ACCOUNTS PAYABLE

This is a sub Ledger (Subsidiary Ledger). When Material Management (MM) is not implemented,
this is used for all purchases as well as for services. When Material Management Module is
implemented this is used for services, where TDS is to Be deducted.
Ex:- Legal & Professional Charge, job work Charges

- Raw Material Purchases entry would be like below:

Purchases A/c Dr.
To Party A/c (Supplier Account) Cr.

- In SAP Entry Would be like below:- ,

Inventory Raw Material A/c Dr. (General Ledger)
To party A/c.(supplier Account) Cr. (Subsidiary ledger)
In Trial Balance only Balances of General Ledgers will affect but not the Subsidiary ledgers. SAP
automatically passes internal entry to Sundry Creditors RM A/c (General Ledger) Reconciliation
Account.

VENDOR ACCOUNT GROUP

- Determines no. ranges of vendor masters
- Field status to create vendor masters
- One time vendor group.

PART PAYMENTS
1. Partial payment method: both invoice and part payment made shown as open items, if total paid
then shows as clear items

2. Residual payment method: Remaining due shown as open item

Inventory RM A/c Dr. 100000
To Vendor A/c 100000

Vendor A/c Dr. 100000

To Bank A/c 80000
To Vendor A/c 20000

HOUSE BANKS
- Each house bank is represented by a bank ID
- Every account at a house bank by an account ID
- For automatic payment transactions we determine the bank details for payment.

Activities
1. Work out the specifications you have to enter in the system for your house banks.
2. Define your house banks and the corresponding accounts in the system under a bank ID or an
account ID

ADVANCE PAYMENT TO VENDORS

- Link between Sundry Creditors & Advance to Vendors - Sundry Creditors (Reconciliation
account)
- Advance to vendors (Alternative Reconciliation A/c)
- A (Advance Special GL indicator)
 - Payment is made against bill number, we will assign A/c 100501 in vendor master, it will
update the A/c 100501.
- If advance, while at the time of payment against Sundry Creditor A/c 4400001, we mention
“A” for advanced, system automatically update A/c 200150 (Advances for vendors account
instead of account 100501 (Sundry creditors Inventory Raw Materials Account)

AUTOMATIC PAYMENT PROGRAM (APP):

In automatic payment program, system will define the due date for the bill based on the payment
terms for the vendor, system will issue the check, pass entry & clear the party account, system will
generate payment advice, it will update the check register. Everything will be done automatically.
The checks will be issued from the lots specified for app. check lot should be sequential. This app
will be used normally by cash rich companies not by all companies, they run every week (or) 10 days
(or) 15 days once. We are not programmers, we use system given payment program, check format
& payment advice format.

Before run we have to give bank wise ranking with available amounts
BANK RANK AVAILABLE AMOUNT
SBI 1 1000000
ICICI 2 500000
IDBI 3 300000

System will issue checks first from rank 1 bank, then it will go to rank 2.like that it issues check based
on ranks upto available format.
When we run the program, it first gives a proposal, in the proposal it shows for which parties, for
which invoices for which amount & for which bank it is going to issued checks, we can edit the
proposal by blocking some invoices for payment or by changing banks for payment.

Blocking of invoices means: If we have funds for payment of 8 bills, but as per the program payable
bills came 12, we can drill down the gross amount payable to any party & block some bills for
payment from that proposal.

Changing of bank can be done when any vendor requested to make the payment from specific bank,
and as per program, system allotted another bank, we can make changes in bank for issuance of
check.

SAP has defined 4 payment methods in APP Program:

I. Payment block: If we don’t want to issue any checks in App, we can select * (skip A/c option &
select payment block.)

II. TA10 has to pay 401401.401401 has to make payment to 501501.401401 requested to issues
check in the name of 501501instead of 401401.here clearing party will be 401401 & check will be
issued in the name of 501501.

III. If TA10 & 401401 both are having bank accounts in ICICI

IV. If 5 bills are due to 401401.system will generate 1 check for all the 5 bills If 401401 asked to issue
a separate each bill, we select this option so system will generate individual payment.

PAYMENT PER DUE DAY

- Indicator which specifies that only items that are due on the same day will be paid with a single
payment.
Examples
 Invoice 1000 due 02/10/2018
 Credit Memo 500 due 02/11/2018
 Invoice 200 due 02/11/2018
 Invoice 700 due 02/12/2018
Grouping these items by due date results in the following arrangement:
 02/10/2018 balance 1000 can be paid
 02/11/2018 balance 300- cannot be paid
 02/12/2018 balance 700 can be paid
In the above case, the items from the 02/11/2018 would be grouped with the items from the
02/12/2018, resulting in the following payments:
 02/10/2018 balance 1000 can be paid
 02/12/2018 balance 400 can be paid

SENDING COMPANY CODE

When making cross-company code payments, you can specify the sending company code as well
as the paying company code for each company code. If the sending company code is different from
the paying company code, the system notes the sending company code in the payment transfer
medium or payment advice. This note is information for the business partner.

Example 1:
Company code 0001 pays its own items and the items of company codes 0002 and 0003
All items are grouped into one payment.
Company code Paying company code Sending company code
0001 0001 0001
0002 0001 0001
0003 0001 0001

Example 2:
Company code 0001 pays its own items and the items of company codes 0002 and 0003.
However, a separate payment is created for each company code.
Company code Paying company code Sending company code
0001 0001 0001
0002 0001 0002
0003 0001 0003

RECONCILIATION ACCOUNT
 Reconciliation account is a sub-ledger account with in the general ledger account,
 The reconciliation account in G/L accounting is the account which is updated parallel to the sub
ledger account for normal postings (for example, invoice or payment).
 For special postings (for example, down payment or bill of exchange), this account is replaced
by another account (for example, 'down payments received' instead of 'receivables').
 The replacement takes place due to the special G/L indicator which you must specify for these
types of postings.