In SAP Business one, you can pay for invoices in advances on account through the outgoing payments window. However, in some countries there is a legal requirement for down payments to have an invoice or a billing document.

Another reason why you might want to use the A/P Down payment invoice is that you might want to recognize stock entries only after the goods/services have been received.

NB: For simplicity, we shall not include tax journals in this example:

1. You send your supplier a purchase order from SAP
2. The supplier needs you to pay 40% of the value of the purchase order before they deliver the goods to you.
3. You need an invoice before you make the make the payment and the supplier send you the invoice
4. You post the invoice as a down payment invoice in SAP
   The journal entry for the A/P down payment invoice will be:
   Dr.  Advance payments a/c 1000    Cr. Supplier a/c  1000
5. You make the payment for the down payment invoice in the outgoing payment screen

The journal entry of the outgoing payment will be:
Dr. Supplier a/c 1000      Credit Bank a/c 1000

6. You receive the goods from the supplier.
   The journal entry to receive the goods will be:
   Dr. Stock a/c 500   Cr. Goods received not invoiced a/c 500
7.  When you receive the final invoice from the supplier, the journal entry will be:
   NB:  The actual invoice is copied from the A/P down payment invoice
   Dr. Goods Received not invoiced a/c 500     Cr. Supplier a/c  1500
   Dr.  Advance Payment a/c 10000
8. When you pay the balance of 1500 to the supplier,  the journal entry will be:
   Dr. Supplier a/c 1500      Cr. Bank a/c 1500

I am Caroline Ininga Majute,  a SAP Business One Consultant based in Nairobi, Kenya. For more inquires about sap business one, contact me at: [email protected]