Perform supplier payments based on payment proposal

Create different types of payment documents based on a payment proposal.

Outcome

This table shows the payment documents created and payment 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 the costs and the 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. These payments are updated in the general ledger only. For checks, the AP checkbook is updated.

This table shows the basic account entries created:
Accounting rule Account Debit Credit
Bank x
* Supplier x
However, for drafts, these are the account entries created:
Accounting rule Account Debit Credit
AP33-295 Draft accepted. See below. x
Supplier x
The asterisk (*) indicates the account entry based on the transaction for the original supplier invoice.

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

Before you start

Before you start, you must meet these prerequisites:
  • Create and verify a payment proposal in 'Suppl Payment Proposal. Open' (APS630).
  • Define these FAM functions in 'FAM Function. Open' (CRS405):
    • AP30: Check payment
    • AP31: Electronic EDIFACT payments
    • AP32: Payments by manual bank transfer and electronic, non-EDIFACT payments
    • AP33: Draft payments without bank confirmation
    • AP34: Draft payments with bank confirmation
    • AP35: Payments by direct debiting
  • Set up the payment methods of the supplier invoices in 'AP Payment Method. Open' (CRS071):
    • For EDI payments, FAM function or accounting event AP31: You must select transfer method 2 = 'EDIFACT payment in PAYMUL format'.
    • For manual bank transfers and electronic, non-EDIFACT payments, FAM function or accounting event AP32: You must select transfer method 1 = 'Manual bank transfer' or 3 = 'Electronic payment, non-EDIFACT standard'.
    • For draft payments without bank confirmation, FAM function or accounting event AP33: You must select alternative 1 in the 'Draft confirmation' field. Account entries are then created already when the draft is printed.
    • For draft payments with bank confirmation, FAM function or accounting event AP34: You must select alternative 2 in the 'Draft confirmation' field. Account entries are then created at payment reconciliation based on the bank report in 'Draft. Reconcile Confirmations' (APS175).

Follow these steps

This diagram shows the work flow in performing supplier payments based on payment proposal:Perform supplier payments based on payment proposal

  1. Create and review payment documents

    To create payment documents according to the payment method of each invoice record, confirm the payment proposal in (APS630). Account entries are created 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 the 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 the bank of the with or without bank confirmation

    Send the draft to the bank of the supplier, who then reviews it and forwards it to the supplier. After that, the bank of the supplier bank sends the draft to the company bank, requesting that the money be transferred to the supplier account. The company bank 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.

    These are the ways to reconcile various types of payments requiring bank confirmation:
    • 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 is updated in 'Suppl Payment. Report Electr Bank Conf' (APS187) and in 'Electronic Bank Confirm. Open Details' in (APS188).
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