Automatic Payment Program or APP process in SAP FICO enables you to clear open items between customers and vendors. It further makes inter-company payments, processes both domestic and foreign payments and block payment etc.
You can use SAP APP (Automatic Payment Program) to handle both outgoing and incoming payments automatically.
Understand the APP Process in SAP FICO
The automatic payment program determines what you have to pay; when you have to pay; and how you should pay, through the payment rules that you define in the payment program configuration.
Furthermore, in SAP FICO APP process can group several open items that are to be paid into a single payment, if required.
The rules determine the due dates for the payments, payees to whom you need to make the payment. Further, it also determines house banks from which you should process the payment and the appropriate payment methods relevant for the payee or country.
Setup All Company Codes for Payment Transaction
- Paying Company Code
- Whether you need to separate Payments per business area
- Whether you use payment method supplements
- Cash discount
- Whether there are any tolerance days for payable
- Whether you need to include the special G/L transactions in the payment for each of the company codes. (Those company codes which are involved in the payment transactions).
Steps to setup All Company Code
IMG => Financial Accounting (New) => Accounts Receivable and Accounts Payable => Business Transactions => Outgoing Payments => Automatic Outgoing Payments => Payment Method/Bank Selection for Payment Program Prepare => Setup All Company Codes for Payment Transaction
The Paying company code
It is the company code that processes payment transactions centrally for several company codes. Consequently, you assign it to each of the company codes participating in the Payment Program.
Tolerance days payable: Important step in the APP process in SAP FICO
The system adds up the number of days specified here when it determines the cash discount periods and the due date for net payment. This is to say, if you enter 03 in this field for an invoice due on 25.01.2020, it will not be paid until 28.01.2020
- Setup Paying Company Codes for Payment Transactions- When configuring the system for paying company codes, you can.
- Specify the minimum amount for which you need to create an incoming or outgoing payment.
- Show or hide the settings for Bills of exchange payments
- Specify forms and sender details for advice notes and EDI accompanying sheets
Steps to setup Paying Company Code
IMG => Financial Accounting (New) => Accounts Receivable and Accounts Payable => Business Transactions => Outgoing Payments => Automatic Outgoing Payments= > Payment Method/Bank Selection for Payment Program Prepare => Setup Paying Company Codes for Payment Transactions T Code- OBZ1
Scroll down and expand Forms and Sender Details to configure these details. For Forms, you may use either SAP Scripts or PDF. Then, finally, select the appropriate form from the dropdown list. This is for sender details, provide header, Footer, signature etc.
Setup Payment Methods per country for Payment Transactions
As part of the APP process in SAP FICO, A payment method specifies how you have to make the payment. Popular payment methods include check, Bill of exchange and bank transfer.
Noteworthy, a payment method helps when you enter the payment in the master record of a business partner, line items or payment run parameter.
Several country-specific payment methods (check, ACH, Bank Transfer etc.) have already been configured in the standard system. Thus, enabling you to use any or all of them for company codes.
Steps to setup payment methods per country
IMG => Financial Accounting (New) => Accounts Receivable and Accounts Payable => Business Transactions => Outgoing Payments => Automatic Outgoing Payments => Payment Method/Bank Selection for Payment Program Prepare => Setup Payment Methods Per country for Payment Transactions or T. Code- OBZ3
For each country-specific payment methods, you specify whether it is meant for incoming or outgoing payment. Likewise, whether you can also use it for paying your document type to be used for payment and clearing. Further which payment program is to be used (RFFOUS_S) for paying through check etc.
Setup Payment Methods per Company Code for Payment Transactions
Besides identifying the payment method that you use in your company codes, you also need to stipulate the conditions for a particular payment method’s usage.
You determine the minimum and maximum amount limits for each of the payment methods and specify the grouping criteria for the payment items. Additionally, you make specifications for foreign currency payments, payment form per payment method and optimizing bank selection.
Steps to set up payment method per company
IMG => Financial Accounting (New) => Accounts Receivable and Accounts Payable => Business Transactions => Outgoing Payments => Automatic Outgoing Payments => Payment Method/Bank Selection for Payment Program Prepare => Setup payment Methods per Company Code for Payment Transactions T Code-OBZ4
Related: Scenarios in SAP GL Accounting
Key points to consider in the APP process in SAP FICO
- Minimum Amount and Maximum Amount- It is the amount beyond which the payment program does not select this payment method.
- Distribution Amount- Any payment exceeding this amount is analyzed to determine whether it can be split into more than one payment totalling this amount. You check it independent of the payment method specification in the document item. Certainly, the amount entered here does not have any effect on the payment proposal.
- Single Payment for the marked item- Select this checkbox to make an individual payment for each of the line items. These are line items that are identified with this payment method. However if you do not check it, the payment program makes a single payment. It does it by grouping all the line items relating to a business partner.
- Payment per Due day- Select this checkbox to group payments that are due on a particular date. It ensures that you take the maximum cash discount. Otherwise, the system groups all the payments per vendor, irrespective of the due dates.
- Form for the Payment Medium- The field is visible when you click the Form Data button to expand the section. Select the appropriate form (Example F110_EDI_01) from the available FORMS.
Setup Bank Determination for Payment Transaction
You can configure the system in the line item to determine the bank from the customer and vendor master records or maintain the bank to be used for payments.
Following settings are required:
- The permitted house banks and their ranking list
- The bank account to be used for payments for each bank and payment method and currency if required.
- Further, the amount separately for incoming and outgoing payments those are available for the payment run, for each account at the house bank.
- Likewise, how many days can elapse between the posting date of the payment run and the value date at the bank, depending on the payment method, bank account, payment amount and currency
- Finally, whether the system can determine the value date, taking into account the bank calendar and any individual arrangements entered to with the bank
Steps to setup bank determination
IMG => Financial Accounting (New) => Accounts Receivable and Accounts Payable => Business Transactions => Outgoing Payments => Automatic Outgoing Payments => Payment Method/Bank Selection for Payment Program Prepare => Setup Bank Determination for the payment transaction
Define Value Date Rules
We have already seen how a lag between the posting date and value date works. It may be by maintaining the Days to Value Date in Payment configuration settings. You may also define a rule for each payment transaction at a house bank to arrive at the value date automatically. Use the T Code- OBBA.
Steps to define value date rules
IMG => Financial Accounting (New) => Accounts Receivable and Accounts Payable => Business TransactionsàOutgoing Payments => Automatic Outgoing Payments => Payment Method/Bank Selection for Payment Program Prepare => Define Value Date Rules to maintain the required settings
When you will configure this, the system adds or subtract the specified days. The days are a derivation from the reference date (document date or posting date).
Consequently, the system can check the final date with a factory calendar to decide whether it is a working day. It does so before finally deciding the value date for that transaction.
Define Forms
You can generate payment media using either the classic payment medium program or payment Medium Workbench. In case, if you don’t want to use the standard form provided by SAP, use the Form Painter (T-code- SE71).
Likewise, use the form to copy a standard payment form and make the required change. Even if you don’t want to create your own form, you need to specify the standard texts. The texts that you use for the letter header, letter footer and sending address in letter window per company code.
Conclusion
APP Process – An important business transaction in SAP FICO’s A/P
APP process in SAP FICO is one of the important business transactions for SAP Accounts Payable. Similarly, there are many types of business transactions for SAP FI Accounts payable. These are Maintain Terms of Payments, Define Cash Discount, Release of Payment & more. Certainly, APP in the most important among all business transactions.
Watch Video: Automatic Payment Program Configuration
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