Please read Part I first: Installment Plans with Interest Calculation in SAP PSCD | Part 1 – Creating the Installment Plan

The use cases covered in this blog are

1. As a collection agent, I can receive the payment of an installment that can be
   • partial or complete
   • in advance or in time
   • late
     • before collection activities (considering the grace period) such as sending a dunning notice for the installment
     • after collection activities
2. As a collection agent, I can dun overdue installments
3. As a collection agent, I can deactivate an existing installment plan

Processing the Payment of an Installment

In the first part of this blog, we have created an installment plan with five installments.

Business Partner Overview – Displaying the Installment Plan

Let’s now proceed with the payment of the first installment at the cash desk.

In the Cash Journal (transaction FPCJ), we enter the header data and the reference to our business partner. In the Select Items screen, we pick the first installment (although not yet overdue) and pay it in cash.

Note: processing a payment from a payment lot is also an option.

Cash Journal – Paying the first installment in Cash

In the Business Partner Overview, the item list has been updated accordingly.

Business Partner Overview – Checking the Impact of the Payment on the Installment Plan

The installment plan in the Manage Installment Plans Fiori app has also been updated.

Manage Installment Plans – Displaying the Item List

In order to better understand how the clearing of the original items by the cash payment was executed, let’s have a look at the account balance.

Account Balance – Displaying the List of Receivables

Some explanations are required here:

• Unlike classical statistical postings, installments are not transferred to G/L when they are cleared. They are just cleared, totally or partially.
• The payment is then assigned to the open items that belong to the installment plan. In our case, that means
  • the two original items
  • the interest document
  • the administrative charge document
• The clearing control logic is defined in the customizing activity Define Defaults for Collective Invoice/Installment Plan/Summarization Group in IMG > Contract Accounts Receivable and Payable > Basic Functions > Open Item Management > Clearing Control > Define Specifications for Clearing Types > Define Defaults for Collective Invoice/Installment Plan/Summarization Group

IMG – Define Defaults for Installment Plan

In this customizing step, the clearing variant is assigned to the clearing type, and the clearing variant defines the expected rules for clearing.

Although the Clearing Control is out of the scope of this blog, it is in this clearing variant that the clearing expectations must be set in terms of priority, grouping, sorting, amount rules, and clearing rules when a payment hits an installment plan. For instance, the priority could be set to first clear the interest, then the charges then the sources documents. In our case, the open items with the oldest due date are cleared first.

What if a partial payment is received on an installment?

The partial payment clears the installment partially.

The partial payment is processed by the clearing control and clears the open items in the installment plan according to the rules defined in the clearing variant.

What if an installment is paid earlier or later than the due date of the installment?

In our scenario, we set the option that we do not correct the interest upon receipt of payment (see Part I of this blog). You can decide otherwise and specify how the system handles interest:

• Calculates interest only for installment payments that are received late
• Calculates interest both for installment payments that are received late and those received early
• Calculates interest regardless of the receipt date of the installment payments

This is possible with the two indicators in the customizing activity Define Default Values for Interest on Installment Plans in IMG > Contract Accounts Receivable and Payable > Business Transactions > Deferral and Installment Plans > Define Default Values for Interest on Installment Plans

• Using the Only int. on arrears
• Never int. on arrears indicators

IMG – Setting the Installment Plan Interest Parameters

For more details, please refer to Charging Interest and Surcharges for Installment Plans

When installment plan items are paid, the interest calculated from the original items of the installment plan has to be recalculated. You can mass update interest documents of installment plans using the mass activity Interest Run for Installment Plans (transaction FPINTM3). You can also do it manually in transaction FPR2.

For more details, please refer to Interest Run for Installment Plan

Can I include the installment plan items in a dunning cycle?

Yes, installment plan items can be included in dunning cycles, for instance in dunning with collection strategies or using the SAP Debt Collection Management.

Can I add new receivables to an existing installment plan?

No, it’s not possible to add new receivables to an existing installment plan.

The option is then to

• Deactivate the current installment plan: If the installment plan has not yet been paid or paid in part, you can carry out an automatic reversal of the interest document and the charge document for this installment plan.
• Decide how the system deals with the interest if the installment plan is deactivated or partially deactivated. In customizing activity Define Default Values for Installment Plan in IMG > Contract Accounts Receivable and Payable > Business Transactions > Deferral and Installment Plans > choose Business Transactions Deferral and Installment Plan Define Default Values for Installment Plans, you can control the calculation of interest on an installment plan for a (partial) deactivation.
  • With the deactivation reason, you can also specify how you want the system to handle the interest calculated. You can choose to have the interest credited or refunded, fully or partially. You can also decide that the interest posting remains after deactivation.
• Create a new installment plan with all receivables, including the new ones.

IMG – Dealing with interest when Installment Plan is deactivated

What happens if an amendment is received on a tax assessment from SAP Tax and Revenue Management and the original receivable is included in an installment plan?

If it is a credit, the delta receivable from the amendment is cleared according to the rules defined in the Clearing Control. Basically, the credit is considered a payment, there will be no impact on the installment plan and the calculated interest.

See below the proposal for clearing in the Account Maintenance (transaction FP06). The payment will partially clear the next installment, and in the background, the clearing control assigned to the clearing type for the Installment plan will clear the source items as defined in the associated clearing variant.

Account Maintenance – Processing an amendment

If it’s a debit, the delta receivable cannot be added to the existing installment plan. the original installment plan must be deactivated and a new installment plan created.

In the next and last part of this blog, we will reclassify installments and related interests that are due in the next year to another G/L account.