Supplier Financing

Invoice date Due Date

1. Buyer places purchase order (PO)
2. Supplier sends goods and invoice
3. Buyer accepts invoice with supplier financing
4. Supplier requests early payment
5. Supplier receives discounted payment
6. Buyer pays bank in full on due dat

Other notes for consideration

1.Involvement of the buyer in the negotiations between the supplier and the bank.
2.The buyer receives fees or other payments from the bank or makes any payments to the bank
other than payment of the original invoice under its terms
3.The buyer pays interest to the bank prior to the date the trade payable is due to be paid.
4.Extended payment terms and finance is only offered to those suppliers who are part of the supply chain finance program.
5.There is a tri-partite agreement between the buyer, supplier and financier

Questions.

1. What should be accounting treatment

3. How is the actual payment transmitted to bank

4. How should we communicate to the bank for supplier financing
5. In the bank statement are there any sepearte transaction code for the fee or bank charges for supplier financing.
6. Who Pays the supplier financing fee/interest
 Payment Date
Dummy

y chain finance program.

pplier financing.
Create Invoice
Make Payment
No Transmission Create Invoice

Receive Bank Statement

Create Payment

Bank Statement Reconcile

Invoice

Payment Bank Account BAI2 Statement

12345678 12345678

Create Invoice
Create Payment 12345678
Bank Stateemnt 12345678
`
 1-Jan-19 1-Jan-19
Category
Charge Dr NET 45 0
To Liability/Supplier Financing NA

Liability Dr. ACTUAL Supplier Financing Format PAYMENTMETHOD

To Clearing

Clearing Dr
To Cash

Detail 10,000.00

Date Amount
1-Jan-19 10000
1-Jan-19 10000
1. Create Supplier with Payment Method
SF as Payment Term
Payment method is presumed to be EFT/Electronic SF 90 Days 0

2. Create Invoice
1. Supplier Number
2. Supplier Name
3. Payment Term Due Date
4. Validate Tax Code
5. Payment Priority/Pay Group

4. Create Payment
Create Payment Format
Create Payment Profile
File generated etext format
Output of the file can be extracted and sent for further processing ERROR
Develop an extraction logic with all the relevant columns This will be a custom process
Invoice and Payments transaction information to be frozen so that no changes are made to those transactions

Payment Batch can be scheduled on daily basis basing on Payment Priority

e a custom process
e to those transactions
EFT CITI

100