FICO Accounts Payable Part 6: Down Payments, Special G/L Transactions and Clearing

📌 KEY POINTS
✅ Down payments are special G/L transactions posted with a special G/L indicator (A for down payments in standard).
✅ A down payment request (F-47) is a noted item that the payment program can pay.
✅ The down payment (F-48 or via payment run) posts to an alternative reconciliation account, separate from normal payables.
✅ When the final invoice arrives, the down payment is cleared against it (F-54 or during invoice entry).
⚠️ Uncleared down payments overstate both advances and payables — check them at every month end.

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▶ WHERE WE ARE
Parts 1–5 covered AP master data, invoices and payments. Part 6 handles advances to suppliers.

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▶ 1. WHY SPECIAL G/L
A payment before the invoice is an advance — an asset, not a reduction of a liability. Posting it to the normal vendor reconciliation account would net it against payables. Special G/L transactions use an indicator that redirects the posting to an alternative reconciliation account, so advances appear separately on the balance sheet while staying on the vendor account.

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▶ 2. REQUESTS AND PAYMENTS
A down payment request (F-47) records the agreed advance as a noted item without affecting balances. The automatic payment program can select requests and pay them, posting the actual down payment. Manual down payments can be posted directly with F-48. Purchase orders can carry down payment information that links the request to the order.

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▶ 3. CLEARING AGAINST THE INVOICE
When the final invoice is posted, the down payment must be transferred from the special G/L account to the normal payable, either during invoice entry when the system proposes open down payments or with F-54 afterwards. Only then can the remaining amount be paid and the advance balance disappear.

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▶ 4. TAX ASPECTS
In some countries, tax is due on down payments. In India, TDS may apply on advances (covered in the TDS lessons), and GST may apply on advances for services. Tax codes and withholding settings on down payments must therefore be designed together with the tax team.

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▶ 5. MONTH-END CHECKS
Report open down payments by vendor and age. Advances older than expected delivery dates may mean invoices were posted without clearing — which leaves the vendor showing both an advance and a payable — or deliveries never happened. Both need action.

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▶ STEP BY STEP

1. Post a down payment request for a vendor and pay it in a test payment run.
2. Display the vendor's special G/L balance.
3. Post the final invoice and clear the down payment.
4. Report open down payments by age.

✅ CHECKPOINT: an advance is paid, shown separately and cleared against the final invoice.

A vendor complained of an underpayment while the books showed the company owed nothing. The vendor's advance had been paid, the invoice posted, but the down payment never cleared, so the payment program paid only part of the invoice. Clearing the advance and adding a down payment check to the month-end routine fixed it.

• Posting advances to normal payables.
• Not clearing down payments against invoices.
• Ignoring tax on advances.
• No ageing review of advances.

• Use down payment requests linked to POs.
• Clear during invoice entry where possible.
• Design tax treatment of advances.
• Monthly advance ageing review.

Interviewers ask why down payments use special G/L indicators, how requests are paid and how clearing works with the final invoice.