Processing Down Payments

The following figure provides an overview of down payment processing in Sales and Distribution and Financial Accounting:

You usually arrange down payments with the customer when dealing with plant engineering and construction or capital goods. Down payments are already created in the sales order. At the corresponding due date, you send a down payment request (billing document in Sales and Distribution) to the customer.

The down payment request in Sales and Distribution is automatically posted in Financial Accounting as a down payment request (posted as a noted item). The item has a special general ledger (G/L) indicator F, which ensures that posting is statistical. Posting is made to a different reconciliation account, which allows you to differentiate down payment requests from other receivables.

When posting an incoming payment for a down payment, the down payment is assigned to the down payment request. The amount paid as down payment is also assigned to the sales order account. The item has a special G/L indicator A.

When processing partial or final invoices, the down payments made are transferred as down payments to be cleared. Within Financial Accounting, the down payments are deducted from the special reconciliation account and entered in the standard reconciliation account. The down payments for clearing then appear as open items for the customer and reduce the receivables total.

The following figure shows down payment agreements in the sales order:

Down payment processing is carried out with the billing plan function.

You can store one or more down payment agreements as a date in a billing plan.

You can enter the value of the agreed down payment either as a fixed amount or as a percentage of the value of the item.

Control is carried out via the following billing rules:

• Billing rule 4

  Down payment for percentage milestone billing.

• Billing rule 5

  Down payment for value-related milestone billing.

The down payment agreement can be assigned directly to an item, or it can be defined as valid for all items in the order.

For partial and final invoices, the down payments made are transferred to the billing documents as down payments for clearing.

An example of this is shown in the following figure:

When you do the partial invoicing, the down payment amount due for clearing is displayed and can be deducted from the receivables. In other words, the clearing is carried out automatically during invoicing.

During partial invoicing, you can change the amount of the down payment to be cleared. You can do this by changing the amount for condition type AZWR on the pricing screen for the item.

An example of this is shown in the following figure:

In this case, the maximum amount for clearing is the amount received as down payments minus the down payments already cleared.

During final invoicing, all pending down payments are taken into account.