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Multiple Payment for Equipment Procurement

Dear Friends,

The scenario which I am asking might be standard way all procure a Equipment.

We have following payment terms for Equipment Procurement (Import Order):

1. 10% as advance against Advance Bank Guarantee

2. 10% After Drawings approval

3. 10% Against Ordering Major Raw Material by Vendor
4. 10 % Against Major Raw Material Receipt by Vendor

5. 55% against Shipping Documents (As order is of type FOB)

6. 5 % Against Final acceptance and Testing

In above case we need to pay to Vendor 40% before shipping from his end, even though we didn't receive material Physically.

I didn't see any standard solution from SAP, even though many procure material in this fashion.

Pls. let me know what are the various ways for this.
I have two solutions:

Solution A) Mention all 1 to 4 as services, do Service Entry. Create Material cost as 55%. Do GRN, MIRO accordingly for 55%.
Advantages: we can have control of services as we are doing through system and can have approval of Service entry if required
Total cost of Final commissioning and other charges of Equipment will be transferred to Asset, shouldn't be issue

Dis Advantages: When viewing cost of Equipment, showing 55% of the Value

Solution B) Create Multiple Down Payment through ME2DP or create advances in FI. Mention the 100% cost of Material in PO
After performing MIGO, MIRO adjust advance when paying to Vendor.
Advantages: Material cost can seen 100% in PO

Dis Advantages: No Control in MM, everything done in FI. User acceptance for each step to be done outside SAP.

Is there any other best way for the above scenario described.


Sai Krishna

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2 Answers

  • Jun 12, 2017 at 07:54 AM

    You might want to use an Invoice Plan:

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  • Jun 13, 2017 at 08:00 PM

    Dear Rob,

    In our scenario, we can't use Invoicing Plan. It requires Non Valuated GR, which we can't do, as we receive material and needs to be inspected.

    Please suggest if there is any method.

    This type of process must be exist in every manufacturing industry, please how you might have mapped.


    Sai Krishna

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