Note To Payee Configuration In Sap

Note To Payee Configuration In Sap

I’ve planned to write this post for some time, but began working on it just recently. I hope it would be of interest for you and will give some new insights on note to payee functionality in SAP. This post contains a lot of technical details, if you have any questions or need some clarification, feel free to post them as comments.

1.1 Introduction

Note to payee is a part of a data medium that contains additional information about payments, which might be relevant for payee or is required legally. As a rule, note to payee is transferred in fields of data medium, which from bank’s perspective are freely definable. That means that if there are no explicit legal or technical bank platform requirements, you can fill it with whatever information you want. Typical usage cases:

  • To provide list of vendor invoice numbers, which are being paid (e.g. CITI Direct);
  • To provide information on payment purpose and VAT amount paid (e.g. typical business practice in Ukraine, Russia);
  • To provide specific legally required details (e.g. typically budget-related payments require additional details).

You can use a lot of standard mapping options in DMEE-tree to generate note-to-payee quite flexibly, but you can also use dedicated note-to-payee functionality to achieve greater flexibility.

1.2 Define technical attributes of note to payee

Technical attributes of note to payee should be defined during creation of payment medium format (hereinafter referred to as PMW). Use the following menu path or transaction OBPM1 to access the customizing:

1. Go to SPRO and navigate to Financial Accounting (new).

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2. Select Accounts Receivable and Accounts Payable.

3. Choose Business Transactions followed by Outgoing Payments.

4. Click on Automatic Outgoing Payments.

5. Proceed to Payment Media and select Make Settings for Payment Medium Formats from PMW.

6. Finally, create the desired Payment Medium Formats.

Select your PMW and navigate to tab “Text Fields for Reference Information”:

Add an entry with note to payee type 1, indicate the length of the field and number of fields. Length of note to payee field usually depends on the requirements of your bank. Number of fields depends on the approach to payments:

  • if you pay each document separately, it would be enough to set up this value to 1 (i.e. one note to payee for each payment document);
  • if you use grouped payments (i.e. one payment for many vendor invoices), number of fields should be high enough to allow creation and storing of note to payee details for each paid invoice.

if number of lines is not enough, you’ll encounter error BFIBL02231 “Payment advice note created for payment document XXXXXXXXXX” and note to payee will not be generated properly.

1.3 Create note to payee

Note to payee is a functionality of SAP that allows to creation and storing of note to payee information (i.e. payment details) that can be used in payment file. Note to payee can be defined via customizing or with help of custom FM. Launch t-code OBPM2 and define note to payee using FM or using customizing. This post will focus on note to payee using FM-based approach, customizing-based note to payee will be covered in upcoming post.

Menu path to access note to payee settings is provided below:

SPRO → Financial Accounting (new) → Accounts Receivable and Accounts Payable → Business Transactions → Outgoing Payments → Automatic Outgoing Payments → Payment Media → Make Settings for Payment Medium Formats from PMW → Adjust Note to Payee.

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If note to payee is FM-based, no additional customizing is necessary in this view. Additional customizing steps for customizing-based note to payee are described in separate post.

1.4 Assign note to payee to payment method

Note to payee should be assigned to a payment method on country level per origin in FBZP (example below):

Please check out OSS-note 1977304 ” FBZP: Explanation of origins when assigning a note to payee ” for details on origins in APP.

1.5 Create FM to build note to payee

FM should be created by copy of standard FM FI_PAYMEDIUM_SAMPLE_DETAILS which provides an interface to build note to payee details. This FM will be triggered during proposal / payment run when option “Create payment medium” is ticked off. The result of FM execution will be saved into database table DFPAYHT – it will store one or more line for each payment document and might store additional technical information as well.

Sample source code for FM that generates note to payee can be found below:

Creating FM for DMEE-tree

This FM should be created via copy of standard template DMEE_EXIT_TEMPLATE_ABA. Please check out my post on ” Exit modules in DMEE ” for more details on this mapping options in DMEE-tree. Proposed source code for this FM can be found below.


lentab is a standard table in SAP that stores text_fpm data. It has a header line which contains information about the table.

Combine the lines in linetab and separate them with spaces to create a result.

Sample note to payee generated by this FM can be found below:

This example might be rather simple, but I hope it provides enough details to understand where to start if you would like to implement more complicated logic for note to payee.

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What constitutes a permissible payee?

A permitted payee, as the term suggests, refers to an individual or entity that is authorized and specified in the vendor master record to receive a valid payment. In India, it is important to create a list of permitted payees for proper payment processing. This list should be carefully maintained and updated regularly to ensure accurate and efficient financial transactions.

What does alternate payee account mean?

The term “alternate payee” refers to any spouse, former spouse, child, or other dependent of a participant who is legally acknowledged through a domestic relations order as having the entitlement to receive all or part of the benefits that are payable under a plan in relation to such participant.

The SAP alternative payee field: what is it?

In SAP systems, there is a feature called “Alternative payee in the document” that allows for configuring an alternative recipient for payments. This means that instead of paying the original vendor directly, the payment can be made to a different party specified in the document.

When this feature is enabled, vendors with alternative payees are treated like regular vendors in the SAP system. This means that their information, such as bank accounts, is stored in their master record and used for making payments. The system will automatically route payments to these alternative payees based on the instructions provided.

To configure this functionality, you would need to set up the alternative payee details in the SAP system. This involves specifying who should receive payments instead of or alongside the original vendor. By doing so, you have more flexibility and control over how payments are processed within your organization.

2. Vendor Treatment: Vendors with this configuration are handled like regular vendors.

3. Payment Routing: Payments can be directed towards these alternative payees as instructed.

4. Configuration Process: Set up and specify details of alternate recipients within SAP.