SAP Retention Process

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What is Retention Process?

 

Retention process is Holding back a portion of payment to vendors who works for your organization.For example, the retention amount is released to the vendor when certain expectations are met or on a specified date that your vendor has agreed upon.

An organization can have an agreement with the vendor that a certain percentage or amount will be retained from the total amount that needs to be paid to be vendor. The agreement can have a retention date on which the help back amount will be paid to the vendor or when certain expectations are attained.

 

The Purpose of this Blog is to Explain the SAP flow of the Retention process.



 

Functionality that needs to be activated is : LOG_MMFI_P2P via tcode SFW5.

 

Customization:

A new document type needs to be created for the retention process.

Tcode - OMR4.



Click on "Document types in Invoice Verification" tab.

 



Select the "MIRO" transaction code line and display its details.

 



The tab highlighted in yellow is where we maintain the document type for Retention process which will then flow while we are Invoicing the Purchase order.

 

The Steps to be done in SAP are given below:

  

Create Purchase order.

Tcode – ME21N

Enter all the relevant details such as Material, Quantity, Unit Price, Plant, Vendor and Retention category.

 



 

 

We will enter 10% as retention. 



 

Save the Purchase order.



PO 4500000087 has been created.

 

 

Create GRN.

Tcode – MIGO



 

Enter the Storage location and tick on “Item OK” icon.



 

Click on “Post“ icon to Post the GRN.



GRN 5000000164 has been created.

 

Book the Vendor Invoice

Tcode – MIRO

Enter the PO Number, Invoice date and reference field and hit Enter.



 

Enter the Amount, Retention due date and Hit Enter. 

 

Click on “Messages” icon to view the message log.

 

 

 

 

 

 

Click on the “Simulate” icon



 

Hit Enter



 

 

Click on the “Post” icon to book the Invoice.



Document 5100000139 has been created.

 

Display Invoice document to check for the GL accounts that are hit in Retention process.

Two accounting document will be generated :

1. Original vendor invoice

2. Retention amount invoice.

Tcode – MIR4

 

Enter the Invoice document and Fiscal year.



 

Hit Enter



This is the document we just posted via MIRO.

 

 

Click on Follow-On documents icon.



We have got 2 Accounting documents been generated here.

 

The screenshot given below is the subsequent accounting entries for Accounting document 5100000112.

 

 

Subsequent accounting entries for Accounting document 5100000113.



 

Note - Payment to vendor can be done via Tcode F-53.

 

 

Conclusion :

1. LOG_MMFI_P2P functionality needs to be activated.


2. Message M8_2303 needs to be activated.


3. A special G/L indicator needs to be created for Retention process so that correct G/L accounts will be hit from the FI side.


4. Two Accounting entries will be generated after booking the Invoice.


5. Retention percentage and category in the PO and Retention due date in MIRO are a mandate.

 

I hope you liked the blog, and if you have any suggestions or questions please let me know.