9/19/2021 Automatic Posting for Cash Discount Granted | SAP Blogs

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Former Member
March 28, 2012
| 5 minute read

Automatic Posting for Cash Discount

Granted
 13  25  70,177

Cash Discount:

What is the meaning of Cash Discount?

Cash Discount is a reduction in the price of an item for sale, allowed in those
cases when payment is made within a stipulated period.

In general business scenario, the cash discount will depend on the payment
terms agreed with the customer. Generally, in the invoice a payment term may be
mentioned. For example, if the payment term mentioned in the invoice is “2/14,
Net 30”, this means that the customer is entitled to a 2% discount if the payment
is made within 14 days of the delivery of goods. If the payment is being made
beyond 14 days of the delivery of goods then full payment is expected. In any
case, the full payment is expected to be made within 30 days.

General Process flow of Cash

Discount in the case of Sales:
Payment terms are agreed upon with the customer.
Goods are sold to the customer.
Invoice is posted for the goods sold.

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Payment is received from the customer before the due date for net payment.
Customer is entitled to Cash Discount which is posted to the Cash Discount Account.
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Business Scenario for Cash

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A cash discount is a strategy applied to incentivize customers to make prompt
payments for the purchases made from the vendor.

The contractual agreement between a vendor and customer usually contains the
details of the cash discount terms.

For example, the vendor may issue invoices to the customer with a standard
payment term of thirty days. The payment term would also include the condition
that a discount would be provided to the customer if the payment is made within
ten days of the date of issue of the invoice. The extent of the cash discount the
customer is entitled to would also be mentioned in the terms of payment. Hence,
if the customer makes the payment within ten days of the date of issue of the
invoice, he would be entitled to the cash discount as mentioned in the payment
terms.

Cash Discount process in SAP:

In SAP the following steps would be involved in the entire cash discount cycle:

The cash discount terms are configured in the terms of payment.

General Ledger account would have to be assigned for posting the cash discount.
The terms of payment configured above are assigned to the customer master.
Invoice is posted against the customer when sales are made to the customer. The
terms of payment maintained in the customer master would default to the invoices
from the customer master. If the defaulted terms of payment needs to be changed
another terms of payment can also be manually entered in the invoice.
If the payment is received from the customer within the date till which the customer
can avail cash discount as per the terms of payment, the customer would be entitled
to cash discounts.

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Step 1:

SAP Configuration – Maintain Terms of

Payment:
Description Transaction Code
Maintain Terms of Payment OBB8

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As per the contractual agreement between a vendor and customer, the terms of
payment would have to be configured in SAP.

For example, the screen shot above shows the details of the payment term –
0002.

The parameters of the payment term mean that the customer is entitled to a
2% discount if the payment is made within 14 days of the baseline date.
If the payment is being made after 14 days from the baseline date then full
payment is expected.
As per the terms of payment the document date is defaulted as the baseline
date which can be modified. If the defaulted date is not modified while
entering the customer invoice the document date will be the baseline date.

Step 2:
SAP Configuration – Define Accounts for Cash
Discount Granted:
Description Transaction Code
Define Accounts for Cash Discount Granted OBXI

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In SAP, the standard transaction key SKT is used to determine accounts or

posting keys for line items which are created automatically by the system for
Cash Discounts granted.

In this configuration step the G/L account number to which the automatic
posting for the cash discount is to be made is assigned.

Step 3:

Master Data maintenance – Assigning terms of

payment in the customer master:
Description Transaction Code
Create/change Customer master FD01/FD02/XD01/XD
02

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Payment terms – maintained in the company code segment of the customer

master
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Payment terms – maintained in the sales area segment of the customer master.

The terms of payment can be maintained in the customer master. If the terms of
payment are maintained in the customer master, while entering an invoice
against that customer, the terms of payment maintained in the customer master
will default to the invoice. Like the baseline date, the terms of payment can also
be modified while entering the invoice, if required.

The terms of payment can be maintained in the company code segment as well
as the sales area segment as shown in the screen shots above.

Step 4:

Transactional data 1 – for illustrating the cash

discount process:
Invoice is posted against the customer when sales are made:

Description Transaction Code

Enter Customer Invoice FB70

An invoice is posted against the customer with document date 19th October
2011.

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When the invoice is posted against the customer upon the sales being made, the
terms of payment maintained in the customer master in Step 3 gets
automatically defaulted to the invoice as shown below.

As per the terms of payment maintained in the customer master, the document
date of the invoice is defaulted as the baseline date.

The document date of the Invoice posted is 19th of October 2011, and hence the
baseline date for the invoice is also 19th of October 2011.

So as per the terms of payment if the payment is made within 14 days from the
baseline date, the customer would be entitled to 2% cash discount.

Both the terms of payment as well as the baseline date defaulted while entering
the invoice can be modified, if required.

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Step 5:
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Transactional data 2 – for illustrating the cash

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discount process:
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Description Transaction Code

Post Incoming Payments F-28

When the payment is received from the customer on 19th of October 2011 (i.e.
before the expiry of 14 days from the baseline date), the customer is entitled to
2% discount. This cash discount of 2% is automatically calculated and proposed
while the incoming payment is being entered.

This 2% discount is automatically posted to the General ledger account – 4040010,

assigned/configured in the transaction OBXI above.

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FIN Financial Supply Chain Management

FIN (Finance)

SAP ERP

automatic

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discount

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13 Comments

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Former Member
October 5, 2012 at 9:41 am

Vry Explainatory...

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Former Member
December 5, 2012 at 5:00 am

Very good. You could have included material master cash discount check box stuff also for completeness.

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Former Member | Blog Post Author

December 5, 2012 at 5:08 am

Thanks Venkat for your suggestion.

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Former Member
April 1, 2013 at 5:34 am

Very useful documentation.

https://blogs.sap.com/2012/03/28/automatic-posting-for-cash-discount-granted/ 10/13
9/19/2021 Automatic Posting for Cash Discount Granted | SAP Blogs

Thanks 

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April 4, 2013 at 12:09 pm

You could have also discussed about 2 types of cash discount which are NET & GROSS.

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Godavari SAP
April 20, 2013 at 12:14 pm

Nicely explained. Good work.

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Mariks .
April 11, 2014 at 12:26 pm

Good document..thanks..

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Lakshmi Sama
May 19, 2014 at 9:29 am

Hi Ajit,

Very well explained document. Thanks alot for sharing your knowledge.

Regards,

Lakshmi S

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NARRA LINGESH

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July 4, 2014 at 11:11 am

Hi Ajit,
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Thanks for sharing the knowledge, i have followed you document but my client was post the document
Like document), hear while make payment we are not able to pick the cash discount
 (billing
through SD
amount in F-28, pls find the below attachment.

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Pls check and guide me. if you post the FI invoice and payment the Cash discount amount filed update,
through SD invoice it is not updated, am i miss any setting?.....

Pls guide me, thank you

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Daniela Stoykova
April 25, 2016 at 8:37 am

Hi,

I'm facing the same issue, the cash discount amount has not been calculated, could you please
share have you found the solution?

Br, Daniela

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Former Member
July 21, 2014 at 1:52 pm

Thanks very detailed explanation. Are there any advantages of having only Cash Discount Expense/Cash
Discount Revenue as only one GL account? (both credit and debit knocking off each other and showing
only net figure)

Thanks

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Former
June 3, 2015 at 9:16 am

Nice documents with each screen shots.

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Thanks

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Former Member
October 21, 2016 at 2:06 am

Hi

Very nicely explained, can you also explain how if a partial payment received within 14 days and we want to
allow only discount for the amount received not the full invoice value

Thanks

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