Customer Advance Payment

[Former Member]

I have a business scenario and I don't know the best way to implement it.

I spent  a lot of time in searching for below solution or some hint but invain , specifically this accouting entry , this  is unique hence posting

My client receives an order and creates a Sales Order. The customer has to make the advance payment. Once the payment is made, outbound delivery is made and goods are issued.

I thought of using a sales cycle and then check the accouting but its difficult to get a accouting entry as below

We will receive $2M as advance from our customer

Dr.       Cash                                 2M

Cr.       Liability with Customer                     2M

We ship our products to the customer with an invoice.

The invoice should have the following contents

Dr.       AR                                     20,000     

Dr.       Liability with Customer         80,000

Cr.       Revenue                                          100,000

Liability account  Balance  2M

Shipped                            80,000

_______________________________

Balance                          1,920,000 

Thanks

Aryan

[Former Member · Accepted solution]

Hello Mahmoud ,

Thanks for this ....the intend here is whatever balance remains from 2M is the revenue earned and should be reported in the income statement....

Approach 1

There is a option of Billing plan 80% and 20% and then do the rev recog ... but I am not sure  if I am able to achieve the  same accouting as required by business..

Approach 2

Create a new GL and post first manual acccouting entry

We will receive $2M as advance from our customer

Dr.       Cash                                 2M

Cr.       Liability with Customer                     2M

Create Order --> do a PGI --> PGI will have its own accounting of its own as usual

inventory and cogs

While doing the billing , identify a user exit add a Dr line of Laibility acount  and break this into 80% and 20% with a validation on ccode etc  and get below accouting

Dr.       AR                                     20,000    

Dr.       Liability with Customer         80,000

Cr.       Revenue                                          100,000

Approach 3

As suggested by you.... but  I just want to get below accounting

Dr.       AR                                     20,000    

Dr.       Liability with Customer         80,000

Cr.       Revenue                                          100,000

Please let me know  your thoughts on the approach, I liked your approach but how can I get accounting that is the question

Also let me know , what do you think of Approach 2

Thanks

Aryan

[former_member200703 · Accepted solution]

Hi

i see that you intend to distribute the billing on customer to 80% deducted from his advance & 20% being a balance on his AR balance.. as far as my experience this is normal case .. You need to define  user exist for this type of transaction only to achive required entry.. you may also try to check this with  SD experts to see if it could done through  standard SAP.

Regards

Mahmoud

[Former Member]

Okay perfect ... I thought so.. so I need to stick to Approach 2  .... Thanks so much Mahmoud.... I really appreicate your support and thanks a million !!

[former_member200703]

Hi

i am little confused here .. in my opinion the invoice should indicate the shipped goods amount , if you need to inform the  client with its balance while issue  every shipment , you need to send statement of account indicating the down payment received and the shipped goods value ..

Regards

Mahmoud

[Former Member]

Hello Mahmoud,

Appreicate your response

so its like whatever balance remains  from 2 M is our revenue or our earnings, do you think I should be driving this from SD or manual journals will work ?

Make a intial journal entry of 2 M , then through some Z program triggger the invoice and

keep booking the accouting entry

Thanks

Aryan

[former_member200703]

Hello

I guess that i may miss to understand your point.. first  if i talk accounting wise i will say as below:

receive the down payment from customer :

Dr     Cash / bank

     Cr. Customer Down Payment received (liability )

when ever i ship him some goods to partially settle his balance :

Dr. AR

     Dr. Revenue

in FBL5N " select also specially GL " you will find that balance of the down payment after showing the invoiced amounts ..

if you expect another solution , please let me know.

Regards

Mahmoud