Automatic posting for cash discount in SAP

12/06/2015 Automatic Posting for Cash Discount Granted | SCN
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created by G. Ajit Kumar on Mar 28, 2012 10:59 AM, last modified by G. Ajit Kumar on Mar 28, 2012 12:15 PM
Cash Discount:

What is the meaning of Cash Discount?

Cash Discount is a reduction in the price of an item for sale, allowed in those cases when payment is made within a
stipulated period.
In general business scenario, the cash discount will depend on the payment terms agreed with the customer.
Generally, in the invoice a payment term may be mentioned. For example, if the payment term mentioned in the
invoice is "2/14, Net 30", this means that the customer is entitled to a 2% discount if the payment is made within 14
days of the delivery of goods. If the payment is being made beyond 14 days of the delivery of goods then full payment
is expected. In any case, the full payment is expected to be made within 30 days.

General Process flow of Cash Discount in the case of
Sales:
Payment terms are agreed upon with the customer.
Goods are sold to the customer.
Invoice is posted for the goods sold.
Payment is received from the customer before the due date for net payment.
Customer is entitled to Cash Discount which is posted to the Cash Discount Account.
Business Scenario for Cash Discount:
A cash discount is a strategy applied to incentivize customers to make prompt payments for the purchases made from
the vendor.
The contractual agreement between a vendor and customer usually contains the details of the cash discount terms.
For example, the vendor may issue invoices to the customer with a standard payment term of thirty days. The payment
term would also include the condition that a discount would be provided to the customer if the payment is made within
ten days of the date of issue of the invoice. The extent of the cash discount the customer is entitled to would also be
mentioned in the terms of payment. Hence, if the customer makes the payment within ten days of the date of issue of
the invoice, he would be entitled to the cash discount as mentioned in the payment terms.
Cash Discount process in SAP:

In SAP the following steps would be involved in the entire cash discount cycle:
The cash discount terms are configured in the terms of payment.
General Ledger account would have to be assigned for posting the cash discount.
The terms of payment configured above are assigned to the customer master.
Invoice is posted against the customer when sales are made to the customer. The terms of payment
maintained in the customer master would default to the invoices from the customer master. If the
defaulted terms of payment needs to be changed another terms of payment can also be manually
entered in the invoice.
If the payment is received from the customer within the date till which the customer can avail cash
discount as per the terms of payment, the customer would be entitled to cash discounts.
Automatic Posting for Cash Discount
Granted
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Version 2


Step 1:

SAP Configuration Maintain Terms of Payment:

Description Transaction Code
Maintain Terms of Payment OBB8

As per the contractual agreement between a vendor and customer, the terms of payment would have to be configured
in SAP.

For example, the screen shot above shows the details of the payment term – 0002.
The parameters of the payment term mean that the customer is entitled to a 2% discount if the payment is made
within 14 days of the baseline date.
If the payment is being made after 14 days from the baseline date then full payment is expected.
As per the terms of payment the document date is defaulted as the baseline date which can be modified. If the
defaulted date is not modified while entering the customer invoice the document date will be the baseline date.
Step 2:
SAP Configuration Define Accounts for Cash Discount Granted:


Define Accounts for Cash Discount Granted OBXI

In SAP, the standard transaction key SKT is used to determine accounts or posting keys for line items which are
created automatically by the system for Cash Discounts granted.
In this configuration step the G/L account number to which the automatic posting for the cash discount is to be made is
assigned.
Step 3:

Master Data maintenance Assigning terms of payment in the
customer master:

Create/change Customer master FD01/FD02/XD01/XD02

Payment terms maintained in the company code segment of the customer master

Payment terms maintained in the sales area segment of the customer master.
The terms of payment can be maintained in the customer master. If the terms of payment are maintained in the
customer master, while entering an invoice against that customer, the terms of payment maintained in the customer
master will default to the invoice. Like the baseline date, the terms of payment can also be modified while entering the
invoice, if required.
The terms of payment can be maintained in the company code segment as well as the sales area segment as shown
in the screen shots above.
Step 4:

Transactional data 1 for illustrating the cash discount process:

Invoice is posted against the customer when sales are made:

Enter Customer Invoice FB70

An invoice is posted against the customer with document date 19th October 2011.
When the invoice is posted against the customer upon the sales being made, the terms of payment maintained in the
customer master in Step 3 gets automatically defaulted to the invoice as shown below.
As per the terms of payment maintained in the customer master, the document date of the invoice is defaulted as the
baseline date. Loading...

The document date of the Invoice posted is 19th of October 2011, and hence the baseline date for the invoice is also
19th of October 2011.
So as per the terms of payment if the payment is made within 14 days from the baseline date, the customer would be
entitled to 2% cash discount.
Both the terms of payment as well as the baseline date defaulted while entering the invoice can be modified, if
required.
Step 5:

Transactional data 2 for illustrating the cash discount process:

Payment is received from the customer within 14 days from the baseline date:

Post Incoming Payments F‐28

When the payment is received from the customer on 19th of October 2011 (i.e. before the expiry of 14 days from the
baseline date), the customer is entitled to 2% discount. This cash discount of 2% is automatically calculated and
proposed while the incoming payment is being entered.
This 2% discount is automatically posted to the General ledger account – 4040010, assigned/configured in the
transaction OBXI above.

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Products: sap_erp_financials Topics: enterprise_resource_planning Tags: sap, erp, key, transaction, of, payments, financials,
cash, automatic, discount, postings, skt, terms
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11 Comments
Like (0)
Debashri Dutta Oct 5, 2012 11:41 AM
Vry Explainatory...
Like (0)
Venkat M Dec 5, 2012 6:03 AM
Very good. You could have included material master cash discount check box stuff also for
completeness.
Like (0)
G. Ajit Kumar Dec 5, 2012 6:08 AM (in response to Venkat M)
Thanks Venkat for your suggestion.
Like (0)
ammu chinni Apr 1, 2013 7:34 AM
Very useful documentation.

Thanks
Like (0)
sridhar S Apr 4, 2013 2:09 PM
You could have also discussed about 2 types of cash discount which are NET & GROSS.
Like (0)
Godavari SAP Apr 20, 2013 2:14 PM (in response to sridhar S)
Nicely explained. Good work.
Like (0)
Mariks . Apr 11, 2014 2:26 PM
Good document..thanks..

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Like (0)
Lakshmi Sama May 19, 2014 11:29 AM
Hi Ajit,

Very well explained document. Thanks alot for sharing your knowledge.

Regards,
Lakshmi S
Like (0)
NARRA LINGESH Jul 4, 2014 1:11 PM
Hi Ajit,

Thanks for sharing the knowledge, i have followed you document but my client was post the
document through SD (billing document), hear while make payment we are not able to pick the cash
discount amount in F28, pls find the below attachment.

Pls check and guide me. if you post the FI invoice and payment the Cash discount amount filed
update, through SD invoice it is not updated, am i miss any setting?.....

Pls guide me, thank you
Like (0)
Adarsh Kalmath Ishwar Jul 21, 2014 4:04 PM
Thanks very detailed explanation. Are there any advantages of having only Cash Discount
Expense/Cash Discount Revenue as only one GL account? (both credit and debit knocking off each
other and showing only net figure)

Thanks
Like (0)
Bhaskar Reddy Jun 3, 2015 11:16 AM
Nice documents with each screen shots.

Thanks

Automatic posting for cash discount in SAP

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