You may have come across this scenario: A user asks how the SAP system can retain either a certain percentage or a dynamic amount from a vendor invoice. You can find yourself facing this situation if a vendor wants to make a down payment and then pay the rest upon completion of the work. This process is called retention on a vendor invoice. I show you how to achieve both percentage-based retention and amount-based retention on a vendor invoice.

Percentage-Based Retention

Let’ say you have a requirement for a 10-percent retention on a vendor invoice as per the contract with a vendor. This is a straightforward requirement that you can achieve by configuring the following payment and installment payment terms. First you configure the payment term using transaction OBB8 or by following menu path SPRO > SAP Reference IMG > Financial Accounting (New) > Accounts Receivable & Accounts Payable > Business Transactions > Incoming Invoices/Credit Memos > Maintain Terms of Payment. Create a new entry. For example, ZRET is the proposed name for the retention invoices because other payment terms may exist. For the payment term, do not forget to select the Installment payment indicator (field XSPLT). You define the description of this payment term ZRET as Pay 90% and retain 10% (Figure 1). Now configure two more payment terms: ZR10 (for 10 percent) and ZR90 (for 90 percent). When you configure ZR10, put the payment block so that the system prevents the 10 percent amount from being paid. The payment block is set by default for that line item when you post a vendor invoice. If you have the requirement that the item should be due in 365 days, then maintain the No of days (due) field. If the item has no due days, leave this field blank. Users have to unblock the line item manually when the payment is due. If the invoice was posted through Logistic Invoice Verification using transaction code MIRO, then users can unblock invoices in one shot using transaction code MRBR. However, if the invoice was posted through FI-AP, then the user has to manually call each document and unblock the items. The point to remember is that the system does not unblock any blocked item automatically on its maturity (i.e., when the payment is due); the user has to unblock it. You need to get the requirements from the business (Figure 2). In Figure 2 only the ZR10 payment term is defined. Create a third payment term – for example, ZR90 (Figure 3), which is a usual payment term with the number of days as 30 or immediate, whatever terms are in the contract. Once you are done with the payment term using transaction OBB8, you link all three payment terms (ZRET, ZR90, and ZR10) as installment payment terms. Go to installment payment terms using transaction code OBB9 or by following menu path SPRO > SAP Reference IMG > Financial Accounting (New) > Accounts Receivable & Accounts Payable > Business Transactions > Incoming Invoices/Credit Memos > Define terms of payment for installment payments (Figure 4). Now you define new entries. Enter ZRET under the Terms of paymen (payment) column. This payment term includes the installment payment indicator in its set-up. Enter 1 under the Inst (Installment) column. Enter 90 under the Percent column and ZR90 in the Pmnt (Payment) term field. Add a second line with ZRET under the Terms of Paymen column, 2 under the Inst column, 10 under the Percent column, and ZR10 under the Pmnt term column, as shown in Figure 4. You have completed the configuration and achieved the user requirement of withholding 10 percent of the invoice amount. Follow the transaction steps to verify that what you have configured yields the desired results.

Transaction Steps

In the transaction steps, you carry out day-to-day business operation activities in your SAP system. In this example, when users receive a vendor’s invoice, they process it through an SAP user transaction menu. To post the vendor invoice, go to the vendor invoice posting transaction FB60 or in the main SAP menu follow menu path Accounting > Financial Accounting > Accounts Payable > Document Entry > Invoice. The first step in the vendor invoice is to complete the header portion. After completing the Basic data tab information, click the Payment tab as shown in Figure 5. Enter payment terms ZRET or the payment term can be defaulted through vendor master data (if it is defined in the vendor master data). After completing the header section, you complete the line item part as required. Once you are done with the double entry, simulate the accounting document before posting it. (When you complete the GL account in the line item part, it becomes a double entry. The header part is the vendor that is credited, and the line item part is the GL account that is debited.) The system splits the amount into two lines. While you are simulating the accounting document, you also see one more line with a zero amount as shown in Figure 6. This line is for information purposes only. If users double-click this line, they find the ZRET payment term. The 10 percent amount is blocked by the system because of the payment block default in payment term ZR10. You are ready to post the document and then you can save it according to your needs.

Amount-Based Retention

As I mentioned, you may have a dynamic requirement because a user wants to retain a specific amount of the invoice rather than a percentage. The installment payment terms can only be configured on a percentage rather than a specific amount. Usually, this type of requirement is handled manually using complex posting options that are time-consuming. Users access a complex posting as shown in Figure 7.

Configuration Steps

If you want to use retention by amount, then you need the same payment terms configuration as explained already. I recommend you have one more payment term, ZR00 (Retention-By Amount) with a payment block. This payment term enables you to keep track of how much is retained manually if someone needs a vendor open-item report on retentions. The payment terms and installment payment term can be used for a percentage-specific scenario. Therefore, to retain an invoice based on an amount, you have to activate the amount split option in global settings. Use transaction code OBY6 or follow menu path SPRO > SAP Reference IMG > Financial Accounting (New) > Financial Accounting Global settings (New) > Global parameters for company code > Enter Global parameters. Select the Enable amount split indicator (Figure 8). The menu path is SAP ERP Central Component (SAP ECC) 5.0. You may have a different menu path if you are on an older version, but you can still call the transaction using transaction code OBY6. You can activate amount splitting in the global settings even if the system is at go-live. If you activate this option, the system enables a new tab named Amount split in vendor/customer invoice/credit memo screens (Figure 9). Amount splitting is also available for document parking as well. This feature is only available for Enjoy SAP transactions. For further information, check help (F1) on the Enable amount split indicator (refer back to Figure 8) to see other features that are available (e.g., withholding tax). By activating the enable amount split in global settings, you can split and retain specific amounts from a vendor’s invoice. Follow the transaction steps in the next section to simulate and ensure that what you have configured yields the desired results.

Transaction Steps

Assume you receive a vendor invoice in the amount of $1,200. You need to retain $150, and the rest has to be paid immediately or within 30 days. When you go to transaction code FB60 (the same menu path as explained earlier for invoice processing), enter the vendor’s account number, the amount, and the rest of the data as needed. In the Payment tab (Figure 10), you have payment terms ZRET by default through vendor master data. It is not important that you have ZRET payment terms. It can be 0001 (immediate) in the Payment tab. This field is hidden as soon as you complete the Amount split tab. Once you enter the basic and payment data, click the icon circled in Figure 11 to go to the Amount split tab using the drop-down menu. In the Amount split tab (Figure 12), enter $1,050.00 under the Amount column and  payment terms Z030, 0001, or ZBAL under the Payt Te … (payment term) column.  (Have one more payment term in the configuration named as Balance Payment of manual retention, if needed, in the first line.) In the second line enter the rest of the amount: $150.00 with ZR00 (as mentioned earlier to have one more payment term for Retention-By Amount with a payment block). Now if you go back to the Payment tab, you don’t see the payment term (Figure 13). Simulate the entry and post the document once it is completed as shown in Figure 14.

Other Features of Enable Amount Split

You can meet other business requirements if you activate the Enable amount split indicator in FI global settings. A common business requirement is to split a vendor invoice into two sales tax codes. Users may want to split a vendor invoice and pay through two different payment methods. Both these requirements can be achieved using enable amount split.