Vendor Payment using Factoring

[Former Member]

Hi All,

I need your help!!... I am facing a situation at work which will require your expertise.

We use factoring process to pay vendors, wherein we make payment to the bank and the bank in turn pays the vendors. This saves time as payment is made to the vendor in shorter time when compared to the normal process.

As of now, the process we follow is:

Step 1:

-  Extract all approved invoices from the Applicable Vendors, we do this by running a customised tcode

-  Find the GL account expense account and WBS code related to the invoice.

-  For each line item, lookup the payment terms of the vendor. This is because we do not send the due date for each invoice to the bank. We send the invoice date and the due date is calculated based on the vendor’s payment terms.

Step 2 - Calculate the due date

Step 3 - Remove credit notes not covered by the invoices for the same vendor

Step 4 - Calculate new invoice data which is calculated by adjusting the due date to Wednesday of the week that the payment is due.

Step 5 - Upload the amended file downloaded in step 1.

Step 6 - A journal is created to clear the items transferred to the bank account.

Step 7 - Accounts Payable entries.

The  new process that we want is as below:

Step 1 - Users must be able to chose the bank(factoring facility) they want to use, at the start of the process.

Note - there are two banks which provide the factoring facility.

Step 2 - Users must be able to extract all approved invoices for Vendors that are designated to be paid by the chosen bank (or factoring facility).

Step 3 - The system must be able to find and allocate the following against all invoices that have been extracted:
1. GL account
2. Expense account
3. WBS code

Step 4 - The system must be able to find the payment terms for all the Vendors that the extracted invoices relate to

Step 5  The system must be able to remove any Credit Notes which are not covered by the invoices for an individual Vendor

Step 6 - The system must be able to produce an Output File that can be used by Accounts Payable to upload into the payment portal for the bank(and other bank of factoring facility)

Step 7 - The system must create a journal to move items from the original vendor account to the Bank Vendor Account and clear the Vendor Account.

Step 8 - The system must be able to translate a single entry in the Vendor Account to multiple line item entries in the Bank Vendor Account

We hope to carry out this process using Bill of Exchange payment method in SAP.

Technically is it possible to do it using Bill of Exchange??

If yes, could you please provide me a guideline from where I can start. If not, could you please provide any alternative??

Many Thanks for your help in advance.

[Marssel700]

Hello Samaira,

This is a similar process to Vendor Risk.

You can do your first step by Payment Orders. When you send DME to Vendor Bank you get your invoice flagged for Payment Orders.

Check FBZP - CoCd Payment Method - to activate this functionality.

The vendor invoices are still opened however unable to be cleared. Then in a second moment you run transaction F_DD_PRENOTIF_ITEM to remove payment order. At this point you are able to clear the initial Vendor invoice.

Please comment if it makes sense for you,

Regards