Lesson 2 of 6
Incoming payments and clearing
6 min
When a customer pays, finance must do two things: record the cash and settle the right invoices. Settling is called clearing. A cleared invoice gets a clearing document number and clearing date, and its status changes from open to cleared. Ideally clearing happens automatically, for example from the electronic bank statement or a lockbox file, which is covered in the bank accounting course. This lesson covers the manual case, which is also what you fall back on when automation cannot find a match.
The tools
In SAP S/4HANA the app Post Incoming Payments records a payment and clears open items in one step: you enter the bank data (G/L bank account, amount, value date), select the customer, and assign the payment to open items. The app Clear Incoming Payments clears items that are already on the customer account, for example a payment that was posted on account without clearing. Classic equivalents in Private Edition are F-28 (post incoming payments) and F-32 (clear customer).
- Enter headerCompany code 1710, posting date, bank G/L account, amount, value date, reference
- Select open itemsCustomer Great Lakes Fleet Services; system lists open items
- AssignSelect the invoices the payment covers; the system shows the difference
- Handle any differenceWithin tolerance → automatic; otherwise partial payment, residual item or write-off
- Simulate and postDebit bank; credit customer; clearing document links payment and invoices
Full, partial and residual
If the payment equals the selected invoices, clearing is simple: everything nets to zero and is cleared. If the customer pays less, you have two choices, and the difference between them is a favorite exam question and a frequent source of confusion in real life.
| Method | What happens to the invoice | What happens to the payment | Open items afterwards |
|---|---|---|---|
| Full clearing | Cleared | Cleared against the invoice | None |
| Partial payment | Stays open at its original amount | Posted as a separate open credit item with an invoice reference | Two: invoice and payment, both open |
| Residual payment | Cleared | Cleared; a new residual item is created for the unpaid difference, referencing the original | One: the residual item |
A worked example makes it concrete. Great Lakes Fleet Services owes invoice 90001234 for 12,000 USD and pays 10,000 USD. With a partial payment, the invoice stays open at 12,000 and a 10,000 credit sits next to it; the customer balance is 2,000, the invoice's original due date is kept, and line item reports show both items. With a residual payment, the invoice and payment are cleared, and a new 2,000 item is created. Depending on configuration in the customer's tolerance group, the residual item keeps the original terms or gets fixed terms, so its due date may differ.
| Partial payment | Residual payment | |
|---|---|---|
| Invoice 90001234 | Open, 12,000 | Cleared |
| Payment | Open credit, 10,000 | Cleared |
| New item | None | Residual item, 2,000, referencing 90001234 |
| Customer balance | 2,000 | 2,000 |
| Best when | The customer will pay the rest of that invoice soon | You want a clean list with one item for what is still owed |
Worked example: 10,000 USD received against a 12,000 USD invoice.
Either way the balance is the same. What differs is how the open item list looks, how aging and dunning treat the remaining amount, and how easy it is for the next person to understand. Agree one standard with the process owner and use reason codes to record why the difference arose, such as a pricing dispute or freight deduction.
What would you do?
A customer pays 10,000 USD against a 12,000 USD invoice. The clerk posts it as a partial payment. Next week the dunning run sends the customer a reminder for 12,000 USD. The customer complains. What happened, and what is the best fix?
- Clearing settles open items and records a clearing document and date.
- Post Incoming Payments records and clears; Clear Incoming Payments clears existing items (classic F-28, F-32).
- Partial payment leaves the invoice open plus an open payment; residual clears both and creates a new item.
- Choose a standard method with the process owner and use reason codes for differences.
Check your understanding · not graded
Lesson check
1. A customer pays part of an invoice. Which method leaves the original invoice open?
2. Which method clears the invoice and creates a new item for the unpaid amount?
3. Which app clears items that are already posted on the customer account?
4. After a residual payment of 10,000 on a 12,000 invoice, how many open items remain for that invoice?