Fast and efficient payments drive small businesses towards business success. To provide continued service to their customers, enterprises need to ensure the receipt of payments against their invoices. Payment advice does just that—issued by the customer; payment advice is the confirmation of payment received for a particular invoice.

Let’s look at how payment advice works in SAP Business One.

What is payment advice?

A payment advice is essentially a receipt (issued by the paying company) confirming the issuance of a payment. This note typically includes the following information:

  • Payment amount
  • Invoice number
  • Date of payment
  • Name of the creditor
  • Method of payment
Payment Advice in SAP Business One

Payment advice can either be a one-off or a recurring payment, confirming the payment to the creditor company. While this may sound straightforward, businesses working with multiple customers and vendors often find it complex to track their monthly payments. Depending on the type of business, enterprises usually have to raise multiple invoices each month and track outstanding payments.

Next, let’s see how small businesses can issue payment advice using SAP Business One or SAP B1.

How does payment advice work in SAP B1?

As an ERP solution for small businesses, SAP B1 has a built-in function to create and send payment advice notes. With this functionality, any enterprise can immediately issue payment advice after executing a payment. They can use this feature to notify the payment to the receiving party along with the related information.

SAP B1 does not follow any standard template for payment advice. Companies can create their format as requested by their customers. Here’s how SAP Business One processes payment advice:

  • SAP B1 records the “incoming payment” when a customer completes the transaction.
  • SAP B1 records the “outgoing payment” whenever the payment is issued to the vendor.

A payment advice note in SAP B1 typically contains all the payment-related information necessary for clearing the open invoice item. The header section of the note includes the information including the following:

  • Payment amount
  • Payment date
  • Additional information

The main section of the note in SAP Business One contains information about the paid items or services, including:

  • Paid amount
  • Difference reason code
  • Identification-related information such as:
    • Document number
    • Reference number
    • Billing document number
    • Customer reference number

How to create a payment advice in SAP B1

SAP B1 enables enterprises to create payment advice in multiple ways, including:

  • By manually handwriting an advice note
  • When processing a bank statement, lockbox data, or check deposit lists
  • When manually processing open items for incoming payments
  • By importing payment advice into SAP B1 using EDI
  • By importing payment advice as an XML file into SAP B1

Here are the steps to follow to create a payment note in SAP Business One:

1. Open the “Accounts Receivable” menu, and create a payment note from Document > Entry > Payment Advice.

2. Assign the note number either internally or externally. For external, enter the advice number. For internal, SAP B1 automatically generates the note number in the following format.

  • “aa” – indicates the type of advice note.
  • “dddddd” – indicates the date of creation.
  • “uuuuuu” – indicates the time of creation.
  • “bb” – indicates the first characters of the user’s name.

3. Next, enter the general information of the advice note – including the payment amount, currency, and bank details.

4. From the “advice item” section, enter the details of the open item.

Based on the predefined rule, SAP Business One displays a selection field and the value that must be selected to identify the open item. After specifying the gross or net amount, SAP B1 compares this value with the open time to which it is allocated. If necessary, it performs a different posting. You can also specify a key for other reasons.

How Praxis Info Solutions can help you with SAP Business One

Through this blog, SAP B1 customers have an overall perspective on creating payment notes with this ERP tool. With an experienced SAP implementation partner, they can effectively use their expertise to leverage their investment in this ERP solution. Here’s why companies must choose the best service provider for ERP integration for their business needs.

Among the leading SAP business partners in India, Praxis Info Solutions can help you maximize your business value by:

  • Implementing the best practices in SAP ERP solutions.
  • Standardizing and integrating your business processes across the enterprise.
  • Designing customized ERP solutions that can address your enterprise’s specific pain points.
  • Reducing your SAP ERP setup expenses and long-term costs.

Are you looking for an affordable SAP Business One licensing cost? If yes, then it’s the right time to contact us.