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Vendor Payment in case of Subcontract


Raw material sent to vendor 110 KG . GR at vendor Location SFG = 100 KG ,Byproduct 10KG. MIRO done against GR is 100KG SFG. So we do payment to vendor against MIRO.

Issue raise when vendor ask to do payment against raw material prcessed 110KG OR ( SFG-100 KG+Byproduct 10Kg). How can we Issue payment to vendor for balance Scrap 10KG.

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1 Answer

  • Best Answer
    Aug 10, 2017 at 04:33 PM

    This sounds like a typical test case where no real invoices are on the desk.

    The vendor sends an invoice and you post this invoice with MIRO and you pay based on the invoice.

    You have wrong prices in your purchase order if you did not reflect what you actually agreed upon with your vendor (price for raw material processed instead for received good finished product quantity as usual)

    You know that SAP prices in the purchase order are for the item quantity that is ordered and value gets proportionally adjusted if a different quantity is received.

    This just means if you get 100 kg good material and have to pay for a 110 kg processed material, then you have to find a workaround as the SAP standard does not work this way. Let us assume you have to pay 2 $ per processed material. This means you would need to pay 110*2 = 220 $. As you know that you only receive 100 you actually have a price 220/100=2.20 $ per 1 kg.

    If you do not want to show this to your vendor then you can still set the indicator for "do not print price" in your PO. And can on the other side put your agreed prices into a long text to get it printed.


    Another alternative would be to go with PP subcontracting process, which means you use production orders to consume and receive the material and the purchase order will only cover the service . And here you can receive a service for 110 kg, while you receive the material against the production order with just 100 kg.

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    • If your quantities are not fixed then you can't use purchasing subcontracting, then you have to switch to the PP route of subcontracting.

      Nevertheless, you did not really explain how you posted the invoice, especially why you did not post the invoice as they is from your vendor. How could it be that you pay him short?