Account Receivable AR Incoming Payment process in SAP

This Process Definition document describes the process of Incoming Payment (Other than down
payment) received from the Customer against an Invoice.
These Payments are received from the Customer for
Product Sale
Project sale
Service Contract
Export Sale

An organization Can receive incoming payment on following account

Incoming Payment Received from Customers (Product / Project / Service )
Incoming Payment from One Time Customers
Incoming Payment Received from Employees against sale of Products.
Incoming Payment received from Export Customers

Creation of Payment Advice (FBE1)

Payment advice will be prepared by Commercial Department .This will facilitate Cheque information to
flow in Accounts . Finance will select the payment Advice & post the payment by using the T-Code

F-28 once the Cheque is received with payment advice number.

Commercial will Input the following details in Payment Advice:
Company Code
Account Type D( Customer)
Account Customer Code
Payment Amount Cheque Amount
Deductions with reason for deduction
Assignment (Cheque Number),
Invoice Number

Save the Payment Advice document. A payment advice number will be generated.
Posting of Customer Receipt will be done in Finance by using T-Code F-28. Procedure of Processing the
payment is same as mentioned below except enter or select the payment advice number in the payment
advice number field.

Post Incoming Payment Procedure (F-28)

Case I : Incoming payment with reference to payment advice
All Cheque which are received by Commercial are to be handed over to Accounts based on the
prerequisites defined above. Accounts will simulate & post the Payment using the Incoming Payment
transaction F-28
Following inputs to be entered by accounts
Payment Advice number
Document Date (date of the instrument)
Posting Date
Document Type (DZ for Customer Payment),
Assignment Cheque Number
GL Account code for bank Incoming Clearing A/c,
Amount
 Value Date (Expected date of credit in bank account)
Profit Centre
Text (Narration )

In case of Cheque received against payment advice, no open items other than Invoice number enter in
the payment advice will be displayed. Simulate & Post the payment document.
Accounting Entry will be passed:
Cheque Deposited but not Cleared Dr.
Freight/Water/Electricity Expenses Dr.
To Customer Account Cr.
Payment advice number will be deleted from the system ,once the incoming document is posted.

Case II : Incoming payment without payment advice

In case Cheque is received by finance directly we have to enter all above parameter & Customer number
then Select option Process Open Items .System will show all open items of that customer. Choose the
billing document to be cleared. Choose relevant option from Standard or Residual Payment. Simulate
& Post the document.
Accounting Entry will be passed:
Cheque Deposited but not Cleared Dr.
Freight/Water/Electricity Expenses Dr.
To Customer Account Cr.

Incoming Payment Procedure from Customers (Fast Entry) F-26

This is another method of entering Cheque received from the Customer against an Invoice .System will
default the Bank Header Data throughout the Incoming Payment Process. Select respective Invoice &
Clear the Document. Simulate the Accounting Entries & Post the Document
Following inputs must be entered.
Bank header Data
Bank GL Account
Bank Profit Center
Currency
Cheque Value Date
Posting Period
Payment Details
Customer Code
Cheque Amount
Cheque Date
Cheque Number
Select option Process Open Items. Choose relevant option from Options Standard, Residual
Payment. All open transactions of the customer including down payments are displayed. Select the
Invoice & clear the outstanding. Simulate & Post the document.
Accounting entries:
Cheque Deposited but not Cleared Dr.
Water/Electricity/Freight expenses Account Dr.
To Customer Account Cr.

Incoming Payment Procedure Employee Customer

Initially the employee will be created as customer and vendor as well. When a product is sold to the
employee, the customer employee balance will be updated by the commercial with installment payment
terms. When the salary is due at the end of the month, then installment which was also became due will
be deducted from the salary & posted in Employee Vendor account.
Accounting Entries created at the time of billing (VF01)
Receivable Employee Dr.
To Sales Revenue Account Cr.
Accounting Entries at the time of Salary Process Month end (Installment)
Payroll Clearing Account Dr.
To Employee -Vendor Account Cr.
Accounting entries at the time of Knocking monthly installment
Employee Vendor Account Dr.
To Employee Customer Account Cr.
To Outgoing Clearing (Bank) Account Cr.

Incoming Payment Export Customers (F-28)

Incoming Payments against Export Customers is received directly at accounts. Then account will post the
Incoming payments as per the procedure mentioned above.
Bank Account Dr.
To Customer Account Cr.
Foreign Exchange Rate Fluctuation (In case of Export)
Exchange rate fluctuation is booked for all incoming payments received from the Foreign Customer.
Unrealized gain/loss will be calculated based on the exchange rate maintained as on last day of the
month. In case of Realized gain/loss, exchange rate fluctuation will be calculated based on the date
payment is received.
If there is a Gain in Foreign exchange rate (Unrealized)
Adjustment for Exchange Fluctuation A/C Dr.
To Exchange Gain Export Unrealized Cr.
If there is a loss in Foreign Exchange rate (Unrealized)
Exchange Loss Export Unrealized Dr.
To Adjustment for Exchange Fluctuation A/C Cr.
These entries will get reversed on next day of the month.
If there is a Gain in Foreign Exchange rate (Realized)
Adjustment for Exchange Fluctuation A/C Dr.
To Exchange Gain Export Realized Cr.
If there is a loss in Foreign Exchange rate (Realized)
Exchange Loss Export Realized Dr.
To Adjustment for Exchange Fluctuation A/C Cr.
SAP T Codes to be used
Post Incoming Payments : F-28
Reset Cleared Items : FBRA
Customer Line item display : FBL5N
Incoming Payments-Fast Entry F-26
Customer Balance : FD10N
Create Payment Advice : FBE1