Executing Supplier Payments Based on Payment Proposal

This document explains how you create different types of payment documents based on a payment proposal.

Outcome

Payment documents are created and the payment is recorded.

Type of payment Documents created

Check

A check, a supplier payment journal, and an accounting journal are printed.

Draft

A draft, a supplier payment journal, a supplier invoice journal, and an accounting journal are printed.

Manual bank transfer

A payment order for the bank, a payment specification for the supplier, a supplier payment journal, and an accounting journal are printed.

Electronic bank transfer

An electronic file with payment orders is created. A supplier payment journal and an accounting journal are printed. If the payment method requires bank confirmation, account entries are not created until payments are reported as confirmed by the bank.

Direct debiting

A supplier payment journal and an accounting journal are printed.

Use the information recorded to analyze your costs and your vendor relationship.

Accounts payable and the general ledger are updated. The only exception is recurring payments that are not connected to an invoice in accounts payable; such payments update the general ledger only. For checks, the AP checkbook is updated. The basic account entries created are:

Accounting rule Account Debit Credit
 

Bank

 

x

*

Supplier

x

 

However, for drafts the account entries created are:

Accounting rule Account Debit Credit

AP33–295

Draft accepted (see below)

 

x

*

Supplier

x

 

(*Account entry based on the transaction for the original supplier invoice.)

For information about other account entries that can be created, see the descriptions of accounting events AP30, AP31, AP32, AP33, AP34, and AP35 in Accounting Rules for AP - Accounts Payable.

Before you start

Follow these steps

Outline
  1. Create and Review Payment Documents

    To create payment documents according to the payment method of each invoice record, confirm the payment proposal in 'Suppl Payment Proposal. Open' (APS130). Account entries are created either when confirming the proposal or when reconciling the payments based on the bank confirmation, depending on the payment method used. Review the payment documents and the account entries created as a last check.

  2. Send Check to Supplier

    Send the check to your supplier. The payment is automatically recorded as completed. If necessary, use the AP checkbook in 'Check. Open Checkbook' (APS300) to update the check status or to reverse the payment transaction.

  3. Send Draft to Supplier's Bank – With or without Bank Confirmation

    Send the draft to the supplier' bank, who will review it and forward it to the supplier. After that the supplier's bank will send the draft to the company bank, requesting that the money be transferred to the supplier account. The company bank then notifies you about the transfer before it is done. When the transaction is completed, you may receive a confirmation from the company bank.

  4. Send Bank Transfer Order to Bank – With or without Bank Confirmation

    Send information on the payments to be transferred from your account to the company bank. You have several alternatives:

    • Send the transfer orders as printed documents
    • Send the transfer orders electronically in a batch file.
  5. Reconcile Payment Based on Bank Confirmation

    Use the bank confirmation to finally reconcile the payments. (For drafts, reconciliation can be useful for payments in foreign currency where the exchange rate is not known until reported by the bank, for example.)

    • Reconcile draft payments requiring bank confirmation in 'Draft. Reconcile Confirmations' (APS175)
    • Reconcile bank transfer payments requiring bank confirmation in 'Suppl Payment. Report Bank Confirmation' (APS190)
    • Reconcile bank transfer payments electronically by processing the bank confirmation file in 'Bank Statement. Open' (ABS100). During this process, the status of the payment reference number will be updated in 'Suppl Payment. Report Electr Bank Conf' (APS187) and in 'Electronic Bank Confirm. Open Details' in (APS188).
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