Explore Alternative Payee Options in Accounts Payable

  • by Martin Ullmann, President, DAP Consulting
  • July 15, 2005
It is often difficult for users to determine which payee option best fits their needs. Learn about all of the different options in detail, with comparisons and examples, so you can choose what will work best for you.
Key Concept
Within Accounts Payable, payments are issued to the address of the vendor. Alternative payees are used when payments have to be sent to an address other than the regular vendor address.

R/3 and mySAP, SAP’s Accounts Payable (AP) applications, offer a variety of options to process payments to alternative payees. The most commonly known and used option is the alternative payee option, because it was the only option available until R/3 Release 4.0. In this release, SAP introduced two more options, which allow more flexibility and functionality. Most customers, however, never investigated these options for various reasons, including not wishing to deviate from established business processes.

The currently available options are:

  • Alternative payee
  • Alternative payee in document
  • Permitted payee

I’ll give you an overview of the different options and then describe each option in detail. I will also show you the implications on invoice entry, payment, and reporting. The screenprints I use here are from R/3 Enterprise 4.7, but the concepts I discuss are relevant to all releases from 4.0 onward, including ERP Enterprise Core.

Martin Ullmann

Martin Ullmann is president of DAP Consulting, which specializes in public sector industries. He has more than 12 years of experience with SAP R/3. His main area of expertise lies in the FI/CO
area, with focus on new components, integration, enhancements, and business process improvements.

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