Netting
Purpose
In an exchange, in which for example, fees, taxes, or material are billed to the exchange partner, it is normal business practice to collect the bills (billing documents) into one billing document and then settle up with the exchange partner, rather than billing each goods movement to the exchange partner separately.
Netting consists of two areas:
Posting payables or receivables
Offsetting payables and receivables
Posting Payables or Receivables
If netting has been agreed on (by the exchange partners), the system posts the receivables to the exchange partner customer account during the creation of a billing document. The receivables posted to the exchange partner are then blocked for collection.
If a goods receipt has taken place, the system posts the payables to the exchange partner customer account during invoice verification. The payables are blocked for payment.
Offsetting Payables and Receivables
When netting has been selected, the system creates a link between the customer account and the vendor account for a specific exchange partner. The items relevant to netting in those accounts are then offset. The difference is then a single open item, which is charged to the exchange partner or which has to be paid to the exchange partner.
The diagram shows the netting process.
Process Flow
You make an agreement with your exchange partner to have an exchange with netting.
You create invoices for your exchange partner. The receivables with respect to your exchange partner are blocked for collection.
You receive billing documents from your exchange partner and post them in the invoice verification. The payables with respect to your exchange partner are blocked for payment.
You create the desired netting criteria for your exchange partner by selecting up to three selection conditions (for example, the number of the exchange agreement, the posting date from ...to...).
You create a netting document with information on the exchange partner, company code and netting selection criteria.
The system proposes a list of open items for netting. You check that default list and choose the corresponding document numbers that you want to be included in netting.
You post the netting document either:
Without batch-input, that is, your accounts and the accounts of your exchange partner will not be settled yet, or
With batch-input. By starting a batch-input session, your receivables and payables with respect to your exchange partner are offset (account settlement, difference posting).
You can print the netting document (netting statement) and send it to your exchange partner.
See also: