Question no 4130 : Cash Discount "SKTO" in MM Purchase Order

In SAP Material Management, note the Cash Discount of Standard Condition Type "SKTO", how did the system retrieve the 3% Cash Discount of "SKTO" Condition Type ?

(only one answer)

A) Purchasing Info Record.

B) Material Master Purchasing data view Condition Record.

C) General Condition.

D) Vendor Master Payment Term in the Purchasing Organization data.

E) Rebate Condition.

.

Answer: D

Notes on Condition Type SKTO: 

• In SAP MM (Materials Management) and SD, SKTO is a standard condition type used to calculate and display cash discounts (prompt payment discounts). It retrieves the discount percentage based on your agreed payment terms and displays it for information purposes during pricing.
• Statistical Condition: SKTO is marked as statistical in the pricing procedure. This means it only calculates for information, it does not alter the actual net value of the material or affect the final inventory valuation.
• Payment Terms Trigger: The discount rate and amount are automatically fetched from the payment terms maintained in the vendor master or Purchase Order (PO). It is important to note that there 2 payment terms in the vendor master; one in the company code level (for non-po based invoice) and another one in the purchasing org data level (for po based invoice). 
• How it works in MM:
• When you create a Purchase Order (ME21N), the system applies the Payment Terms (e.g., Pay within 14 days, get a 2% discount).
• The SKTO condition automatically reads these payment terms and calculates the potential discount amount.
• Because it is statistical, the Purchase Order remains correctly valued at the gross price, but the system stores the SKTO data so the Finance team knows exactly what discount to expect if the invoice is paid early.
• Accounting Impact: When the actual invoice is processed in Logistics Invoice Verification (MIRO), the cash discount is handled directly by SAP's financial accounting component (FI). Depending on your company code settings, the discount taken is either posted to a cash discount received/cleared account or reduces the material's inventory value.
• In SAP, you can post vendor invoices in transaction MIRO using either Gross (Document Type RE) or Net (Document Type RN) methods, primarily depending on how you want to handle cash discounts and taxes:
• Gross Invoice Posting (Document Type: RE): 
• This is the default, standard method in MIRO. The vendor is credited with the full invoice amount (including taxes), and the cash discount is not considered during the initial invoice entry.
• Cash discounts are only recognized when the payment is actually made, reducing the cash discount account.
• d
• Net Invoice Posting (Document Type: RN): 
• The invoice amount is entered exclusive of the cash discount. The system automatically deducts the expected cash discount from the stock or cost account. This means that the cash discounts are already realized when the invoice is first posted.
• The discount amount is posted to a Cash Discount Clearing account and then cleared at the time of payment.
• Organizations that strictly enforce automatic cash discount deductions and want their inventory/material costs accurately reflected at the net cost immediately. 
• Net invoice posting via transaction code MIRO is an acceptable practice in accounting, but its acceptability depends heavily on strict internal controls and consistent accounting policies.