A payment method is a means used in SAP to make payments to Vendors or in some cases Customers, for liabilities owed to them. It is represented in the system by a one character alpha-numeric key.
Payment method configuration will be discussed in three series. In this post we will discuss the steps involved in SAP “payment methods in Country” configuration settings. In the follow-up posts we will discuss:
- Setting Up Payment Methods per Company Code for Payment Transactions
- Assigning payment methods to House Bank Accounts (Set Up Bank Determination for Payment Transactions)
Payment Methods in Country
All payment methods to be used by a company code has to be defined at the country level. The country in question is the country in which that organization resides. If your organization is spread across more than one country, then similar payment method settings has to be extended to those countries also.
To set up payment methods per country, follow the menu path below:
IMG — Financial Accounting (New) — Accounts Receivable and Accounts Payable — Business Transactions — Outgoing Payments — Automatic Outgoing Payments — Payment Method/Bank Selection for Payment Program — Set Up Payment Methods per Country for Payment Transactions
Or use the famous FBZP transaction code
You can either copy from an existing country setting or you create a new country setting by clicking on “New Entries”
Enter the country code of the country your company code resides, in the field “Country”
Enter the payment method you want to create. In our case we will create payment method “1”.
Enter the description for your payment method. In our example for “SWIFT MT103”.
Now we go through the following tabs below to set up “Payment Methods in Country for Payment Transactions”:
Note: we will concentrate on explaining only the selections commonly used fields.
1) The payment for tab
Here you choose whether the payment method you are defining will be used for outgoing or incoming payment. We select the outgoing payment option.
2) The payment method classification tab
We assign here the payment method we are defining, to one of the payment method types/categories below.
a) Bank transfer: if this indicator is ticked, it means the outgoing payment is a bank transfer.
b) Check: if this indicator is ticked, it means the outgoing payment is a check.
c) Bills of Exchange
d) Check/bills of exchange
The most common ones are the Bank Transfer and Check and most of the payment methods you will create can be classified under one of the two. In our example we select the Bank Transfer.
Payment Method Allowed for Personnel Payments: If this indicator is selected, it means this payment method can also be used for personnel related payments (example payroll payments). Therefore, if your organization wants to use the swift MT103 payment method in paying their payroll, for example, you have to select this indicator.
3) Required Master Record specification tab
Here we define what Vendor/Customer Master Data values must be maintained for the Automatic Payment Program (APP) to run successfully.
a) Street, P.O. Box or P.O. Box postal code required: If this indicator is flagged, it means that an APP run, using this payment method can only be successful if a street, the P.O. Box or a postal code is specified in the customer/vendor master record in addition to the location.
b) Bank Details: If this indicator is flagged, it means that an APP run, using this payment method can only be successful if the bank details have been maintained in the customer/vendor master record. This prevents the issuing of payments to vendors without complete bank details.
c) Account Number Required: If you set this indicator, the payment method is only used if the account number has been maintained for the bank details of the Vendor/ customer.
Note: You can only set the indicator if the bank details indicator is set (as in point “b” above), meaning the indicator Bank Details has been activated.
d) IBAN Required: If you set this indicator, the payment method is only used in APP, if the IBAN has been maintained for the bank details of the Vendor/ customer.
As in “c” above, this indicator can only be set if the indicator Bank Details has been activated.
e) SWIFT Code Required: If this indicator is flagged, it means that an APP run, using this payment method can only be successful if the SWIFT Code is maintained in the customer/vendor master record. As above, indicator can only be set if the indicator Bank Details has been activated.
4) Posting Details tab
This tab defines how the postings related issues will be handled for the payment method you are defining.
a) Document Type for the Payment: we specify here the document type to be used to post the document that the payment program will generate using this payment method.
b) Clearing Document Type: we specify here the document type to be used to post the document that the payment program will generate in cross-company code payments.
c) Payment Order only: If this indicator is checked it means that the payment program does not post a payment document and the paid items (invoices) are not cleared, when you use this payment method. Only a payment order is generated with the information that will be used in a later stage to clear the open items.
5) Payment Medium tab
Use Payment Medium Workbench (PMW): The PMW is used to create payment media. SAP Provides generic payment medium program for all payment medium formats for which payment medium variants have to be defined in Customizing.
We will discuss the customization of a payment medium variant in a later post
Format: Once you have decided that you want to use the PMW, you assign a payment medium format your payment method. In our example we assign the MT103 Format.
Use Classic Payment Medium Programs: choose this field to specify that you wish to use the classic payment medium programs RFFO* series.
Payment Medium Program: Enter the name of the payment medium program with which the respective payment form will be printed. For example RFFOUS_C for check payment method.
6) Other settings
Highlight your payment method and double click “Currencies Allowed”
In case there is a business requirement to allow only certain currencies to be used when paying with this payment method, enter those currencies here. If no currencies are specified here it means that all currencies are permitted. We leave this blank.
Permitted Destination Countries
Highlight your payment method and double click “Permitted Destination Countries”
In case there is a business requirement to do so, enter the Countries for which you want to allow this payment method. If no Countries are specified then it means the payment method is allowed for all countries. We leave this blank also.
Note to Payee by Origin
Make this setting if the origin, together with the payment method, determines the structure of the note to payee.
Highlight your payment method and double click “Note to Payee by Origin”
Save you entries after maintaining all the necessary fields.
With these settings the configuration of “payment methods in country” is completed.
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