Posting Manual Incoming Payments


After completing this lesson, you will be able to:

  • Process manual incoming payments accurately within the system.
  • Display customer balances in SAP S/4HANA.
  • Analyze the status of invoices after payment application using SAP S/4HANA.

Manual Incoming Payments


Michael has made progress in his new role and is ready to learn about processing incoming payments. What will be interesting for him is how customer payments are matched to invoices and how differences are dealt with during this task. He is aware that Bike Company processes high volumes of customer payments on a daily basis.

In addition, are there any automated processes that SAP S/4HANA has available to match incoming payments with invoices?

Michael is aware that certain payments will not matched to invoices (price differences and so on) and therefore need to be processed manually. He should be able to explain the differences between partial, payment on account and residual, and understand the use of Reason Codes in conjunction with managing payment differences.

He should also gain knowledge on the resulting related journal entries from the payment documents posted in Receivables Management.

Concept – Manual Incoming Payments

You usually check for incoming payments using online banking. However, if payments are not received using electronic bank statements (Lockbox for US customers), you need to enter the payment data manually and search for the matching of open items. Ideally, the system proposes a list of matching items for which you can post and clear the payment in one step. If it is not possible to clear the payment, you can post it on the account, or to a G/L account.

Incoming payments can be dealt with in several ways in different companies and countries. The invoices or open items are cleared if the customer pays the full amount or with an agreed cash discount.

If a minor payment difference exists, this can be charged off automatically, depending on the Tolerances configured in SAP S/4HANA. The maximum amount that constitutes a minor payment difference is defined in the Tolerance Group settings. Any payment difference outside the Tolerance Group settings must be dealt with manually. Two methods of posting payment differences are as follows:

  1. Partial payment: The item being short-paid does not clear. A new open item in the amount of the payment is created on the customer’s account. This credit entry references the open item being short-paid.


    It is also possible to post the incoming payment on an account where there is no reference to an invoice.

  2. Residual item: The open invoice is cleared and a new open item (residual item) in the amount of the payment difference is created.

How to Post a Partial Payment

In this exercise, you will post a partial payment.

How to Post a Payment on Account

In this exercise, you will post a payment on account.

Reason Codes

The use of Reason Codes in incoming payments within SAP S/4HANA allows organizations to identify and track the reasons for customer payments or adjustments. They are used to categorize payments, which enables organizations to better manage cash flows, improve forecasting accuracy, and reduce manual work in reconciling accounts.

They can also be used to identify the reasons for invoice adjustments such as price changes, discounts, or disputed items, and can be assigned to the following:

  • Difference Postings
  • Partial Payments
  • Residual Items

Moreover, the use of Reason Codes can enhance financial reporting and analysis by providing insights into payment behaviors and trends that can be used to inform decision-making. They can help businesses to identify issues that are causing late payments and enable proactive measures to improve payment times and customer relationships.

You can use Reason Codes to describe the reason for the payment difference. To assign more than one reason code to a payment difference, choose Distribute Difference.

Reason codes also have the following additional optional functions:

  • Control the type of payment notice sent to a customer
  • Control the account where a residual item is posted
  • Automatic posting of a residual item to a specified G/L account
  • Exclusion of disputed residual items from credit limit checks


To learn more about how to process a manual incoming residual payment, consult the video in the following demonstration, How to Process Manual Incoming Payments.

How to Process Manual Incoming Payments

Choose the Play button to learn about how to process a manual incoming residual payment in SAP S/4HANA Cloud public edition system.

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