| # Examples of payment agreements This example describes: The definitions of payment agreements PA1, PA2, and PA3. The sales invoices that you must pay to the invoice-from business partners BP1, BP2, and BP3. The payment advices that result from applying the payment agreements. Payment agreement definitions Payment agreements PA1, PA2, and PA3 are defined as follows:
Payment agreement 1
Payment agreement | PA1
Currency | JPY
Limit | 100,000
Next PA | PA2
Sequence | 1 | 2
Agreement type | Percentage | Percentage
Amount | - | -
Percentage | 30 | 70
Payment method | PM1 | PM2
Payment agreement 2
Payment agreement | PA2 |  |
Currency | JPY |  |
Limit | 200,000 |  |
Next PA | - |  |
Sequence | 1 | 2 | 3 | 4
Agreement type | Amount | Amount | Percentage | Percentage
Amount | 50,000 | 50,000 | 40 | 60
Percentage | - | - |  |
Payment method | PM3 | PM4 | PM1 | PM2
Payment agreement 3
Payment agreement | PA3
Currency | USD
Limit | 30,000
Next PA | -
Sequence | 1 | 2
Agreement type | Percentage | Percentage
Amount | - | -
Percentage | 40 | 60
Payment method | PM5 | PM6
Business partner BP1 For invoice-from business partner BP1 you have open entries ACR1 and ACR2.
Invoices from business partner BP1
Invoice | Currency | Amount | Payment agreement
ACR1 | JPY | 20,000 | PA1
ACR2 | JPY | 30,000 | PA1
Applying the payment agreements results in these payment advices:
Payments to business partner BP1
Invoice | Sequence | Currency | Amount | Payment method
ACP1 | 1 | JPY | 15,000 | PM1
ACP1 | 2 | JPY | 5,000 | PM2
ACP2 | 1 | JPY | 30,000 | PM2
The payment agreement on the invoices is PA1 PA1 limit = 100,000 The total invoice amount is 20,000 + 30,000 = 50,000. This amount is less than the PA1 limit. Consequently, PA1 is used. 30 percent of the amount (= 15,000) is paid using payment method PM1. This covers the first 15,000 of invoice ACR1. The remaining 70 percent (= 35,000) is paid using payment method PM2. This covers the remaining 5,000 of invoice ACR1 plus the full amount of 30,000 of invoice ACR2. Business partner BP2 For invoice-from business partner BP2 you have open entries ACR3 and ACR4.
Invoices from business partner BP2
Invoice | Currency | Amount | Payment agreement
ACR3 | JPY | 110,000 | PA1
ACR4 | JPY | 40,000 | PA1
This results in these payment advices:
Payments to business partner BP2
Invoice | Sequence | Currency | Amount | Payment method
ACP3 | 1 | JPY | 50,000 | PM3
ACP3 | 2 | JPY | 50,000 | PM4
ACP3 | 3 | JPY | 10,000 | PM1
ACP4 | 1 | JPY | 10,000 | PM1
ACP4 | 3 | JPY | 30,000 | PM2
The payment agreement on the invoices is PA1 PA1 limit = 100,000. The next payment agreement is PA2. The total invoice amount is 110,000 + 40,000 = 150,000. This amount exceeds the PA1 limit. Consequently, PA2 is used. 50,000 is paid using payment method PM3. This covers the first 50,000 of invoice ACR3. 50,000 is paid using payment method PM4. This covers the next 50,000 of invoice ACR3. The total remaining amount is 150,000 - ( 2 * 50,000) = 50,000. Of the remaining amount, 40 percent (= 20,000) is paid using payment method PM1. This covers the remaining 10,000 of invoice ACR3 plus the first 10,000 of invoice ACR4. The remaining 60 percent of 50,000 (= 30,000) is paid using payment method PM2. This covers the remaining 30,000 of invoice ACR4. Business partner BP3 For invoice-from business partner BP3 you have open entries ACR5, ACR6, and ACR7. Note that the invoice currency of ACR7 differs from the other invoice currencies, and therefore a different payment agreement must be used.
Invoices from business partner BP3
Invoice | Currency | Amount | Payment agreement
ACR5 | JPY | 5,000 | PA1
ACR6 | JPY | 5,000 | PA1
ACR7 | USD | 20,000 | PA3
This results in these payment advices:
Payments to business partner BP3
Invoice | Sequence | Currency | Amount | Payment method
ACP5 | 1 | JPY | 3,000 | PM1
ACP5 | 2 | JPY | 2,000 | PM2
ACP6 | 3 | JPY | 5,000 | PM2
ACP7 | 1 | USD | 8,000 | PM5
ACP7 | 3 | USD | 12,000 | PM6
The payment agreement on invoices ACR5 and ACR6 is PA1. The payment agreement on invoice ACR7 is PA3. PA1 limit = 100,000 The total invoice amount for the JPY currency is 3,000 + 2,000 + 5,000 = 10,000. This amount is less than the PA1 limit. Consequently, PA1 is used for the invoices ACR5 and ACR6. 30 percent of the amount (= 3,000) is paid using payment method PM1. This covers the first 3,000 of invoice ACR5. The remaining 70 percent (= 7,000) is paid using payment method PM2. This covers the remaining 2,000 of invoice ACR5 plus the full amount of 5,000 of invoice ACR6. The payment agreement on invoice ACP7 = PA3. PA3 limit = 30,000 The total invoice amount of invoice ACR7 is 20,000. This amount is less than the PA3 limit. Consequently, PA3 is used. 40 percent of the amount (= 8,000) is paid using payment method PM5. This covers the first 8,000 of invoice ACR7. The remaining 60 percent (= 12,000) is paid using payment method PM6. This covers the remaining 12,000 of invoice ACR7. Related topics Using payment agreements |