Payments on Account (SAP Business One)

A payment on account, often referred to as a deposit or advance payment, is a payment that is made before the full delivery of a good or service. It serves as financial security for the seller and can be offset against the total cost of the goods or services. Payments on account are common in many industries, especially for major purchases, construction projects or long-term services, and help to minimise the risk between the parties involved.

Payments on account in SAP Business One

SAP Business One handles payments on account (down payments) for both purchases and sales through specific document types defined in the system as "down payment requests" and "down payment documents". Here is a basic overview of how payments on account are handled in SAP Business One:

Payments on account in SAP B1 Purchasing

Firstly, a down payment request is created, which is generated based on a purchasing document such as a purchase offer or a purchase order.
After the down payment request has been created, a down payment document (payment on account document) can be issued. This document represents the actual transfer of the down payment to the supplier.
As soon as the delivery or service has been provided in full and the final purchase document (e.g. an incoming invoice) is created, the down payment is offset against this purchase document. This reduces the amount to be paid by the down payment already made.
Payments on account for sales:

Payments on account in SAP B1 Sales

Similar to purchases, the process begins with the creation of a down payment request based on a sales offer or purchase order.
A down payment receipt is then created, which documents the receipt of the down payment from the customer.
Upon issue of the final A/R Invoice the down payment is taken into account, whereby the total amount to be paid by the customer is adjusted accordingly.