Public

Dynamic Discount Credit Memo Creation

Chris Chase - Director Network & Financial Solutions Working Capital

Safe Harbor Statement

This information reflects the status of Ariba Inc., an SAP company, solution planning as of
May 11, 2017. All such solution planning information is the Confidential Information of Ariba
(per the contract between our companies or an authorized distributor), and must not be
further disclosed, as stated in the confidentiality clause of that contract. This presentation
contains only intended guidance and is not binding upon Ariba (or its affiliates) to take any
particular course of business, product strategy, and/or development. Its content is subject to
change without notice. Ariba assumes no responsibility for errors or omissions in this
document. Ariba shall have no liability for damages of any kind including without limitation
direct, special, indirect, or consequential damages that may result from the use of these
materials.

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Dynamic Discounting Challenges

How Dynamic Discounting works

Ariba helps buyers and suppliers realize using a prorated

daily rate.

The discount amount and payment date unknown until

after supplier issues invoice.

Challenges

Suppliers adjust VAT if the buyer takes advantage an early

payment discount.

Suppliers may issue credit note in order to account for the

discount allowed to the customer.

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 Dynamic Discounting Tax Adjustments

Article 79 of the Council Directive 2006/112/EC

states:
The taxable amount shall not include the
following factors:
(a) Price reductions by way of discount for early
payment;.

Swiss VAT Law Article 24 para. 1:

Tax is calculated on the consideration
actually received

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4
Dynamic Discounting Credit Memo Creation
Current Problem
Many countries with VAT or similar indirect taxes requires suppliers to issue credit memos when an early payment discount is
agreed upon after a tax invoice is issued.
Solution
Ariba Network issues Dynamic Discounting Credit Memos on the suppliers through the following approach:
Generates Dynamic Discounting Credit Memos at time of payment upon receipt of buyers remittance
Copies content from original tax invoice
Adjusts taxable amount, prices, tax amount using discount %
Applies country specific e-signature(s)
Applies country business rules
Supplier use Early Payment detail report to make tax adjustments
Supplier may archive Dynamic Discounting Credit Memo cXML & PDF through Archive Zip process or SAP Aribas
Archive Service.
Buyers receive dynamic discounting credit memos through their cXML invoice interface and may attach the cXML & PDF or
original FI document (journal entry representing suppliers invoice).

Benefits
Dynamic discounting extended to the United Kingdom and other countries that require credit memos including Australia,
Czech Republic, Denmark, Finland, France, Hong Kong, Ireland, Luxembourg, Netherlands, Malaysia, New Zealand,
Slovakia, South Africa, Singapore, Spain, Sweden, and the United Kingdom .
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Dynamic Discounting Credit Memo Creation
Issues Dynamic Discounting Buyers Sellers
Tax Invoice
Credit Memo
1000.00 EUR Purchase
Copies compliance content 200.00 EURVAT (20%)
from original tax invoice 1200.00 EUR Amount Due .
Payment Proposal Request
Adjusts taxable amount, 1000.00 EUR Discount Basis
prices, tax amount using 200.00 EUR VAT
discount % Payment Proposal Request (Update)
Applies country specific e- 20.00 EUR Discount (2%) .
signature(s) 4.00 EUR VAT Adjustment (2% of VAT)
Remittance
Applies country business rules 1200.00 EUR Original Amount Due
AN makes tolerance check 20.00 EUR Discount (2%)
between remittance and early 4.00 EUR Adjustment (2% of VAT)
payment instruction 1176.00 EUR Amount Paid
Credit Memo
Limited to supplier submitted 20.00 EUR Discount (2%)
e-invoices on AN 4.00 EUR VAT Adjustment (2% of VAT)
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Early Payment Instruction

Discount Basis = Taxable Amount

Tax Amount and Adjustment

Example of a buyer-initiated
discount accepted by a supplier for
early payment on November 20th.

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Remittance

Discount including tax amount

SAP limitation prevents payment run
from breaking out adjustment

Matching early payment instruction with tax

and discounting breakout
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Dynamic Discounting Credit Memo Header

Original Invoice Values

Document type describing purpose of traction
* supplier selected %

Original Invoice # regulatory requirement for credit memos

Sequential range regulatory requirement for France

Credit Memo Date is date of remittance receipt resulting

from buyers payment run.

New type of Generation Method indication created by Ariba on suppliers behalf

Trading partners copied from original tax invoice

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Dynamic Discounting Credit Memo Header

Shipping Information copied from original tax invoice

VAT IDs regulatory requirement for credit memos

Comments indicate credit memo created by Ariba on

suppliers behalf.

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Dynamic Discounting Credit Memo Lines

Original Invoice Values *

Line details copied from original tax supplier selected %
invoice

Original Invoice Values *

supplier selected %

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Dynamic Discounting Credit Memo Summary

Original Invoice Values *

supplier selected %

Digital Signature for authenticity and integrity regulator

requirement

Original Invoice Values *

supplier selected %

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Archive Zip File

Suppliers may archive by download tax invoices and

dynamic discounting credit memos and burning on write
once read many storage media.
Alternatively suppliers may receive archive Zip file by https
to store in their local archive system.

Dynamic discount files

include: cxml, PDF,.

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Document Archive Service

Suppliers may alternatively archive subscribe to SAP Ariba

archive service.

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Early Payment Detail Report supports
suppliers tax postings

Supplier may use Early Payment

Detail Report to post tax
adjustments daily, weekly,..

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Dynamic Discounting Credit Memo Creation
Applicable to the Following: Change Management for GA:
Ariba Network None
Ariba Discount Professional
Using this Feature:
Enabling
See proceeding slides
Prerequisites
Buyers must work with IT to put in place the necessary integration
Buyers must load remittance data to Ariba Network through AribaPay or cxml.

Limitations
SAP AddOn support not in place
Importing and Exporting Data
Buyers may need to work with IT configure SAP to populate Discount Basis on FI document
Tax Adjustment SAP PI Netweaver changes available in CI-8; SAP PI Neweaver changes to attach dynamic discounting credit memos to original FI document
available in CI-9SP1.
SAP AddOn customers may request SAP Ariba consulting assistance to put integration logic in place themselves until supported.

Changes to Existing Functionality or User Interface

See proceeding slides

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Dynamic Discounting Credit Memo Creation
Using this Feature:
Limitations
Does not apply to P2P only buyers. Buyers must integrate via cxml through SAP Ariba or their
own middleware.

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