Use Down Payment Chain Functionality to Improve Efficiency of Tracking Contractual Events

  • by Shankar Kaza, Head of the SAP Financials Practice, Mahindra Satyam
  • July 13, 2011
Track contractual events that occur in long-term projects with the down payment chain functionality in FI. Walk through the end-to-end configuration of the functionality supported by process steps with an example.
Key Concept

SAP’s down payment chains functionality groups all the accounting documents that belong to one contract. It also allows you to structure the data entry and display of the business transactions so that you can more effectively control and track them. Down payment chains are part of FI and integrate with managerial accounting (CO) and Project System (PS).

Long-term business projects — the construction of a new building, for example — can span years. Different business transactions involving multiple business partners (e.g., raising partial invoices, partial payments, retention amounts, and additional costs) accumulate and become a challenge to manage. SAP’s down payment chain functionality helps you track these events.

SAP has two types of down payment chains:

  • Debit-side down payment chains monitor receivables from customers involved in the project and provide information on past and future incoming payments
  • Credit-side down payment chains monitor payables for vendors or subcontractors involved in the project and provide information on past and future outgoing payments

I explain the configuration steps and business process using the example of a credit-side down payment chain. First, I review some concepts and the decisions to be taken based on the contractual terms.

The down payment chain type, such as the debit-side down payment or credit-side down payment chain, is used to restrict the types of transactions that can be posted to the down payment chain. Down payment chain types help reduce input errors, and they are specific to a company code. You create at least one down payment chain type for the debit-side or credit-side per company code as required.

Shankar Kaza

Shankar Kaza is has more than 12 years of SAP consulting and management experience, specializing in FI. He has more than 13 years of rich domain experience as head of finance and accounts departments in a cross-section of industries. Currently, he is heading the SAP Financials practice in Tech Mahindra.


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