Configuring Company Code Settings for Payment Program

Hi. My name is Jackson. I have a strong technical background and a proficient understanding of finance and business. Before joining the Bike Company, I worked at the Car Company for seven years in various roles focused on payments. As an Internal Consultant in the Payables Management area of the Bike Company, I am responsible for customizing and optimizing the automatic payment run. I identify potential areas of improvement within the payment system to ensure the process is efficient, secure, and user-friendly.

From our Cash Management Department, I have received information that a new bank will be utilized as our primary institution for outgoing payments. I need to adjust the configuration of our bank selection of our automated payment program. Let's get started.

First, let's specify the company codes involved in the payment transactions.

Sending company codes: If company code A pays on behalf of company code B, then company B is the sending company code. If a company code is not specified, the application automatically regards the sending company code as the paying company code.

Paying company codes: Here you can locate the company code that processes the payment transactions.

Payment method supplements: If activated, it allows the user to print and sort payments. You can create a two-character payment method supplement that can be assigned to customer or vendor master records. When you enter a document in the system, it automatically assigns the relevant data to individual items. You can also manually enter or overwrite the data in the line item when you create a document.

Cash discounts: You can define a minimum discount limit for outgoing payments. If the discount is less than this limit, it is ignored and the payment is not made until the due date for the net payment. The maximum discount setting causes the maximum discount to be used, even if the cash discount period has been exceeded.

Tolerances days of payments: This parameter allows you to specify the number of days by which the cash discount period and the period for the net payment may be exceeded (delayed payment). If you know that your vendors usually grant a certain number of grace days, you can enter tolerance days for payables for every company code. These tolerance days help postpone the payment of some due items until the next payment run, while still receiving the appropriate discounts.

Customer and vendor transactions: The Vendor/Customer Sp. G/L Transactions to be paid/for Exception List fields specify the special general ledger transactions that can be processed/ignored using the payment program.

In this video, we will look at identifying all company code settings within an automatic payment run. We will cover:

• Configuring Company Code Settings for Automatic Payments.
• Utilizing Cash Discount and Tolerances.
• Incorporating Special G/L Transactions.

Before customizing bank selection settings, it's crucial to review and configure the company code settings for the automatic payment program, including parameters such as paying and sending company codes (both set to 1010), tolerance days for payable (5 days), and outgoing payment with a 2% cash discount. You can navigate these settings through the Implementation Activities app under Payables and Receivables Management → Payment Processing → Company Initiated Payment and Clearing → You use automatic payments and payment media formats → Set Up All Company Codes for Payment Transactions.

Ensure the paying and sending company codes are correct or input different ones if needed. Set up separate payments for each business area and use payment method supplements to group line items. The Cash Discount and Tolerances section is vital for managing extra days for payables and setting conditions for cash discounts.

After configuring the settings for All Company Codes, make additional changes in the Paying Company Codes Customizing section.

For each paying company code, you need to define the following settings:

Minimum amounts for payments: You can define the minimum amount required for incoming and outgoing payments. Payments below this cut-off amount will not be made.

The "No Exchange Rate Differences" field is used to indicate whether or not the system should calculate exchange rate differences. If this option is selected, any changes in the exchange rate between the time the various part payments are made will not be included in the payment calculations. This option can also be applied to partial payments.

The "Separate Payments for Each Reference": field indicates that payment will be made separately for each invoice or payment reference number. This ensures that each transaction is individually processed and recorded, facilitating clear tracking and payment accounting.

Bill of exchange specifications: You can define the number of bills of exchange created for each account during the payment run for the bill of exchange payment method. You can also control which open items for the bill of exchange payment method will be considered during the payment run using due-date specifications.

Direct Debit Pre-Notifications: can also be included in the payment run. These inform the debtors in advance about upcoming direct debit transfers, providing important details such as the amount and due date of the payment.

Creditor Identification Number: The Creditor Identification Number is a unique reference number in the SEPA (Single Euro Payments Area) scheme that identifies each creditor involved in direct debit transactions. It establishes a unique and standardized identity for the creditors, making it easier to manage and execute payment transactions effectively.

In this video, we will look at identifying paying company code settings within an automatic payment run. We will cover:

• Setting Minimum Amounts for Payment Transactions.
• Configuring Payment and Exchange Rate Preferences.
• Outlining Direct Debit Pre-Notification and Creditor Identifiers.

Set up minimum payment amounts for company code 1010: 0.50 Euro for incoming and 2.50 Euro for outgoing payments. Navigate to Customizing and select Set Up Paying Company Codes for Payment Transactions. The system will ignore payments below these limits. You can also automate exchange rate difference postings and configure separate payments per reference. Additionally, set up bill of exchange payments and direct debit pre-notifications, informing customers about upcoming direct debits and entering creditor identification number. You can navigate these settings through the Implementation Activities app under Payables and Receivables Management → Payment Processing → Company Initiated Payment and Clearing → You use automatic payments and payment media formats → Set Up Paying Company Codes for Payment Transactions.

To prevent issues during the execution of the payment program and while creating the payment medium, additional settings need to be configured for the "Payment Medium Format per Company Code."

The "Set Up Payment Medium Formats per Company Code" Customization section allows you to configure the specific format in which payment details will be presented for each company code, payment method, and house bank.

Company Code: Use this field to specify the specific code assigned to each company within the system.

Payment Method: Use this field to define how payments will be made, e.g., checks, bank transfers, debit cards, etc. Each payment method can have different conditions and procedures.

House Bank: defines the organization's chosen financial institution, which handles its primary banking transactions.

Payment medium format: refers to the structured outline, or layout, used to present payment details, e.g., checks, direct deposits, and electronic funds transfers.

Additional Format Supplement: Use this field to specify or provide additional details about the format for payment information, based on business scenarios, financial regulations, or bank agreements.

Alternative Format Type: This field allows the user to select an alternate format for payment information, serving as a secondary option if the primary one isn't compatible or sufficient.

Hash Algorithm: This refers to the specific cryptographic function that takes an input and returns a fixed-size string of bytes. It's used for security purposes in the payment process to ensure the integrity and confidentiality of the data.

After the format settings have been made, a "Note to Payee" can be assigned to the Payment Medium Format based on the Paying Company Code, Payment Method, and House Bank.

Paying Company Code: This is a unique identifier within a system that refers to the specific entity under which the payment is being processed.

Note to Payee: Use this field to add extra information or instructions about the payment that will be visible to the payee. This could include details such as the reason for payment, referencing invoices, or other relevant notes that can provide context or clarifications regarding the payment. SAP provides several standard "Note to Payee" options. These can be used for specific transactions, such as SAP SEPA for SEPA payments.

In this video, we will look at identifying payment medium formats per company code settings within an automatic payment run. We will cover:

• Setting Up Payment Medium Formats.
• Configuring SEPA Credit Transfer Payment Methods.
• Configuring Note to Payee Settings.

To create a payment medium file for a new house bank, set a payment medium format for the house bank and payment method in the company code. You can navigate to these settings through the Implementation Activities app under Payables and Receivables Management → Payment Processing → Company Initiated Payment and Clearing → You use automatic payments and payment media formats → Set Up Payment Methods for Each Country/Region. Select SEPA Credit Transfer for Germany and click "Format in Company Code." Add a new entry for house bank T-B10 in company code 1010. Additional settings are not needed. Optionally, configure the Note to Payee settings using the standard SAP SEPA format.

In the "Create/Assign Selection Variants" section further settings for the Payment Medium Format can be carried out, such as creating and assigning selection variants. These variants can then be utilized when generating payment media through the Payment Medium Workbench. This is useful for handling more complex scenarios, such as for example making payments in different currencies like USD and EUR. For each currency, specific variants with unique parameter values can be created. If you do not have such requirements, there is no need to manage the dynamic selection.

When creating and assigning a selection variant, the following steps are carried out:

Settings are made for the corresponding Company Code, House Bank, and Sequence No.

Step 1: (Selection Variant): you can enter a name of the selection variant in this field

Step 2: (Format Parameters): you can set parameters for the format such Name Space, ISO Code, Requested Execution Date and so on.

Step 3: (Dynamic Selection): you can maintain dynamic selection parameters such as House Bank, Currency, Account ID, and so on. The exact combination of fields depends on the payment medium format.