Down Payment

Definition

• Down payments are advance payments made by customers to suppliers or vendors before goods or services are delivered, used to manage cash flows and mitigate credit risks.

• Uses Special GL indicator (F,A) to differentiate the posting

Procurement Process Steps

1.     Down Payment Request: Down payment request special GL Indicator “F”

2.     Down Payment Posting: Down payment posting special GL Indicator

“A-Vendor advance account (Asset)”

3.     GR/IR: Down payment is cleared against the Invoice

4.     Payment 

Journal Entries:

Sales Process Steps

1.     Customer Down Payment Request

2.     Customer Down Payment Posting

3.     Goods Delivery to Customer

4.     Payment

Journal Entries: