Split Payment in SAP

On 1st July 2018, the law related to the so-called split payment came into force.

It includes the possibility to pay invoices in two parts – to the general account and the VAT one. In the case of companies that operate them with SAP systems, it is necessary to adapt them to the new regulations.

Implementation of split payment in SAP involves changes in the configuration of ERP systems.

This is mostly the case in the area of automatic payments. The payer will be able to choose one of the forms of settlement – using a split or a standard payment. Regarding reckoning with a single undertaking, the payer may select the preferred method of payment for certain obligations.

The application of the split payment mechanism is primarily linked to the modified transfer form through which undertakings will settle payments in this form. In such a case, the transfer message must contain information on the value of VAT so that the bank knows what amount must be credited to a dedicated VAT account. On the other hand, the split payment does not cause any fundamental changes in the accounting of bank statements.

SAP split payment – two methods

Many large companies use SAP ERP to handle this type of processes. There are two possible approaches in this system. The first one is the SAP’s, which is the most recommended solution here and requires relatively little effort. The only condition needed in this case is the use of automatic payment processing in SAP.

The implementation in this scenario consists of introducing additional configurations in the company system.

These include the extension of the primary payment method data of suppliers or recipients. All settings result in the transfer message being appropriately marked so that the bank knows that the trader is using split payment and can divide the cost of payment into net amount and VAT.

Items settled by the split payment method are marked in the system with a special flag, which makes it easier to perform analyses. No significant changes are required in the accounting of bank statements.

The process of such implementation is not complicated and may take about two working days.

If for some reason a company cannot implement a standard SAP solution, i.e., it does not use automatic payment processing, it is possible to adjust the system according to individual requirements.

Split payment – benefits for entrepreneurs

The use of the split payment mechanism is voluntary. However, it can bring considerable benefits to entrepreneurs.

These include:

• VAT reduction if the company pays it before the due date,
• VAT reduction when the company pays full VAT from the VAT account,
• shortening the period for refunding VAT surpluses by the Tax Office,
• lack of sanctions resulting from a failed settlement with the Tax Office.

The SAP solution does not cause any significant changes in the way of posting invoices or bank statements for the primary account. On the other hand, it gives the possibility to use the split payment mechanism at any time in the case of a settlement with any company.