What is earnest money deposit in SAP PSM-GPR - Procurement for Public Sector?

SAP Term: earnest money deposit

• Component: PSM-GPR

• Component Name: Procurement for Public Sector

• Description: A payment or credit memo submitted by a supplier with an RFx response as a guarantee of good faith for the fulfillment of a purchase order or contract.

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• Key Concepts: 
  An earnest money deposit (EMD) is a payment made by a bidder to demonstrate their commitment to a contract. It is usually a percentage of the total contract value and is held in escrow until the contract is completed. In the Public Sector Management (PSM-GPR) Procurement module of SAP, EMDs are used to ensure that bidders are serious about their bids and that they will fulfill their obligations if they are awarded the contract. 
  
  How to use it: 
  In SAP PSM-GPR Procurement, EMDs can be set up for each bid. The amount of the EMD is determined by the bidder and must be approved by the contracting authority. Once the EMD has been accepted, it will be held in escrow until the contract is completed. If the bidder fails to fulfill their obligations, the EMD will be forfeited. 
  
  Tips & Tricks: 
  When setting up an EMD in SAP PSM-GPR Procurement, it is important to ensure that all relevant information is included in the bid documents. This includes details about how the EMD will be held in escrow, how it will be released upon completion of the contract, and any other conditions that must be met for the EMD to be returned. 
  
  Related Information: 
  For more information on using earnest money deposits in SAP PSM-GPR Procurement, please refer to SAP Help documentation or contact your local SAP support team.