will be underlined and their net value is zero, as seen below:
- Let’s take one more look at the customer line item report with transaction code FBL5N. Select the Normal items tickbox and the Cleared items radial button on the report selection screen. When you run the report, you’ll find that the normalised transfer posting you made in the previous step and the customer invoice you created in step two have both been cleared. The SAP client down payment procedure is finished at this stage!
There are numerous steps in the procedure, but as you go along, you’ll notice that everything goes quite easily. You will eventually have a very simple and effective method for managing advanced payments from your clients.