If you work in Sales Billing in SAP S/4HANA Public Cloud, you already know that getting money in before you deliver goods or services is good business — and that making sure the system handles that money correctly is also good business (just less glamorous). SAP's Advanced Down Payment Processing framework has been steadily expanding to make both of those things easier. Today, we're excited to introduce the newest addition to that framework: Milestone Billing with Down Payment Requests.

A Quick Recap: What is Advanced Down Payment Processing?
Before we dive into the new process, a little context goes a long way.

Advanced Down Payment (ADP) Processing is SAP's next-generation framework for managing customer down payments end to end — from the initial request, through settlement against customer invoices, all the way to final payment. Over time, it's set to fully replace the “classic” SD down payment approach (as defined in scope item BKJ) with something more powerful, more flexible, and far better suited to complex international business scenarios.

At its core, every ADP process follows the same five-step rhythm:

1. Request — send a request for down payment to your customer
2. Receive — record the incoming payment
3. Deliver — ship goods or render services (for physical goods, receiving the down payment automatically lifts the delivery block)
4. Invoice & settle — create one or more customer invoices and settle the down payment against them
5. Receive final payment — collect the remaining balance and complete the transaction

The following graphic provides an overview of these five steps:

What distinguishes the individual ADP processes from each other is how billing is tied to the underlying sales document — and that's where things get interesting.

The Previous Release: Delivery-Related Billing with Down Payments
The first ADP process to ship was Sell from Stock with Down Payment Requests (scope item 7S7). That process is built for the classic logistics scenario: a customer orders standard goods, you request a down payment, the customer pays, the goods are picked and shipped, and you invoice per delivery. In other words, delivery-related billing — the invoice is created with reference to an outbound delivery document.

That model works great for straightforward sell-from-stock transactions. But what about contracts where invoicing follows a schedule, a project milestone, or a phase of work — regardless of whether a delivery has happened yet? For those scenarios, you need order-related billing.

The New Addition: Milestone Billing with Down Payment Requests
Meet Milestone Billing with Down Payment Requests, now available via scope item 7Z1 (Sales Order Processing with Milestone Billing). This process combines order-related milestone billing with the full power of ADP processing.

In this approach, both the down payment request and the settlement invoice are always created with reference to the sales order — not to an outbound delivery. This means billing can proceed on its own schedule, independently of logistics. Whether your team is dealing with a delayed shipment, a multi-phase service contract, or a deal that mixes physical goods with maintenance services, billing doesn't have to wait.

What Kinds of Products Are Supported?
The process supports sales order items of the following item categories:

In other words: physical goods, non-stock items, and pure services are all in scope — making this the most versatile billing setup in ADP so far.

Process Flow Overview
The graphic below shows a simple example document flow across sales, delivery management, and financial accounting. It illustrates how all the pieces connect — from sales order creation through final payment.

Let's go through it, step by step:

1. Sales order with billing plan 
   A sales rep creates a sales order. For each relevant item, they enable down payment requests and set up a billing plan. The plan includes at least one down payment request date (billing type DPR1) and at least one final invoice date. Milestone dates for partial invoices are optional.
2. Down payment request is created and sent 
   A billing clerk creates the down payment request and posts it to financial accounting. Output is triggered automatically (for example, via email).
3. Noted item in FI 
   When the down payment request is posted, the system creates a noted item (special G/L indicator F) — a placeholder that signals a down payment is expected without affecting any G/L account balance. The customer is not legally obligated to pay at this point; the request is non-binding.
4. Incoming payment clears the noted item
   Once the customer pays, an AR accountant clears the noted item. The total amount (net + tax) is posted with special G/L indicator A. For delivery-relevant items (CBAO, CTAX), this can automatically remove the delivery block on the sales order item.
5. Delivery (D) and partial settlement invoices (if applicable)
   For physical goods, the shipping team creates the outbound delivery, picks, and posts goods issue as usual. If required, a billing clerk creates partial invoices with reference to the milestone billing plan dates. Using the down payment register, the billing clerk can adjust down payment settlement for individual items.
6. Incoming payment clears partial settlement invoices (if applicable)
   An AR accountant posts incoming payments that the customer has made for any partial invoices.
7. Final settlement invoice
   A billing clerk creates the final invoice with reference to the final billing plan date. Before posting, they can again use the down payment register to review and flexibly adjust exactly how much of each received down payment is settled against each item. The system reduces the invoice total accordingly.
8. Final payment 
   The customer pays the remaining open amount (Total Invoice Amount − Settled Down Payment Amount). Once received and posted, the business transaction is complete.

What Makes This Different from the “Classic” Milestone Billing Process with Down Payment Requests?
The previous milestone billing process (scope item BKJ) handled order-related billing but lacked the ADP framework's modern capabilities. Here's what's new:

• Item-level down payment settlement via the down payment register 
  Instead of a blunt, document-level settlement, you can now allocate and adjust settlement amounts per item, giving you granular control and a clear audit trail.
• Condition-technique-based settlement logic
  This eliminates rounding differences automatically. 
• Consistency across Sales and Financial accounting
  The underlying data model keeps Sales and Financial Accounting fully in sync throughout the process, dramatically reducing the risk of inconsistencies.
• Non-binding down payment requests — The request is legally treated as a non-binding offer. If the customer doesn't pay, you cancel cleanly with no financial impact.

When Should You Use This Process?
This process is a strong fit for scenarios like:

• Capital equipment sales — selling a factory floor machine with scheduled milestone payments tied to project phases
• Mixed contracts — the same order includes both the machine (CBAO) and ongoing maintenance service (CTAD)
• Long-term service engagements — where billing follows predefined phases of work rather than individual shipments
• Construction and engineering projects — where invoicing on milestones, not deliveries, is contractually required

If your business operates under legal frameworks in Germany, the United States, or other jurisdictions with specific requirements for down payment handling, the process is also designed to help you stay compliant — no custom modifications needed.

Getting Started
To enable this process, activate scope item 7Z1 (Sales Order Processing with Milestone Billing) and complete the required configuration. Full setup guidance is available in the SAP Help Portal under Setting Up Advanced Down Payment Processing.

For a more detailed look at the complete process flow, step-by-step instructions, and related information (billing plans, down payment requests, the down payment register, settlement invoices), see Milestone Billing with Down Payment Requests on SAP Help Portal and scope item 7Z1 in SAP Signavio Process Navigator.

The ADP framework is growing — and with milestone billing now in the picture, it covers both ends of the billing spectrum: delivery-based and order-based. Whether goods are moving out the door or milestones are being crossed on a service contract, advanced down payment processing has you covered.