8.5 Billing Plans, Down Payment Agreements, and Installment Payments

Billing Plans, Down Payment Agreements, and Installment Payments

Not every sale is billed once after delivery. Rental contracts are billed every month, construction projects in stages, and capital goods often require a down payment before production starts. The S46150 unit Exploring Special Business Processes (135 minutes) covers the tools for these cases: billing plans, down payments, and installment payments.

Billing Plans

When processing an order, instead of storing a single billing date, you can store a billing plan with several billing dates at item level. You can also define a billing plan at header level; it is then valid for all items assigned to it, and header billing plans are assigned to sales document types. Depending on the business transaction, the system automatically proposes one of the two billing plan types:

Items with a billing plan have billing relevance I (order-relevant billing according to the billing plan), so billing is order-related: each due date appears in the billing due list.

Periodic Billing

Periodic billing suits rental contracts:

• The start and end dates define the duration of the billing plan and are taken from the contract data where possible.
• If the duration is unlimited, you may set no end date. New dates are then created up to the horizon, which specifies the number of settlement periods in the billing plan.
• You create new dates directly in the billing plan or with report RVFPLA01. Schedule the report regularly, because new dates are not created automatically when you bill individual periods.
• The billing dates define when and how often billing happens, for example on the first or last day of every month.
• Special condition types with monthly prices let you price rental costs month by month.

Milestone Billing

In milestone billing, the total value is distributed among the individual dates according to rules:

• You can enter as many dates per billing plan as required, and dates can be blocked for billing.
• If amounts change after some milestone billing documents have been created, the changes are distributed among the remaining dates, and any amount still to be billed for documents already created is included in the final invoice.
• The system creates an entry in the billing index for each billing date, so the date appears in the billing due list when it is reached; billing is order-related.
• When you create a billing document, the system updates the status of the billing plan dates. Billed dates can no longer be changed; existing billing documents are visible in the document flow.

Link to Project Milestones

A typical case is a project in plant engineering. In SAP S/4HANA, milestones are stored in a project network with planned and actual data. Milestones are assigned to billing plan dates, which stay blocked for billing until the milestone is confirmed as completed. For each billing date you can control:

• Whether it is a fixed date.
• Whether it is updated with the actual date of the milestone.
• Whether it is updated with the actual date only if the milestone is completed before the planned billing date.

The Billing Rule

A billing rule can be created for each billing plan date. It defines how the value to be billed on that date is determined: a fixed amount or a percentage of the total amount. It also determines whether the amount counts as a final invoice, for which unbilled dates must also be taken into account.

Customizing Billing Plans

Billing plan Customizing defines the billing plan types, the date categories (with their billing rule and billing block proposal), date proposals, and the assignment of billing plan types to item categories and, for header billing plans, to sales document types.

Down Payment Agreements in the Billing Plan

Down payments are usually agreed for plant engineering, construction, or capital goods. They are created in the sales order, and down payment processing is carried out with the billing plan function:

• You store one or more down payment agreements as dates in a billing plan.
• You enter the agreed value either as a fixed amount or as a percentage of the item value.
• Control is through the billing rules: billing rule 4 (down payment for percentage milestone billing) and billing rule 5 (down payment for value-related milestone billing).
• The agreement can be assigned to a single item or be valid for all items of the order.
• Down payment items use the special condition type AZWR instead of PR00. AZWR has condition category E and calculation rule B (fixed amount). When AZWR is determined, all other condition types are set to inactive.

At the due date, the system creates a down payment request (billing type FAZ). In Financial Accounting it is posted as a noted item with special G/L indicator F, which is statistical and posted to a different reconciliation account. The customer's payment is posted with special G/L indicator A and assigned to the down payment request and to the sales order (section 8.3).

Partial and Final Invoices

In partial and final invoices, the down payments made are transferred as down payments to be cleared:

• Full settlement: during partial invoicing, the down payment amount due for clearing is displayed and deducted from the receivable automatically.
• Proportional settlement: you can change the amount of the down payment to be cleared by changing the AZWR amount on the item's pricing screen. The maximum is the down payments received minus the down payments already cleared.
• During final invoicing, all pending down payments are taken into account.

In Financial Accounting, the cleared down payments are moved from the special reconciliation account to the standard reconciliation account, where they appear as open items for the customer and reduce the receivables total.

Installment Payments

An installment payment splits one invoice amount into several partial amounts with different due dates, for example 40% after 30 days, 30% after 60 days, and 30% after 90 days. It is controlled by terms of payment for installment payments in Financial Accounting Customizing. The billing document itself is created once, with the installment payment terms; when it is posted, accounting creates one receivable line item per installment, each with its own due date. Installment payments therefore spread the payment, while a billing plan spreads the billing over several billing documents.

Worked Example: Machine Order with Down Payment and Milestones

A machine is sold for 100,000 EUR with this agreement: 20% down payment at order, 50% on acceptance of the design, and the rest after delivery.

1. The item has a milestone billing plan with three dates: a down payment date with billing rule 4 (20%), a milestone date (50%) blocked until the design milestone is confirmed, and a final invoice date.
2. At the first date, down payment request FAZ for 20,000 EUR is created and posted as a noted item (special G/L indicator F). The customer pays; the payment is posted with indicator A.
3. When the design milestone is confirmed, the block on the second date is removed and a partial invoice for 50,000 EUR is created. With full settlement, the 20,000 EUR down payment is cleared, so the customer owes 30,000 EUR.
4. After delivery, the final invoice bills the remaining 30,000 EUR. All down payments have already been cleared, and the billed dates can no longer be changed.