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Gaurav Misri
March 27, 2019 3 minute read

SAP Retention Process

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What is Retention Process?

Retention process is Holding back a portion of payment to vendors who works for your organization.For example, the retention amount is released to
the vendor when certain expectations are met or on a speci ed date that your vendor has agreed upon.

An organization can have an agreement with the vendor that a certain percentage or amount will be retained from the total amount that needs to be
paid to be vendor. The agreement can have a retention date on which the help back amount will be paid to the vendor or when certain expectations
are attained.

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The Purpose of this Blog is to Explain the SAP ow of the Retention process.

Functionality that needs to be activated is : LOG_MMFI_P2P via tcode SFW5.

Customization:

A new document type needs to be created for the retention process.

Tcode – OMR4.

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Click on “Document types in Invoice Veri cation” tab.

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Select the “MIRO” transaction code line and display its details.

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The tab highlighted in yellow is where we maintain the document type for Retention process which will then ow while we are Invoicing the Purchase
order.

The Steps to be done in SAP are given below:

  

Create Purchase order.

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Tcode – ME21N

Enter all the relevant details such as Material, Quantity, Unit Price, Plant, Vendor and Retention category.

We will enter 10% as retention. 

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Save the Purchase order.

PO 4500000087 has been created.

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Create GRN.

Tcode – MIGO

Enter the Storage location and tick on “Item OK” icon.

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Click on “Post“ icon to Post the GRN.

GRN 5000000164 has been created.

Book the Vendor Invoice

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Tcode – MIRO

Enter the PO Number, Invoice date and reference eld and hit Enter.

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Enter the Amount, Retention due date and Hit Enter. 

Click on “Messages” icon to view the message log.

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Click on the “Simulate” icon

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Hit Enter

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Click on the “Post” icon to book the Invoice.

Document 5100000139 has been created.

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Display Invoice document to check for the GL accounts that are hit in Retention process.

Two accounting document will be generated :

1. Original vendor invoice
2. Retention amount invoice.
Tcode – MIR4

Enter the Invoice document and Fiscal year.

Hit Enter

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This is the document we just posted via MIRO.

Click on Follow-On documents icon.

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We have got 2 Accounting documents been generated here.

The screenshot given below is the subsequent accounting entries for Accounting document 5100000112.

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Subsequent accounting entries for Accounting document 5100000113.

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Note – Payment to vendor can be done via Tcode F-53.

Conclusion :

1. LOG_MMFI_P2P functionality needs to be activated.

2. Message M8_2303 needs to be activated.
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3. A special G/L indicator needs to be created for Retention process so that correct G/L accounts will be hit from the FI side.
4. Two Accounting entries will be generated after booking the Invoice.
5. Retention percentage and category in the PO and Retention due date in MIRO are a mandate.

I hope you liked the blog, and if you have any suggestions or questions please let me know.

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Assigned tags

MM Purchasing | SAP Supply Chain Management | retention | sap mm |

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9 Comments

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V V Santhosh Kumar Kolla

April 1, 2019 at 8:58 am

Hello Gaurav,

Good Blog. Keep it up.

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Thanks,

Santhosh Kolla.

Like (0)

Amaranatha Reddy Musali

April 3, 2019 at 10:54 am

Very helpful blog.

Since you have provided step by step screenshots, it makes the it easily understandable.

Regards.

Amar

Like (0)

Samay R Nanda

April 5, 2019 at 9:06 am

Insightful to the Vendor retention Functionality.

Any Use cases or industry speci c examples where we can use it?

Like (0)

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Gaurav Misri | Post author

April 8, 2019 at 2:00 pm

Retention is common practice in certain areas, for example, construction.

In construction projects, it is standard to withhold a percentage of the invoices sent by contractors because, at the time of invoice, the quality of the
goods cannot be assessed. Typically, about six months after construction projects are nished, quality issues appear and can be assessed. If no
quality problems arise, the money that was withheld is paid to the contractor.

Like (0)

Samay R Nanda

April 9, 2019 at 10:22 am

Thank you! That helps

Like (1)

Sophia Scott

April 19, 2019 at 5:46 am

Thanks For Sharing…Very Helpful Blog.

Like (1)
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Olga Nevo

May 3, 2019 at 2:09 am

Hello Gaurav,

Very nice document. Thank you.

Can you please advise, if there are two Ratios of retention in one PO (10% and 5%), means two Retention documents should be created during
MIRO? How to proceed?

Thanks.

Olga

Like (0)

Gaurav Misri | Post author

May 7, 2019 at 2:22 pm

2 Di erent ratios of retention in a PO means 2 PO line items.

So if you do MIRO for these 2 PO line items in a single go, Yes… 2 Retentions documents would be created.. 1 for each line item.

Like (0)

Olga Nevo

May 22, 2019 at 2:58 pm

Thank you very much, Gaurav.

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Actually, the company has a kind of gradual retention process, when two di erent rates should be applied to the single PO line… Do you have any
advice?

Thanks.

Olga

Like (0)

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