| Examples of payment agreements |  |
| This example describes: The definitions of the payment agreements PA1, PA2, and PA3. The sales invoices that you must pay to the invoice-from business parnters BP1, BP2, and BP3. The payment advices that result from applying the payment agreements. The payment agreement definitions The 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 the invoice-from business partner BP1 you have the 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 the following payment advices:
Payments to business partner BP1
Invoice | Sequence | Currency | Amount | Payment method
ACR1 | 1 | JPY | 15,000 | PM1
ACR1 | 2 | JPY | 5,000 | PM2
ACR2 | 1 | JPY | 30,000 | PM2
The payment agreement on the invoices = PA1 The PA1 limit = 100,000 The total invoice amount = 20,000 + 30,000 = 50,000. This amount is less than the PA1 limit. Consequently, PA1 is used. 30percent of the amount = 15,000 is paid using payment method PM1. This covers the first 15,000 of invoice ACR1. The remaining 70percent = 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 the invoice-from business partner BP1 you have the 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 the following payment advices:
Payments to business partner BP2
Invoice | Sequence | Currency | Amount | Payment method
ACR3 | 1 | JPY | 50,000 | PM3
ACR3 | 2 | JPY | 50,000 | PM4
ACR3 | 3 | JPY | 10,000 | PM1
ACR4 | 1 | JPY | 10,000 | PM1
ACR4 | 3 | JPY | 30,000 | PM2
The payment agreement on the invoices = PA1 PA1 limit = 100,000. The next payment agreement is PA2. The total invoice amount = 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, 40percent = 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 60percent of 50,000 = 30,000 is paid using payment method PM2. This covers the remaining 30,000 of invoice ACR4. Business partner BP3 For the invoice-from business partner BP3 you have the 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 the following payment advices:
Payments to business partner BP3
Invoice | Sequence | Currency | Amount | Payment method
ACR5 | 1 | JPY | 3,000 | PM1
ACR5 | 2 | JPY | 2,000 | PM2
ACR6 | 3 | JPY | 5,000 | PM2
ACR7 | 1 | USD | 8,000 | PM5
ACR7 | 3 | USD | 12,000 | PM6
The payment agreement on invoices ACR5 and ACR6 = PA1. The payment agreement on invoice ACR7 = PA3. The PA1 limit = 100,000. The total invoice amount for the JPY currency = 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. 30percent of the amount = 3,000 is paid using payment method PM1. This covers the first 3,000 of invoice ACR5. The remaining 70percent = 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 ACR7 = PA3. The PA3 limit = 30,000. The total invoice amount of invoice ACR7 = 20,000. This amount is less than the PA3 limit. Consequently, PA3 is used. 40percent of the amount = 8,000 is paid using payment method PM5. This covers the first 8,000 of invoice ACR7. The remaining 60percent = 12,000 is paid using payment method PM6. This covers the remaining 12,000 of invoice ACR7. Related topics To use payment agreements |