Lesson 4 of 6
The automatic payment run
6 min
Most supplier payments at a company of Contoso's size are made by the automatic payment program. It selects open items that are due, groups them by supplier, decides which bank to pay from and by which method, posts the payment documents that clear the invoices, and creates the payment medium, usually a bank file. In SAP S/4HANA the Fiori app is Manage Automatic Payments; the classic transaction F110 does the same job and both work on the same payment runs.
The steps
- ParametersRun date and identification; posting date; documents entered up to; company codes; payment methods; next payment date; suppliers
- ProposalProgram selects due items and lists what it would pay, plus exceptions it cannot pay
- Review and editAP edits the proposal: change payment method or bank, block or unblock items, remove items
- Payment runProgram posts payment documents, clears invoices and credit memos
- Payment mediumBank file (and any checks or advices) created for each payment group
- Logs and follow-upReview logs and payment list; transmit file; later match with the bank statement
Parameters that matter
| Parameter | What it controls | Common mistake |
|---|---|---|
| Run date and identification | Together they identify the run, so several runs can exist on one day | Reusing an identification and confusing two runs |
| Posting date | Posting date of the payment documents | A date in a closed posting period, so the run fails |
| Documents entered up to | Only documents entered (created) on or before this date are selected | Assuming it means posting date; invoices entered today are missed |
| Company codes and payment methods | Which company codes pay and which methods may be used, in priority order | Leaving out a method suppliers depend on |
| Next payment date | Decides whether items can wait for the next run | Wrong date causes early or late payments |
| Supplier selection and free selection | Which suppliers and items to include | Free selections left over from a test run |
Key parameters of a payment run.
Behind the parameters sits configuration that testers should at least know exists: which company codes pay for which (the paying company code), the payment methods allowed per country and company code with their minimum and maximum amounts, and bank determination, which ranks house banks per payment method and currency and checks the available amounts. When the program cannot find a bank or method that fits, the item becomes an exception.
Reviewing and editing the proposal
The proposal is the control point. Nothing is posted yet, and the AP lead can edit it: change the payment method or house bank for a supplier, block an item for this run, or remove a supplier entirely. The proposal also shows the exception list, items selected but not payable, each with a reason. At Contoso, Maria reviews the proposal every Thursday afternoon with two questions: does the total look like a normal week, and does every exception have an owner? Only then does she schedule the payment run.
Once the payment run is posted, changes are corrections, not edits. You would need to reverse payments or void checks, which is slower and riskier. That is why sign-off of a payment run sits on the proposal, not on the bank file.
Payment medium
The payment medium is what leaves the company: a bank file, printed checks or both. In SAP S/4HANA it is generated through the Payment Medium Workbench using a payment medium format assigned to the payment method, and the files can be downloaded in the Manage Payment Media app. The format decides the file layout, for example a national ACH format or an ISO 20022 XML format; banks often require their own variant. Payment advice notes can be sent to suppliers so they can see which invoices were paid.
What would you do?
On Thursday the proposal total is 1.9 million USD; a normal week is about 600,000 USD. The payment run is due to post in one hour. What should Maria do?
- Manage Automatic Payments (classic F110) runs parameters, proposal, payment run and payment medium.
- Documents entered up to filters by entry date, not posting date.
- The proposal can be edited; it is the control point for sign-off.
- Payment methods, bank determination and the payment medium format decide how and from where items are paid.
Check your understanding · not graded
Lesson check
1. Which step of the payment run can be edited before anything is posted?
2. What does "documents entered up to" filter on?
3. Which configuration ranks house banks per payment method and currency?
4. Where is the bank file format assigned?