Debit-Side and Credit-Side Down Payment Chains 

Purpose

Down payment chains are intended for use in long-running projects. In the construction industry in particular, projects can take several years to complete.

Over the course of a project up until its completion, various business transactions arise with several business partners such as the sold-to party, suppliers, and subcontractors. A number of partial invoices are created. Retention amounts and additional costs also have to be taken into account. At the end, the final invoice is created. Documents can also be reversed and corrections to postings can be made for the final invoice. Down payment chains enable you to structure the data entry and display of business transactions.

The purpose of a debit-side down payment chain is to monitor receivables to customers, for example, the sold-to party of a construction project, and to gain information on past and future incoming payments.

The purpose of a credit-side down payment chain is to monitor payables for subcontractors or vendors and to gain information on past and future outgoing payments.

Down payment chains offer you the following benefits:

●      Save time in data entry

●      Fewer processing errors

●      Clearer overview

●      Better controlling for long-term accounting processes

Integration

Financial Accounting (FI)

Down payment chains group together all accounting documents belonging to one contract. These documents are managed in Financial Accounting (FI). The postings to Financial Accounting (FI) are made internally using Business Application Programming Interfaces (BAPIs).

Reporting for Customer and Vendor Invoice is available to you for making the postings.

Controlling

Costs and revenues for down payment chains are assigned to the projects. Work breakdown structure elements are the CO account assignment objects. The financial accounting accounts are managed in Controlling as cost elements or revenue elements.

In addition to the work breakdown structure (WBS) element you also have use of network, network activity, cost center, and order as CO account assignment objects.

Project System (PS)

In reporting for Project System, you can display revenues, costs, and down payments for down payment chains.

If you have activated PS Cash Management, the down payment chain payments can be analyzed.

Features

●      A down payment chain groups invoice and payment transactions carried out by two business partners:

○       Debit-side down payment chains cover transactions with a customer.

○       Credit-side down payment chains cover transactions with a vendor.

●      The application offers you a user-friendly working environment, and a clear and structured display of the down payment chains. You can enter and post transactions on the processing screen for down payment chains. For example, you can trigger partial invoices and corrections from the down payment chain display.

●      Partial invoices can be created both as invoices (affecting net income) and down payment requests (affecting payment). If partial invoices are entered as invoices, the user can firstly enter an advance payment.

●      For a transaction, you can also consider the following:

○       Security retention amounts for partial invoices (which are canceled when the final invoice is created)

○       Security retention amounts for final invoices (which affect payment when a defined time period has elapsed or through a bank guarantee)

○       Special retention amounts (quality defects or incorrect invoicing)

○       Additional costs (reduce revenue or expenses) 

○       Reversal of individual partial invoices

●      You can either enter the cumulative value (cumulative entry) or the difference in value between this posting and the previous postings (delta entry).

●      Costs and revenues for down payment chains are assigned to the projects. Work breakdown structure elements are the CO account assignment objects. The financial accounting accounts are managed in Controlling (CO) as cost elements or revenue elements.
In addition to the work breakdown structure (WBS) element you also have use of network, network activity, cost center, and order as CO account assignment objects.

●      You make down payments and payments in Accounts Payable and Receivable (FI-AP/AR). The payments are displayed in the posting data for the transactions.

●      Various reports are available to monitor receivables and payables for individual projects, vendors, or customers.

●      For down payment chains you can carry out the sales tax summary report for deferred tax according to the legal regulations of the country and display the current state of the sales tax.

●      You can archive down payment chains.

Constraints

Final Invoice

You can only create one final invoice per down payment chain.

A single down payment chain cannot therefore display the following document flow:

...

       1.      Partial invoice 1 for section 1

       2.      Final invoice for section 1

       3.      Partial invoice 1 for section 2

       4.      Final invoice section 2

In this case create two down payment chains.

Clearing Other Documents

Documents posted within a down payment chain cannot clear other accounting documents.