Difference between downpayment and Milestone billing

[Former Member]

Dear Guru's

can anyone tell me what is the difference between downpayment and milestone billing. And also tell me anyother things are there in this process.

regards,

Reshmi

[Former Member]

HI

<b>Down payments:</b>Down payments are payments made before completion of the product, with no interest. They represent short or medium term outside capital procurement and therefore improve the company’s liquidity situation.

<b>Milestone billing</b> is typically used for billing projects, such as plant engineering and construction projects. Such projects often include a series of milestones that mark the completion of different stages of the work. In the SAP R/3 System, milestones are defined in a network along with planned and actual dates for the completion of work. The milestones are also assigned to the billing dates in the billing plan. Each milestone-related billing date is blocked for processing until the Project System confirms that the milestone is completed.

Regards,

Arunprasad

[Former Member]

Functionally how things work are quite clear by now

In the milestone billing we have a line item to include the down payment with the billing type FAZ which is a down payment request .On the due date the down payment request is sent to the customer and the incoming payment is posted against the request and settled against subsequent billing partially or fully as may be required.

[Former Member]

hi

Milestone billing is typically used for billing projects, such as plant engineering and construction projects. Such projects often include a series of milestones that mark the completion of different stages of the work. In the SAP R/3 System, milestones are defined in a network along with planned and actual dates for the completion of work. The milestones are also assigned to the billing dates in the billing plan. Each milestone-related billing date is blocked for processing until the Project System confirms that the milestone is completed.

Delivery-relevant order items for which a milestone billing plan applies are billed on the basis of the requested delivery quantity and not on the total of the confirmed quantities.

<a href="http://help.sap.com/saphelp_470/helpdata/en/59/ac922bcb0411d2acbe0000e8a5bd28/frameset.htm">http://help.sap.com/saphelp_470/helpdata/en/59/ac922bcb0411d2acbe0000e8a5bd28/frameset.htm</a>

[Former Member]

1.Normally, down payment agreements are made for producing and delivering goods to customers in the capital goods, or plant engineering and construction industries.

Down payments are payments made before completion of the product, with no interest. They represent short or medium term outside capital procurement and therefore improve the company’s liquidity situation.

2.

Milestone billing is typically used for billing projects, such as plant engineering and construction projects. Such projects often include a series of milestones that mark the completion of different stages of the work.

[Former Member]

Hi Reshmi,

These are two different things. Downpayment, is advance you are asking to the customer to render the service/product.

Milestone billing is one of the billing process, i.e how you will bill your customer for a service/product.

in billing there is another plan is called periodic billing is there.

Normally Milestone billing yoused for project/service which continues for a longer period.

Periodic billing used for rent/ or such kind of service where you need to bill the customer for a specific amount for specific period like moth/year etc.

Down payment is used both for product, service and project kind of business.

in make-to-order, etc. you need to take some money either as a confirmation/raw material charge etc. for the product/service rendered.

Reward if it helps.

Rgds.

Bidhu.

[Former Member]

Hi,

Down payment processing : As the name suggests the Customer gives down payment before the delivery / invoice.

Mile stone billing: This is normally work with the PS module. Tkae the example of a software project. The entire project payment will be devided. When you reach each milestone a certain amount will be billed.

This is a very simple answer for your understanding.

Prase