Netting of Payables and Receivable

SAP manages its suppliers and customers master data as business partners. If any partner is both supplier and customer, assign different roles to it, and use one business partner. But there could be instances wherein we have created a particular partner as a supplier, and then later they are our customers as well or vice versa. In the earlier case, where the business partner is the same with different roles assigned to it, reconcile by knocking off the payables and receivables in SAP. But in the latter case, where the master data are not similar, the reconciliation is hard to manage. SAP Business ByDesign has an inbuilt feature to handle such cases. Yes, the netting of business partners with different business partner id is possible in ByDesign.

Let’s take a look at the following example:

We have a supplier named Miller & Sons configured as an independent supplier in the system.

Below is another business partner who is a customer, Miller Parts Pvt. Ltd.

We can see that the above two business partners maintained as separate masters in the system. But they are similar accounts with different roles, that of customer and supplier. These partners have some open transactions against them. To be considered as separate partners, we have to make payments against their payables and receivables from them. So we are making payments where a liability already exists against the same entity. To avoid this scenario, we can mark the business partners as nettable in the master data. Do these settings under the contacts tab and subheading Relationships. The relationship type will have to be Nettable with, and in the business partner, select the business partner to perform the netting. Below is the screenshot of the netting relationship maintained in the system.

Finally, we can look at how we can clear the open items. These can be managed manually as well as automatically in the system. Below is the screen for manual clearing of the ‘open items’ for the nettable partners:

In the above example, the following is the calculation–

My total receivables and payments are considered together as receivables and knocked off against the payables. We can also select the exact invoices that we want to knock off and make the necessary payments or can also have receivables as the case may be.

Receivables = INR 21,830.00

Payments = INR 5,000.00

Total Receivables = 21,830 + 5,000.00 = INR 26,830.00

Payables = INR 49,560.00

Netting = 26,830.00 – 49,560.00

= INR -22,730.00

So, net payable = INR 22,730.00

Note that you can perform netting only against one business partner in SAP Business ByDesign.

Author: Vidya Kudva, SAP Lead Consultant.