Payment Currency

Description

In the SAP R/3 System, line items posted in one currency can be paid in a different (alternative) currency when paying line items manually. Payers in certain countries and industries also require this facility during automatic payment transactions so that they can make payments in any given currency available to them.

As a rule, payers and the vendors either come to a general agreement on what constitute acceptable alternative currencies, or they agree on the payment currency and the payment amount per transaction. Prior to Release 4.5A, payments in an alternative currency could only be created and posted manually. As of Release 4.5A, it is now possible to enter a payment currency that differs from the document currency in the open item. You can also specify an amount equivalent to the gross amount of the item in the payment currency.

This payment currency is supported in both Accounts Payable and Accounts Receivable.

Change system parameters in customizing

You need to change your field selection settings for those reconciliation accounts and posting keys for which you are permitted to enter a payment currency or the amount in the payment currency. The Payment currency and Amount in payment currency fields are maintained under the Customizing activity Maintain field status variants .

You need to maintain the document change rules for the fields Payment currency (BSEG-PYCUR) and Amount in payment currency (BSEG-PYAMT), if these fields are to be changeable following posting. These fields are maintained in Customizing under the activity Maintain document change rules.

Note that changing a document only makes sense if the line item has not yet been cleared.

You can define the new fields as selection field, search field and sort field for the clearing transactions and for displaying line items.

The system automatically creates line items for amount differences that arise from predefined amounts in payment currency. These line items are created during payment. For further details, see under

Changes in procedure

below. You define the relevant accounts in Customizing in the activities

Define accounts for payment differences with alternative currency

Define clearing accounts for payment differences with alternative currency

Changes in procedure

Document processing: You can enter an alternative payment currency and an amount in payment currency in those line items that can be paid automatically.

You can enter any currency except the document currency. If you also default an amount in payment currency, the payment program uses this in place of the gross amount, meaning that the amount you enter here is reduced by the cash discount and withholding tax amount.

The amount in payment currency is subject to a validation check by which the system converts the gross amount in document currency to the payment currency. This conversion takes place in the sequence Document currency -> Local currency -> Payment currency, whereby for the document currency the system uses the exchange rate entered in the document header, and for the local currency, the current average rate from the exchange rate table.

If the amount you entered differs from the amount calculated as above by a percentage rate that exceeds the tolerance specified in the company code table (maximum exchange rate difference) the system displays a suitable warning message. Message F5 874 can be customized and can hidden or changed to an error message as appropriate.
Further information on creating messages can be found in the Financial Accounting Implementation Guide under "Financial Accounting Global Settings" in the activity Change message control for document processing .

When entering invoice-related credit memos, the system uses the payment currency. If an amount in payment currency is also entered in the invoice, the system enters an appropriate amount in the credit memo.

Example: Invoice amount 100 USD, amount in payment currency 180 DEM
Credit memo amount 20 USD, amount in payment currency 36 DEM

You can change the payment currency and the payment amount in a line item provided this is permitted by your Customizing settings for document change rules.

Payment program: The payment progam determines the payment amount for a line item with a predefined payment currency as if the line item was posted in the payment currency. Since not all the amounts required are in the payment currency, the system carries out the following conversions automatically:

Gross amount of the line item
Insofar as no amount in payment currency is predefined in the line item, the system determines the amount when you run the payment program.

The payment currency is the same as the local currency and for the company code in question, you stipulated that no exchange rate differences are to be posted when clearing an item in local currency
In this case, the system adopts the local currency amount as the amount in the payment currency. Conversion takes place in the sequence
Document currency -> Local currency -> Payment currency.

The payment currency is the same as the local currency and exchange rate differences can be posted when clearing an item in local currency .
In this case, the system converts the document currency amount into the local currency using the current exchange rate. The resulting amount will normally differ from the original posting amount in local currency.

Payment currency differs from local currency
In this case, the amount in document currency is converted into the payment currency using the current exchange rate. Conversion takes place in the sequence document currency -> local currency -> payment currency.

Cash discount amount, cash discount base, base amount for withholding tax
So far as they exist, these amounts are shown in document currency. Once the amount in payment currency has been calculated, these three amounts are then recalculated.

If both the payment currency and the amount in payment currency is predefined, then a new type of difference amount arises when you post the payment. The predefined amount will generally differ from the amount that results from conversion at current exchange rates. The difference represents an underpayment or overpayment (agreed with the business partner) and is automatically posted. As for exchange rate differences, difference amounts exist in local currency only.

Example: You agree an outgoing payment in CHF for an invoice of 1000 USD (equivalent to 1800 DEM in local currency). The amount agreed is 1480 CHF.

At the time of payment, the CHF/DEM exchange rate is 1,20000. Assuming the payment program is to post exchange rate differences (according to your settings for the paying company code) the local

currency amount for the bank sub-account is determined by converting the amount 1480 CHF into DEM - giving an amount of 1776 DEM. The transaction equivalent amount of 1000 USD at the time of payment is 1500 CHF, meaning a profit of 20 CHF or 24 DEM. In the simplest case,

the following posting then results:

 
  Bank sub-account           Vendor              Difference account 
--------------------   ---------------------   --------------------- 
         | 1480 CHF     1480 CHF |                       |    0 CHF 
         |(1776 DEM)   (1800 DEM)|                       |(  24 DEM)

In order to clear the original payable, 1800 DEM must be posted to the vendor account (and not 1776 DEM).

To enable the automatic posting to be made, you need to specify a difference account in Customizing. With regard to automatic postings, there are the following options:

Exchange rate differences are posted in the payment program
In this case, the local currency amount to be posted to the bank sub-account is determined by converting the payment amount.

Tax does not apply to the account specified
The whole difference amount in local currency is posted in a line item as in the example above.

The account specified is subject to tax
The tax is calculated from the difference amount (in the same way as for cash discoun). Given a tax rate of 15%, the above example would result in a profit of 20.87 DEM and a pre-tax amount of 3.13 DEM.
Since the tax is always calculated based on the amount in document currency, you cannot correct a tax amount for a line item with a zero amount (as in the above example). For this reason, the system creates two additional line items:

 
  Difference account 1        Difference account 2 
 ---------------------      ---------------------- 
          |    20 CHF           20 CHF | 
          | (  24 DEM)       (   0 DEM)|

For the first posting, the system corrects the tax amount by 15%, so that the following line items result for the difference amount.

 
  Difference acct 1    Difference acct 2             Input tax 
--------------------  --------------------      ------------------- 
        | 17.39 CHF    20 CHF |                 2.61 CHF | 
        |(20.87 DEM)  ( 0 DEM)|                (3.13 DEM)|

You must also define the second difference account in Customizing. The two difference postings can be made to the same account, provided the account is tax-relevant and permit postings without a tax code.

Exchange rate differences are not posted by the payment program
In this case, the local currency amount to be posted to the bank sub-account is the total of the local currency amounts of the line items to be paid, minus cash discount and withholding tax.

The difference account is either not tax-relevant or you have not specified a difference account
The system does not generate a difference posting. In the above example, the local currency amount on the bank sub-account would change to 1800 DEM.

The difference account specified is not tax-relevant
In the above example, the posting to the bank sub-account is then 1800 DEM (and not 776 DEM) and to difference account 2, 24 DEM (and not 0 DEM).

 
  Difference acct 1     Difference acct 2          Input tax 
---------------------   ---------------------   ------------------- 
         | 17.39 CHF       20 CHF |             2.61 CHF | 
         |(20.87 DEM)    (24 DEM) |            (3.13 DEM)|

Manual clearing: If you clear an item in a currency other than the currency it was posted in, then for clearing processing, the system converts the amounts into the clearing currency at the current exchange rate. This conversion does not take place if the clearing currency is the same as the predefined payment currency, and you also entered an amount in payment currency. In this case, the system uses the predefined amount in payment currency.

As a result, the same difference postings can result as occur using the payment program (if this program is permitted to post exchange rate differences).

Dependent functions

In the liquidity forecast of the application component Treasury, the expected payments for open items in Accounts Receivable and Accounts Payable are normally stored in the relevant document currency.

For line items for which a payment currency is predefined, this is used in place of the document currency. The expected payment amount is equal to the amount in payment currency minus the expected cash discount deduction. If no payment currency is predefined in payment currency, the amount in document currency is converted into the payment currency and used in place of any predefined amount. Conversion takes place in the sequence Document currency -> Local currency -> Payment currency.