In this post, we will focus on understanding the purpose of SAP payment advice, its content, high-level process flow, functionalities, and transaction codes.
Overview
- What is a Payment Advice?
- What does a Payment Advice contain?
- SAP Payment Advice High-Level Process Flow
- SAP Payment Advice Functionalities
- SAP Payment Advice Transaction Codes
- Summary
What is a Payment Advice?
Think of payment advice as a letter that is given to a business. This letter tells the business that a payment has been made to an outstanding invoice. Sounds straightforward right?
Allow me to introduce some situations relating to payment advice that can be a bit tricky to manage.
Ideally, businesses have multiple customers and vendors involved. Multiple customers would of course correspond to sales and incoming payments.
On the other hand, multiple vendors would correspond to outgoing payments – meaning the business pays these vendors (a company needs to pay a vendor or supplier for office printing supplies).
| Customers | Incoming Payments |
| Vendors | Outgoing Payments |
At this point, you should note that several invoices are also involves for the transactions between customers, vendors, and the business.
Now, let us go back to our definition of payment advice. Earlier, it was mentioned that a payment advice is a letter given to a business letting them know that a payment has been made to an invoice.
This letter makes it easier to keep track of the payments among multiple payment transactions involved in the business. Why does this letter make it easier?
Well, it is through the information contained in the letter where you can link or make associations with the payments and the invoice that is being paid.
Key Takeaway: A payment advice helps match payments to an invoice. This matching will help clear the open items in SAP.
Customers and Multiple Invoices
Consider the scenario where there are 3 Customers: Customer A, Customer B, and Customer C. These 3 customers may have more than 1 invoice linked to them.
Now let us assume all 3 customers decide to pay all invoices today except for 1. How do we know which invoice has been paid and which hasn’t been paid? This is where the convenience of the payment advice/s information comes in.
Vendors and Multiple Invoices
The same goes for Vendors that may have more than 1 invoices linked to them. Let us assume all 3 vendors decide to pay all invoices today except for 1. How do we know which invoice has been paid and which hasn’t been paid? This is where the convenience of the payment advice/s information comes in.
What does a Payment Advice contain?
Earlier we said that a payment advice helps match payments to an invoice. It is the information contained in the payment advice that helps pinpoint which invoice has / hasn’t been paid.
Okay, so what information can we find in a payment advice?
Some information contained in a payment advice can be the following:
- Payment Date
- Payment Amount
- Reference to Invoice or Document Number
- Method of Payment etc.
There is no standard SAP Format for Payment Advice. As such, consultants would need to pattern the format and functionality that was requested by the client / business.
SAP Payment Advice High-Level Process Flow
The process flow ideally follows the same concept wherein a payment advice is sent after or alongside the invoice payment.
From the image below, you will notice that the payment advice (or letter containing the payment information) is included in the transaction when there is an “incoming payment” recorded in SAP from the Customer and when there is an “outgoing payment” recorded in SAP focusing on the Vendor payment.
This is a high-level explanation and the simplest way I could find to explain the process. There are aspects that can be included such as a payment advice being sent to emails.
If you are interested to know about how to do this functionality, you can refer to the Business Transaction Events post where I talk about utilizing BTEs in the example of payment advice functionality.
SAP Payment Advice Functionalities?
Now that we know the high-level process flow of Payment Advice in SAP, it is good to know the options we have for this functionality.
The information on functionalities below are referred from SAP Help:
- You can enter handwritten advice notes manually.
- When processing bank statements, check deposit lists or lockbox data, you can have the system create a payment advice note with the detail information automatically. This may be necessary if the program cannot clear open items immediately due to differences.
- When manually processing open items for incoming payments, you can create an advice note to record the current processing status of the items.
- Payment advice notes can be imported into the SAP System using EDI.
- Payment advice notes can be imported into the SAP system as an XML file.
- For more information about the configuration of SAP NetWeaver Process Integration necessary for this, see SAP Note 1348137.
Some functionalities above help “automate” the clearing of open items in consideration to the information found in a payment advice.
SAP Payment Advice Transaction Codes
- For the AP process configuration, you can refer to the post on SAP DME Note to Payee Functionality as an example.
- For the AR process (incoming) and other needs, you can refer to the following: Intercompany Data Exchange SAP Payment Advice or SPRO on “Incoming Payments” and “Payment Advice Notes”
- To manually enter a payment advice in SAP, go to transaction code FBE1.
You can also view automatically created payment advice documents in FBE3 or simply refer to the report.
- To view all payment advice documents in SAP, go to report S_ALR_87010059.
Summary
- What is a Payment Advice? A payment advice helps match payments to an invoice. This matching will help clear the open items in SAP.
- What does a Payment Advice contain? Payment Date, Payment Amount, Reference to Invoice or Document Number, and Method of Payment etc.
- SAP Payment Advice High-Level Process Flow: A payment advice is sent after or alongside the invoice payment for Accounts Receivable (incoming payment) and Accounts Payable (outgoing payment) processes.
- SAP Payment Advice Functionalities: manual input, processing bank statements, input using EDI / XML, SAP Netweaver process integrations.
- SAP Payment Advice Transaction Codes
- OBPM1
- OBPM2
- FBZP
- DMEE
- SPRO
- FBE1
- S_ALR_87010059
I hope this helps. Good luck! 😊
