Hello SAPers!
Here is another post, where I'd like to share a couple of details about SAP's functionality. This time about handling of down-payments. I hope you'll find something interesting for you.
Down-payment is a special payment that the company receives prior to goods issue to customer or is sending to vendor before goods / service receipt. Consequently, we can distinguish between incoming and outgoing down-payments.
SAP specifics for down-payments processing implies use of Special GL indicators (SGL-indicator). SGL-indicator in the case of down-payment can be considered as a special attribute of transactional data that re-routes the posting from regular AP/AR reconciliation account to a dedicated reconciliation account for down-payments (i.e. down-payments made / down-payments received). Separate reconciliation account for down-payments is not a mere technical feature, but as a rule legal requirement.
Certain countries for example Ukraine or Russia consider down-payments as events which increase companies’ VAT liability / credit. Therefore, certain customizing and master data prerequisites should be met to ensure that these events can be accounted for correctly in SAP.
This post explains the functionality behind calculation / posting of VAT on down-payments on so called “gross basis”. “Gross basis” is not official accounting term, rather a popular description behind the approach. This approach assumes that total amount of down-payment is a sum of tax base + VAT amount.
Accounting postings for typical vendor down-payment process would be as follows*:
* Notes:
Accounting treatment for incoming down-payments is similar:
Posting scheme for VAT on down-payments requires configuration of clearing accounts for VAT on down-payments. Configuration of automatic accounts determination can be reached via t-code OBXB or via the following menu path:
SPRO → Financial Accounting (New) → Accounts Receivable and Accounts Payable → Business Transactions → Down-Payments Made → Define Account for Tax Clearing.
Relevant transaction keys for VAT on down-payments are MVA – for incoming down-payments and VVA for outgoing down-payments:
Add account modification A and clearing GL account for input VAT:
Do the same for output tax clearing:
Account determination for clearing VAT accounts can be universal (i.e. the same GL account will be used regardless of vendor’s / customer’s reconciliation account) or can be dependent on account modification. Go posting rules’ settings and activate checkbox “Input/output tax clearing” to enable account modifications:
Once account determination is maintained, proceed to customizing of special GL indicators in t-code FBKP or via the following menu path:
SPRO → Financial Accounting (New) → Accounts Receivable and Accounts Payable → Business Transactions → Down-Payments Made → Define Alternative Reconciliation Account for Down Payments.
As a rule, most companies use SGL-indicator A for down-payments, but other indicators might be used as well. Check which of them are relevant for your company and if they have type “Down payment / down payment request”:
Indicate account modification A for those vendor reconciliation accounts, which are subject for VAT calculation. If you have several account modifications, you can have different account determination for example for local vs. foreign down-payments.
Perform similar customizing for customer down-payments:
So far, the setup is complete from configuration point of view. But there are a few prerequisites for master data of GL accounts / tax codes that are involved into the posting:
Prerequisites for incoming down-payments:
Prerequisites for outgoing down-payments:
Tax categories of GL accounts can be checked in t-code FSS0, whereas settings of tax codes can be verified in t-code FTXP.
Example of incoming down-payment can be found below*:
* Note: just in case, transaction key UAM is a custom key for output VAT, instead of standard key MWS.
Example of customer invoice can be found below:
Example of clearing of customer’s open items can be also found below:
I hope that you have learn something useful once you reached this sentcen. I’m looking forward to your comments and remarks.
Best regards,
Bohdan Petrushchak
Here is another post, where I'd like to share a couple of details about SAP's functionality. This time about handling of down-payments. I hope you'll find something interesting for you.
1. Introduction
Down-payment is a special payment that the company receives prior to goods issue to customer or is sending to vendor before goods / service receipt. Consequently, we can distinguish between incoming and outgoing down-payments.
SAP specifics for down-payments processing implies use of Special GL indicators (SGL-indicator). SGL-indicator in the case of down-payment can be considered as a special attribute of transactional data that re-routes the posting from regular AP/AR reconciliation account to a dedicated reconciliation account for down-payments (i.e. down-payments made / down-payments received). Separate reconciliation account for down-payments is not a mere technical feature, but as a rule legal requirement.
Certain countries for example Ukraine or Russia consider down-payments as events which increase companies’ VAT liability / credit. Therefore, certain customizing and master data prerequisites should be met to ensure that these events can be accounted for correctly in SAP.
This post explains the functionality behind calculation / posting of VAT on down-payments on so called “gross basis”. “Gross basis” is not official accounting term, rather a popular description behind the approach. This approach assumes that total amount of down-payment is a sum of tax base + VAT amount.
Accounting postings for typical vendor down-payment process would be as follows*:
* Notes:
- This example assumes tax rate of 20 %;
- Input VAT amount is posted to in correspondence with “VAT on down-payments made” account, which can be considered as clearing account;
- “Deferred” input VAT represents a temporary GL account, which might be used in some countries to account for VAT amounts before they are re-posted to “target” GL account i.e. before input VAT can be considered as deductible. This reposting can be made via deferred tax transfer programs or by special localization-specific program. This topic by itself is very broad and cannot be covered as part of this post.
Accounting treatment for incoming down-payments is similar:
2. Overview of customizing
Posting scheme for VAT on down-payments requires configuration of clearing accounts for VAT on down-payments. Configuration of automatic accounts determination can be reached via t-code OBXB or via the following menu path:
SPRO → Financial Accounting (New) → Accounts Receivable and Accounts Payable → Business Transactions → Down-Payments Made → Define Account for Tax Clearing.
Relevant transaction keys for VAT on down-payments are MVA – for incoming down-payments and VVA for outgoing down-payments:
Add account modification A and clearing GL account for input VAT:
Do the same for output tax clearing:
Account determination for clearing VAT accounts can be universal (i.e. the same GL account will be used regardless of vendor’s / customer’s reconciliation account) or can be dependent on account modification. Go posting rules’ settings and activate checkbox “Input/output tax clearing” to enable account modifications:
Once account determination is maintained, proceed to customizing of special GL indicators in t-code FBKP or via the following menu path:
SPRO → Financial Accounting (New) → Accounts Receivable and Accounts Payable → Business Transactions → Down-Payments Made → Define Alternative Reconciliation Account for Down Payments.
As a rule, most companies use SGL-indicator A for down-payments, but other indicators might be used as well. Check which of them are relevant for your company and if they have type “Down payment / down payment request”:
Indicate account modification A for those vendor reconciliation accounts, which are subject for VAT calculation. If you have several account modifications, you can have different account determination for example for local vs. foreign down-payments.
Perform similar customizing for customer down-payments:
3. Master data prerequisites
So far, the setup is complete from configuration point of view. But there are a few prerequisites for master data of GL accounts / tax codes that are involved into the posting:
Prerequisites for incoming down-payments:
- Reconciliation GL account for incoming down-payments should have tax category +B;
- Posting of incoming down-payment should involve tax code with type “A” (i.e. output tax);
- Clearing account for output VAT on down-payments should have tax category “>” and should not be managed on open items basis.
Prerequisites for outgoing down-payments:
- Reconciliation GL account for outgoing down-payments should have tax category -B;
- Posting of outgoing down-payment should involve tax code with type “V” (i.e. input tax);
- Clearing account for input VAT on down-payments should have tax category “<” and should not be managed on open items basis.
Tax categories of GL accounts can be checked in t-code FSS0, whereas settings of tax codes can be verified in t-code FTXP.
4. Examples in the system
Example of incoming down-payment can be found below*:
* Note: just in case, transaction key UAM is a custom key for output VAT, instead of standard key MWS.
Example of customer invoice can be found below:
Example of clearing of customer’s open items can be also found below:
I hope that you have learn something useful once you reached this sentcen. I’m looking forward to your comments and remarks.
Best regards,
Bohdan Petrushchak
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