Explore the Payment Currency Option in Accounts Payable

  • by Surya Padhi, Principal Consultant – ERP, Cognizant Technology Solutions
  • March 20, 2012
Learn how to use the payment currency function to pay vendors and customers who submit invoices in foreign currencies.
Key Concept
In an SAP environment you might have used currencies such as local currency, company code currency, or group currency. In addition to these currencies, SAP provides another currency called payment currency, which is little known or used. Payment currency refers to a currency in which you make a payment to your business partner for supplying services or materials. Payment currency can be any foreign currency (foreign currency means any currency other then company code currency) or company code currency. Document currency refers to a currency in which you have posted a business transaction (e.g., a vendor invoice or a credit memo).

In today’s global environment you may conduct business with customers and vendors located in different continents or countries. These customers may invoice in a currency with which you are not familiar.

In SAP ERP Financials, you can post an FI document directly or indirectly through the feeder components of an SAP application — that is, through material management (MM), sales and distribution (SD), or an interface from external applications with any currencies, including foreign currencies as long as you have maintained a foreign exchange rate in FI.

An automatic payment program creates a payment output either as a check or a bank transfer in document currency. However, sometimes you face a situation where company code currency and document currency are different. In such a case, the accounts payable department books invoices in a foreign currency, and an automatic payment program tries to create payment outputs in document currencies that are not allowable because you haven’t configured the SAP system to create payments in that currency. Consequently, the system creates an exception report (Figure 1).

Surya Padhi

Surya Padhi is a principal consultant – ERP at Cognizant Technology Solutions. He has more than 17 years of experience in accounts, finance, taxation, and SAP FICO. He has expertise in both SAP FI and SAP CO with integration to other modules in manufacturing and process industries. He is a chartered accountant and SAP Certified Financial Consultant. He holds a bachelor’s degree in commerce.

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