-
Chapter 3
3-1
Accounts Receivable AccountingAccounts receivable accounting in
R/3 FI maintains and manages a cus-tomer accounting data. It is
also an integral component of sales management.Sales and accounting
have the same information requirements (creditworthi-ness, payment
history). Because of this, a limitation of risk is undertaken atthe
start of the transaction (bid, order). If the customer order
results indelivery and subsequent invoicing, then these
transactions are postedautomatically in the accounting system. The
various stages of this processare updated in real time in cash
management and forecasting, includingchanges to liquidity planning.
To hedge foreign currency transactions, aforeign exchange
transaction is assigned through foreign exchange manage-ment.
Fig. 3-1: Accounts Receivable Accounting
With its primary fixed asset and balance sheet accounts, the
chart of accountsis the central posting-system link between the
general ledger and correspon-ding customer accounts. Use of the
automatic posting principle means thateach business transaction is
posted simultaneously to the customer account.This is done as a
line item to the general ledger on a totals level through
theassigned balance sheet account. This tightly coordinated
updating takesplace automatically and ensures that the general
ledger and subledger ac-counts are reconciled at any given
time.
You can use account analyses, alarm reports, due date lists, and
a flexibledunning system to track open items. The correspondence
associated withthis is set up for each company. This is also true
of payment notices, balance
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3 Accounts Receivable Accounting
3-2
confirmations, account statements, or interest calculations.
Incoming pay-ments are assigned to the debts due manually through
user-friendly func-tions. It can also be carried out electronically
using EDI or electronic accountstatements. The debit memo procedure
and payments are automated withthe payment program.
Balance lists, journals, a balance audit trail, and numerous
other standardreports are available for documenting transactions in
accounts receivableaccounting. For key date analyses:
q foreign currency items are revaluated
q customers with a credit balance are identified
q resulting balances are sorted according to their remaining
life
Accounts receivable accounting is more than a basic element of
proper ac-counting methods. It provides data for effective credit
management throughits close link to the sales component. It also
provides information for optimi-zing liquidity planning through its
connection to cash management and fore-casting.
The Customer Master Record
Significance of Customer Master Records
A customer master record contains all the information that a
company needsfor its business relations with a customer. This data
controls the postingprocedure and subsequent processing, such as
payments and dunning. Cu-stomer master records also provide
information on customers for the ac-counting and sales departments.
Customer data records are centrally storedin the system. This means
that the data record is always consistent, up-to-date, and free of
redundancy.
The customer master record is characterized by the following
features:
q It provides an overview of all of a customers data at any
time.
q It allows flexible access to the data.
q It forms the data base that controls automatic dunning and
automaticpayment transactions.
The layout of customer master records also leaves room for
special require-ments.
One-time accounts permit effective and space-saving management
of one-time or infrequent customers. One-time accounts contain only
the most es-sential control information, such as the reconciliation
account. These ac-
One-time Transactions
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Accounts Receivable Accounting 3
3-3
counts have no customer-specific information, such as address or
bankingdata. Customer name, address, telephone number, and bank
details are pro-vided when the invoice is entered. In this way, a
one-time customer masterrecord is used for many customers.
Customer-specific information for pay-ment or dunning procedures is
taken from the invoice.
Shared tasks, which in some industries are performed by
alternative areas ofthe company, are also represented through
customer master records. Forexample, branch offices place purchase
orders locally while invoices are paidby the companys head office.
By linking a branch account to a head officeaccount, an invoice can
be drawn up for goods supplied to a branch. At thesame time, sales
figures are posted to the head office account. However,
in-formation on the branch office is retained in the document.
Dunning noticescan then be sent to the branch and head offices.
The account number of an alternative payer can also be entered
in the cu-stomer master record. Debit memos and refunds by bank
transfer are deter-mined by different payer bank data.
If dunning notices are not to be sent to the customer from whom
the recei-vable is due, a different dunning recipient can be
indicated.
If an affiliated company is invoiced, this must be reflected in
a group conso-lidation. All sales achieved through business
transactions within the groupmust be eliminated (elimination of IC
sales). To do this, the groups uniformcompany ID must be entered in
the master record. The uniform company IDis transferred to the
document upon posting.
The customer master record constitutes the flexible data base
for handlingbusiness relations with customers. It also offers space
for special require-ments (one-time transactions).
Structure
The three-part structure of master records makes it possible to
flexibly depictthe various organizational structures of an
operation:
q General Data:This is data that is equally relevant to every
company code and everysales organization within a company.
q Data for Company Codes:This is data that reflects the
company-specific agreements with the cu-stomer.
q Data for Sales:This is data with different characteristics for
a companys sales orga-nizations and channels.
Head Office and BranchAccounts
Alternative Payer
Alternative DunningRecipient
Affiliated Companies
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3 Accounts Receivable Accounting
3-4
Fig. 3-2: Structure of the Customer Master Record
General data includes the address, telecommunications data
(telephone, te-lex, fax), general information on the customer
(plant number, industry,group allocation) and bank details.
Company code data includes the terms of payment and dates:
q for automatic payment transactions (bank collection),
q for correspondence (account number and the person in charge at
thecustomer location)
q for the automatic dunning procedure
In addition, the reconciliation account for G/L accounting is
indicated at thecompany level. Transaction figures for this general
ledger account are auto-matically updated to the customer account
upon posting.
Information on order processing, shipping, and invoicing is
found amongthe sales-specific data. This is described in greater
detail in the correspon-ding SAP brochure for the SD application
area (R/3 Sales and Distribution).
The system offers specific options for controlling master data
responsibilityin keeping with the company philosophy during system
setup. Strategicdecisions, such as whether a new customer should be
included for the entirecompany or only for sub-areas, are made
centrally. Thus, all data areas canbe entered and updated
centrally. Alternatively, accounting and sales canmaintain the
general data together and in their respective areas separately.
The structure of the customer master record supports the
consistent, redun-dancy-free use of accounting and sales data.
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Accounts Receivable Accounting 3
3-5
Editing Master Records
Separate functions are available for creating, changing, and
displaying whenediting customer master records. Authorization for
these functions is gran-ted based on the employees area of
responsibility. Each new master recordmust be assigned to an
account group. This classifies customers according tothe following
criteria:
q Type of Number Assignment:Each master record has a unique
number that is assigned either by thesystem (internally) or by the
user (externally). External number assignmentis appropriate
especially when the numbers are adopted from a front-endsystem. The
system ensures that an account number is only assigned once.
q ccount Number Range (number interval):Number intervals are
user-defined. Vendors and customers can be de-fined with the same
number or a hierarchy can be depicted.
q User Interface Layout (screen images):You can specify which
information is mandatory or optional for each groupof customers.
Information that is not needed can be blanked from the inter-face.
In this way, only data a company needs to transact business is
required.
Fig. 3-3: The Customer Master
RecordAddress/AccountManagement/Correspondence
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3 Accounts Receivable Accounting
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The system offers the broadest possible support for keeping data
free of red-undancy. For example, You can use a convenient search
feature to create anoverview of existing accounts. An automatic
duplication check ensures that amaster record is created only once
for sales and accounting.
A copy feature provides support when entering new master
records. Data fromone master record can be included in a new one.
Additionally, a group of cus-tomer master records can be copied
from one company code to another.
You can specify which fields can be changed. For example,
authorization canbe used to prevent unintentional modification of
the reconciliation account.You can always access the specific areas
that you would like to change (forexample, only payment data). The
system logs all changes that are made, sothat an overview of the
update history can be obtained at any time.
You can select areas that interest you for display purposes. You
can also callup another master record from the current display of a
master record to dis-play or change it. You can access the change
feature from the display.
The easy-to-use user interface, which you can customize, makes
it possible toedit and manage master records easily and
quickly.
What is the function of the customer data record?
The customer data record and its data (link to the general
ledger, informa-tion on the business partner) constitute the basis
for accounts receivableaccounting. It is also the link between the
sales and accounting functions ofthe SAP system. Through its
special characteristics, it provides specialaccounting
correlations.
Accounts Receiving Accounting Transactions
Invoices and Credit Memos
With the integrated use of SAPs sales and financial accounting
systems, thebilling system prepares and posts outgoing invoices.
Invoices from otherR/3 billing systems can also be transferred to
accounting through an inter-face, after which they are posted. Only
invoices not created in an R/3 systemmust be recorded manually.
A document consists of a header and several line items. The
header containsinformation that applies to the entire document.
This includes the documentdate, number, and type. Line items
contain the terms of payment, the ac-count assignment, and amounts.
Some line items, such as sales tax, are gene-rated by the system
automatically. These line items supplement the ma-
Entering Data
Changing Data
Displaying Data
Document Layout
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Accounts Receivable Accounting 3
3-7
nually generated items and complete the document. Before posting
a docu-ment, you can call up and change any of these line
items.
Fig. 3-4: Customer Invoice: Posting Document/Document Line
Item
Besides the accounting document described above, the system
features se-veral special documents, such as recurring entries and
sample documents.
You can generate recurring entries for regularly recurring
transactions thatalso feature the same amounts. An example of this
is receivables to be paidby a customer in monthly installments.
These entries do not affect accoun-ting when they are generated.
Rather, they are posted to the accounting sy-stem only upon
execution. The so-called recurring entry original docu-ment
contains data for posting the accounting documents, such as
amountand account number. It also contains controlling information,
such as thedate of the beginning and end of execution and deadline
data.
If information about the time and amounts are the only ways in
which thepostings differ, the sample document technique can be
used. If a sampledocument serves as a model, then only minor
adjustments are necessary(such as in the posting date or the
amount). Instead of a sample document,an existing accounting
document can also be used as a model.
Recurring Entries
Sample Documents
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3 Accounts Receivable Accounting
3-8
The system provides a number of supporting features for entering
invoicesand credit memos. They include:
q setting default values
q fast entry for simple invoices and credit memos
q noting data from previous activities
q user-defined retention of data for multiple transactions
q adjustment of editing options
q flexible search mechanism for accounts, cost centers, and so
on
If it is not possible to complete entry of a document, the entry
process can beinterrupted at any point and saved. The document can
then be completed andposted later. The input data is checked
immediately and adjustments are offe-red if errors are detected. A
document can be posted (and thus updated in thetransaction figures)
only if it is complete and error-free. Complete means:
q debit/credit balance is zero
q minimum account assignments including document date, posting
date,document type, posting key, account number, and amounts have
beenmade
q all required fields, as defined during system setup, are
filled
For credit memos and transfers, entry transactions are available
where sup-porting functions can be used similarly.
All documents can be entered in any currency. A local currency
is assignedto each company code. Up to two other currencies can be
indicated. Theseparallel currencies are handled and updated like
the local currency. Thesystem stores the amounts found in the
documents in the local and docu-ment currency. An exchange rate
tablecontaining daily, accurate currencyexchange ratesis used to
convert between local and document currencies.However, the exchange
rate can also be indicated directly during posting.You control
whether the local and document currencies (or only the docu-ment
currency) are open for input during document entry. Either way,
bothcurrency amounts are visible in the document display. A
document musthave a zero balance in both the local and the document
currency to beposted. Small rounding-off differences, that can
arise in many lines due toconversion, are automatically taken into
account. The transaction figures inthe customer area are kept only
in local currency. The receivables fromgoods and services
reconciliation account is kept in local currency and in allposted
foreign currencies.
You are supported by a wide range of additional functions when
entering in-voices and credit memos. Techniques are provided for
automated invoicereceipt.
Entry tools
Currencies
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Accounts Receivable Accounting 3
3-9
Payments
Incoming payments processing consists of the following two
actions:
q posting payments
q clearing open invoice line items with payment line items in
the customeraccount
These two steps can be performed manually with paper-based
payments:
q check
q transfer
q bill of exchange
For extended bank and treasury functions, fast entry techniques
significantlyreduce manual processing. These include:
q manual account statement
q manual check deposit list
These can also be done automatically:
q electronic account statement
q lockbox (USA)
q check deposit transaction with a check scanner
q POR procedures (Switzerland)
If the debit memo procedure has been agreed to with the
customer, all in-voices can be automatically collected according to
their due date, using thepayment program. Similarly, refunds to
customers can be transacted auto-matically (by check or transfer).
The payment program is described in detailin the Accounts Payable
Accounting chapter.
For manual receipt of payments, the document numbers of the
in-voices/credit memos to be cleared are indicated on the existing
transfer slipor on the corresponding payment advice note. The
following data must thenbe entered:
q bank G/L account number
q amount of payment
q any bank charges
q document numbers of the documents to be cleared
If the totals of the indicated invoices (after any deduction of
cash discount)agree with the input payment amount, then the
document is posted and thepayment is cleared with the invoices. The
cleared items now contain thenumber of the incoming payment
document and the clearing date.
Incoming Payments
Manual Receipt of Payments
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3 Accounts Receivable Accounting
3-10
If inadequate information is available regarding the invoices to
be cleared,paid items for the customer can be determined using
search criteria. Anydocument-specific information can serve as the
search word. You can com-pile the desired information.
The following are some examples:
q reference number
q posting date
q amount of invoice
You can to specify intervals or individual values in the search.
You can alsoremove items from the list of results or add additional
items through a newsearch. The list of open items can be sorted
according to various criteria. Youcan search for individual
documents or groups of documents in the list toidentify line items
that must be cleared. The list of results can be preparedaccording
to any criteria. You can display all the data or the entire
documentfor a line item.
Once all items to be paid have been found, they can be posted.
Minor diffe-rences are automatically added to the cash discount
paid or to a separateaccount. The maximum amount of difference
accepted by the system is de-termined by customer and user-specific
tolerances.
If a complete assignment of the payment amount is not possible
or no allo-cation notice is found, then a payment on account is
posted in the same ope-ration. If invoices are to be paid only in
part, then the invoice is cleared. Anew item in the amount of the
outstanding receivable is generated. Anotheroption is having a
partial payment posted containing an internal reference tothe
invoice that remains to be paid.
The items can also be selected automatically (without entering
search crite-ria). The system attempts to determine the line items
that come closest to thepayment amount, or alternatively, to
distribute the amount of money accor-ding to the due dates of the
items.
Fees charged by the bank are entered with the cash receipt
amount. The sy-stem automatically generates a separate document
line item for the feecharge. Manual payments are possible in any
currency. Any exchange ratedifferences are posted automatically.
The payment settlement can also con-tain down payments and take
vendor line items into account. Multiple cu-stomer accounts can be
cleared at the same time. Clearing of multiple com-pany codes is
also possible. A separate clearing document is generated foreach
company code.
The use of payment advice notes permits an automatic search and
as-signment of open items during payment clearing. A payment advice
note iscreated in the SAP system in various ways:
Document Not To BeCleared Completely
Payment Advice Notes
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Accounts Receivable Accounting 3
3-11
q A payment advice note that already exists in written form can
beentered manually.
q A payment advice note can be generated automatically while
processingaccount statements, check deposit transactions, or
lockbox data. It con-tains detailed information if direct clearing
of open items is not possiblebecause of differences.
q The current processing status of the items can be noted in the
form of apayment advice note during manual processing of open items
as part ofa receipt of payment.
q A payment advice note can be transferred to the SAP system
using EDI(electronic data interchange).
Instead of selection information and subsequent processing of
the openitems, only an indication of the payment advice note number
is required. Ifthere are differences between the payment advice
note and the open items,the system automatically creates residual
items and payments on account.These can be canceled if the
difference is to be assigned manually or postedas a total.
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The manual check deposit and manual account statement features
makethe processing of incoming payments substantially easier.
Instead of exten-sive posting records, only incoming checks (check,
check number, amount)have to be entered. Payment is posted to the
bank and customer account andthe payment is settled, all
automatically.
The SAP R/3 System offers the option of handling incoming
paymentsautomatically. There is no need to enter data or assign
incoming payments tothe open items and clear them. The procedures
for automatic handling pro-vide greater efficiency. It eliminates
the need to manually enter and assign
Fast Entry Techniques
Electronic Banking
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3 Accounts Receivable Accounting
3-12
incoming payments to the customers open items. Review is only
necessarywhen payment differences occur and incomplete payment
informationprovided. This option frees up resources to deal with
truly complex anddifficult situations.
Data provided by the bank or post office on a data according to
the SwissPOR procedure is easily transferred to financial
accounting and posted there.
Payment transactions that take place in the USA through a
lockbox are alsodepicted in R/3 FI. Payment is posted automatically
and the open items arecleared.
Similarly, data provided by an external data entry system, such
as a checkscanner, is posted in financial accounting
automatically.
The electronic account statement offers the option of
automatically depictingall flows of money in the system. The system
reads in the account statementsand obtains information for clearing
the payment from the note to payeefield. From there it reads the
document number (for example, through whichthe incoming payment is
assigned to the open item and cleared). However,the criterion that
serves as clearing information cannot be the documentnumber. It can
be an insurance number (with insurance policies) or any
othercriterion. If you have special needs, you can add your own
codings throughuser-exits without modifying the standard
system.
It is also possible for a company headquartered in the US with
subsidiariesin Great Britain and France to handle payment
transactions through accountsin the respective countries and read
in and post an English or French accountstatement. In addition to
BACS (Great Britain) and ETEBAC (France), a largenumber of other
international formats are offered:
q SWIFT MT 940
q MultiCash
q CODA (Belgium)
q CSB43 (Spain)
q FIDES (Switzerland)
q ZENGINKYO (Japan)
q Several formats for:
m Czech Republic
m Sweden
The system architecture is set up in such a way that new formats
can be ea-sily integrated.
POR Procedure
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Electronic Check DepositTransactions
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Accounts Receivable Accounting 3
3-13
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Fig. 3-6: Architecture
R/3 FI supports automatic handling and clearing of incoming
payments. Indi-vidual needs can be met without having to modify the
standard system. Auto-matic posting of electronic account
statements dramatically reduces manualentry work.
Special Operations
There are certain business transactions that should be posted to
the customerbut not updated in the line item of receivables from
goods and services in thegeneral ledger. An example of this is down
payments. These are identifiedseparately in the balance sheet.
Using a special G/L indicator, the system istold that a posting
should not be actualized in the reconciliation accountfrom the
customer master record. Instead, it is done in a G/L account
spe-cially set up for that purpose.
If a customer makes a down payment, then a down payment request
is ente-red in the system as a statistical posting. It is shown
with the item display,but does not result in a change in the
transaction figures of the customer orgeneral ledger. However, this
down payment request can be dunned. Usingthe payment program, a
down payment posting is generated per bank col-lection. When
posting a down payment request, the system assigns the lineitems to
a special G/L account. You can create a list of all expected
downpayments at any time.
Down Payments
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3 Accounts Receivable Accounting
3-14
Fig. 3-7: Special G/L Transactions
When posting the down payment, a gross or net display can be
chosen in thecustomer account. Net means that the down payment
account shows thedown payment minus the amount of tax. With gross
display, the tax is in-cluded in the line item of the down payment
account. An additional line isgenerated in the tax clearing account
as a clearing entry. In every case, cor-rect display in the balance
sheet is ensured. A note regarding existing downpayments appears
during posting of the final settlement. These can then
betransferred in full or in part. However, clearing against the
invoice can onlytake place upon receipt of payment.
With integrated use of SAP cost accounting and financial
accounting, downpayments can be assigned to accounts for projects,
orders, or cost centers.
Bills of exchange are also handled in the system as special G/L
transactions.These transactions are automatically kept in the
subledger separate fromother transactions. They are posted to a
special G/L account in the generalledger. This ensures that an
overview of bill of exchange receivables andpayables can be
generated at any time. As a rule, transfer postings for thebalance
sheet display are not necessary.
For payment of invoices with bills of exchange, the original
receivables arecleared. The process corresponds to that of a normal
incoming payment.However, there is no posting to a bank account.
Instead, a bill of exchangereceivable is generated for the
customer. This bill of account receivable re-mains in place until
the bill of exchange is sold (forfeited) or paid.
Bills of Exchange
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Accounts Receivable Accounting 3
3-15
Paying is machine-supported using a presentation list. Another
feature letsyou write off several bill of exchange receivables
based on the input of a keydate for the bill of exchange due date.
The bill of exchange list can also begenerated from the system.
In each company code, default values are set for the discount
percentagerate, collection charges, and bill of exchange tax
indicators. The chargesshould be posted to separate accounts. The
amount charged to the customerfor a bill of exchange is generated
automatically.
Statistical postings, refinancing notes and guarantees of
payment are alsohandled using special G/L indicators. There are
various functions availablethat make operation of the system safe
and easy.
Furthermore, you can set up your own special G/L transactions in
thesystem.
R/3 FI permits flexible posting, viewing, and management of
special transac-tions. Special transactions are also updated in the
general ledger.
How are business transactions depicted in accounts receivable
accounting?
Business transactions are depicted automatically in financial
accounting.Entry of business transactions is automated. It is done
efficiently and safelyusing SAPs numerous tools.
Document and Account Processing
Document and Account Display
When business transactions are posted to an account, the system
automati-cally updates the account balance. It also notes which
items of a documenthave been posted to the account. Thus, the
account balance and line items forany account can be viewed.
The account balance offers an overview of the transaction
figures per period,separated into debits and credits. Similarly,
sales per period and special G/Ltransactions such as down payments
and bill of exchange payables for thefiscal year can be discerned
at a glance. From here, you can go directly to thedisplay of
items.
A line item display provides an overview of an accounts open and
cleareditems. You can specify which information on individual items
appears on thescreen. For example, one user could be interested in
the terms of payment,while another could be more interested in the
dunning data for the line items.
Account Balance
Line Item Display
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3 Accounts Receivable Accounting
3-16
However, even with an item list that has already been prepared,
the viewcan be changed dynamically.
Extensive totaling and selection features are available within
the line itemdisplay. For example, a total can be called up for
each document type to dis-play the line items for each document
type separately. Search and total fea-tures are also available,
making it unnecessary to display all items initially.
q Line item display features are available for the following
areas:
q an account in a company code
q a group of accounts in a group of company codes
For example, it is possible to display a consolidated group that
is represen-ted in different customer master records.
You can switch from the list of line items to the display of
documents at anytime.
If it is necessary to display an individual document, then the
documentnumber and company code must be indicated. Alternatively,
there are searchfunctions that allow you to find a document using
the posting date or docu-ment type. With transactions involving
cross-company code postings, a listof the relevant documents is
displayed. You then have a choice of displayingthe line items of
the individual documents or all line items pertaining to
atransaction.
Other options for account analysis include:
q days in arrears (by number of days overdue)
q net/cash discount overview
q display payment history (customers liquidity)
q simulate payment history
q display credit limit (more information on this can be found in
CreditManagement, later in this chapter)
The individual account display lets you locate all needed
documents quicklyand efficiently .
Document Changes
Various features are available for changing documents that have
alreadybeen posted. To make changes, you can:
q call up an individual document
q edit documents for a transaction involving cross-company code
posting
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Accounts Receivable Accounting 3
3-17
q request a list of all documents for a vendor and change
specific docu-ments
q request a list of all documents for a vendor and perform a
mass change(for example, release of payment) for certain fields
These functions are as easy to use as the display
transactions.
Fields that have resulted in a data update can no longer be
changed. Theseinclude:
q account numbers
q posting keys
q posting date
q amounts
q tax information
With many fields, the ability to make changes depends on the R/3
Systemcomponents installed in addition to accounting. Therefore,
the cost centercan no longer be changed if the data are updated in
cost accounting. Finally,there are other rules that have to do with
the document status. Naturally,terms of payment can no longer be
changed once the item has been cleared.
Apart from these fixed rules, you can stipulate for all fields
whether andunder what conditions a field change can be permitted.
For example, youcan stipulate that certain additional account
assignments can only be chan-ged if the posting period of the
document is still open for posting. If themonth has been closed for
accounting purposes and data has been relayed toseparate systems
for evaluation, changes to this data can be prohibited. Thisis set
using system settings.
The functions for changing documents correspond to those for
documentand account display. All search and sorting options are
available. Withproper authorization, you can switch dynamically
from the display to thechange function without losing the view that
was just selected.
Documents can be adjusted quickly and easily depending on the
your needs,ensuring accurate posting records.
How does the FI system support the editing of account assignment
items?
The FI system supports you through a large number of display,
search, andadjustment options. You can set up and use these
functions however youwant.
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Dunning NoticesFrequently, customers do not satisfy their
obligations on time and fall intoarrears with payments. Dunning
notices are sent out to remind them of theiroutstanding debts.
Dunning is handled automatically by the dunning program. The
programdetermines:
q accounts and items to be dunned
q dunning level of the account
q dunning notice based on the dunning level
Dunning notices are printed out and the determined dunning data
are storedin the items and accounts.
Functions of the Dunning Program
The dunning program offers the following functions:
q Any number of dunning procedures can be defined. The
dunningprocedure controls the dunning process.
q For each dunning procedure, multiple dunning levels can be
establis-hed. Dunning levels are determined on the basis of the
days in arrears ofthe open items. It can also depend on the dunning
amount or a percen-tage (sales-relevant determination of dunning
level). In addition, it canbe established on the account level that
a dunning level is initiated onlywhen a certain amount or
percentage is reached.
q Dunning can be performed separately according to dunning
areas.Dunning areas are organizational entities that handle dunning
within acompany code. The dunning area can correspond to a profit
center orsales organization. You select a dunning area when posting
an openitem. In this way, items can be later dunned separately
according todunning areas.
q Dunning texts are selected in accordance with the dunning
levels. Thetexts can be composed in different languages. In each
case, the text is inthe language indicated in the master record for
the respective businesspartner.
q The dunning program can be used to dun customers, as well as
vendors.This is appropriate if the vendor has a debit balance
because of a creditnote. If a customer is also a vendor, you can
specify that the combinedbalance of the accounts serves as the
critical dunning decision factor.
q Interest on arrears and charges can be applied optionally and
a paymentdeadline for the due items can be printed out in the
dunning letter.
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q Items and totals in the dunning letter are identified in the
documentcurrency and/or local currency.
q Where there is a head office/branch office relationship, the
dunningnotice is generally sent to the head office. Local dunning
is also possible.
Procedure for Dunning
The dunning process is divided into three steps:
q generate dunning proposal
q edit dunning proposal
q print dunning letter
Fig. 3-8: Dunning Procedure
To initiate automatic dunning, you determine a key date for the
maturitycheck and which accounts should be checked. The dunning
program checksthe due dates of open items in the specified
accounts.
Generate Dunning Proposal
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The program then generates a list of the accounts and open items
for whichit proposes dunning (dunning proposal list).
You can edit the dunning proposal list. The dunning level of
items and ac-counts can be changed. Items (accounts) can be
released or blocked withregard to dunning. All changes are logged,
so the result of the dunning runalways remains transparent.
The dunning proposal can be generated as often as necessary.
This is pos-sible since dunning data is updated in the item and in
the account only whendunning letters are printed.
If the dunning proposal has been accepted, dunning notices can
be printed.The SAP system already contains sample forms which you
can modify.Sample forms can be copied so that only relevant
variables, such as addres-ses, have to be inserted. However, you
can also specify the layout and text ofthe dunning letters using
SAPscript (the SAP word processing program).
You can specify whether:
q you are using forms that are uniform for the entire group
q you are only using company code-specific data from specific
text com-ponents
q individual company codes use their own forms
Besides dunning as a batch processing function, there are also
provisions fordunning individual accounts. In this case, an
individual dunning textwhich is different from the standard
textmust be indicated.
Along with editing logs, the following logs are also
generated:
q lists of blocked items and accounts
q lists of items with special dunning keys
q dunning statistics
With the financial calendar, periodically recurring functions,
such as dun-ning runs, can be scheduled and assigned to the
appropriate employee fortimely processing. This employee is
notified at the proper time.
In this way, authorized employees can generate a status report
on dunningruns at any time. They can also track and check on
previous dunning runs.
Edit Dunning Proposal
Print Dunning Letters
Other Dunning Functions
Financial Calendar
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Fig. 3-9: Monitoring Dunning Runs Using the Financial
Calendar
You can structure dunning notice generation according to your
needs.
How does dunning proceed in the FI system?
You can set up the dunning procedure to fit your needs. You can
intervenein the automatic process to structure the dunning proposal
list in keepingwith your requirements.
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CorrespondenceAlong with dunning notices, other types of
correspondence are generated bythe system. These include the
following standard reports, which are mailedto customers:
q payment notices
q account statements and open item lists in letter form
q general letters
q balance confirmations
q document extracts
q bill of exchange charges statements
q interest calculations
You can request correspondence while processing accounts and
documents.It can be generated automatically in a certain cycle or
started manually.Written notices are generated in the language of
the business partner.
The system automatically generates payment notices giving the
businesspartner information on which open items have been cleared
with their pay-ments. If differences arise during clearing, the
business partner can be askedto clarify or pay these. If payments
were made that have not been assignedto open items, the business
partner is asked to clarify the payment. You cangenerate a reply
slip to permit assignment to open items of payments onaccount. You
can also do this for other non-assignable credit memos thatshould
have been posted in the clearing procedure. The customers openitems
are listed in this notice. They can identify the open items to be
paidand provide further remarks.
The customer account statement is used for reconciliation and
provides in-formation to the business partner. It shows:
q the balance carried forward
q all items for the selected time period
q the account closing balance
The open item list is a special form of account statement. It is
sent to the bu-siness partner for reconciliation or information
purposes. Occasionally, thelist is also used as a reminder. Open
items, up to the desired key date, areidentified in the list.
Both types of notices contain the document number or another
reference.These include:
q document number
q document date
Payment Notices
Account Statements andOpen Item Lists
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q document type
q currency
q amount for each item
q balance of open items on the key date
The account statement also includes the clearing document
number, if appli-cable. If branch offices were included in a notice
to a head office, their ad-dresses are listed at the end of the
notice.
The layout of the notice is specified through a form. The notice
can includethe days in arrears per item on the key date or other
information, dependingon the form used.
The individual letter makes it possible to enter individual text
when corre-spondence is requested. This text is stored separately.
The system automati-cally determines information pertaining to the
customer, such as the address.The individual letter is composed
like individual text.
With a standard letter, specified text is already in place. This
standard letteris called up for the customer whose account is being
processed. The systemautomatically determines information, such as
address, pertaining to thecustomer. For example, you can send a
standard letter to customers if thereis a personnel change within
the companys accounting department.
Balance confirmations are very demanding with regard to the
variability ofthe selections. For example, customers with the
highest balances will be de-termined first. Next, a balance
confirmation is generated for these customers.Selection criteria
and/or random selection can then be used to determine(from the
remaining accounts) a representative quantity of accounts forwhich
a balance confirmation is similarly generated.
With document extracts you inform your customers of a specific
line item(for example, a credit memo) in a targeted fashion. The
system recordswhich document line items are selected.
If a customer has paid off invoices with a bill of exchange, a
bill of exchangecharges statement is generated. At the same time, a
letter is automaticallygenerated informing the customer of what
charges have been incurred.Forms are stored in the word processing
program for all letters that are sentto customers or vendors. A
language code in the respective master recordcontrols the language
in which the forms are printed.
Correspondence relating to interest data can also be generated.
This datarelates to:
q Item Interest Calculation:Interest is charged on items that
have not yet been paid and are over-due, or that were paid only
after the due date for net payment.
q Account Interest Calculation:Interest is charged on the
account balance. This is used to calculate inte-rest on employer
loan accounts, for example.
General Letters
Balance Confirmations
Document Extracts
Bill of Exchange ChargesStatement
Interest Calculations
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In both cases, cover letters are generated with the settlement
information. Aform letter for this, which you can modify, comes
with the system.
Fig. 3-10: Process for Generating Correspondence Requests
Internal documents allow you to generate complete documents with
allfields that have been entered in the system. Internal documents
of this kindare used as in-house documents if no original document
is present. They canalso be used for documents intended for
circulation within the company.
The bill of exchange list contains all open bills of exchange.
As a supplement,cleared bills of exchange can also be displayed,
upon request.
What customer-specific correspondence does the FI system
create?
All important information from posting transactions can be
logged in wri-ting and sent out in the form of notices.
Internal Documents
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ReportingR/3 FI offers a large number of standard reports
regarding customers. Thesereports can be printed or displayed
directly on the screen.
In principle, the reporting system is set up in such a way that
all reports canbe run in parallel. When printing, you have the
option of first storing thisinformation in a temporary file.
Afterward, you can decide whether andwhere the data should be
physically output.
Master Record Lists
Standard reports for master record information are available,
along with anumber of selection criteria. Selection criteria
include reports according topostal code or according to the
reconciliation account. You specify the num-ber of fields to be
printed in the lists. For example, a list can be generatedwith only
customer address information. Another list can also contain
bankinformation. You could also have a list with all the fields of
the customermaster record. Sorting the list is also an option when
the report is called up.
Customer Analyses
Reports are available that document customer items. For example,
an openitem list for any key date can be composed (as long as the
items are stillavailable in the system). There are reports with
sorted open item lists, whereyou specify the sorting intervals.
Accounts
Many times, items cannot be left in the system after clearing
because of me-mory considerations. To document all of an accounts
items at year endwithout pulling in all the archives, the items are
stored in a different file,separate from the documents. Only
information from the customer line itemsis found here. In addition,
this file is sorted in such a way that cleared itemsappear at the
beginning of each account. Clearing transactions are
sortedaccording to clearing date and clearing document number. This
makes thecontext clear. Items still open on the key date are then
listed at the end ofeach account. Reconciliation totals are output
for each account and reconci-liation account, making it possible to
coordinate with the other parts of theaccounting system.
How is the reporting feature of the FI system set up?
Numerous standard reports for customer data are possible. They
supportprocessing and management of customer accounts. These
reports can also beprinted.
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Customer Credit ManagementCustomer credit management offers the
option of making order acceptancedependent on an assessment of a
customers creditworthiness. This is donethrough a credit limit. The
limit is checked in financial accounting and salesupon posting. If
the limit is exceeded, the system issues a warning or anerror
message, depending on setup. The document can be posted.
Otheractions can follow. An example would be an examination of the
customer ora block on the master record. The credit limit can be
assigned on variouslevels. Credit limits are assigned and monitored
using credit control areas."A credit control area consists of one
or more company codes. If a credit con-trol area has been set up
and a preset value has been indicated for a custo-mer, then the
credit master record is automatically set up when a customermaster
record is set up.
Fig. 3-11: Credit Control Areas
Assigning A Credit Limit
It is possible to assign a credit limit for a specific customer
or for severalcustomers together. To classify customers regarding
business risk and toinitiate corresponding checks, you can assign a
risk class to the customer.The risk class specifies which checks
are performed during order processing.In addition, customers can be
combined into groups (industries, countries).
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Monitoring A Credit Limit
For each customer in a credit control area, the system
calculates and displaysthe following data:
q receivables from sales, insofar as they are not identified as
disputeditems
q receivables from special G/L transactions, insofar as they are
identifiedas relevant to the credit limit (for example, down
payments)
q order value, consisting of open orders, open deliveries, and
openinvoices
q total liabilities (total of others)
Displayed total liabilities increase automatically when an
invoice is postedand decrease upon receipt of payment. If the total
liabilities exceed the creditlimit for the customer in the credit
control area, the system provides a war-ning. However, it is still
possible to enter the invoice. The date on which thecredit limit
was exceeded is recorded by the system.
The credit limit is maintained in a separate credit limit
currency, which isestablished for each control area. This currency
is independent of the localcurrency (currency of a company code).
The system converts the amounts forupdating credit limit data. This
has no effect on the update of the transactionfigures or on
posting.
Central data can be created in any currency, regardless of the
currencies ofthe control areas.
Display and Analysis Functions
The system supports credit limit monitoring with a variety of
functions. Youcan create an overview of the current situation at
any time. You can displaythe following data concerning a
customer:
q changes in the master record
q oldest due items
q customer order value, broken out into open orders, open
deliveries, andopen invoices
q last payment
q line items
q dunning and payment data
If an accounting clerk notices critical data, an internal memo
drawing atten-tion to the matter can be sent. The clerk can
initiate an examination of thecustomer or a block on
deliveries.
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To permit fast and flexible reaction, the system offers a
variety of analysisoptions. Customers can be analyzed according to
sales and payment history.You can move from credit management to
the financial information system.There, due date analyses, further
evaluations of the payment history, orcalculations of DSO (day
sales outstanding) figures can be performed. Thestructure of the
evaluations can be specified individually. Data is com-pressed or
expanded at will (from the open item display to the credit
mana-gement data of the customer). Evaluations can also be prepared
and depictedgraphically.
Fig. 3-12: Due Date Analysis According to Country and Company
Code
A credit master sheet can be generated for information or
documentationpurposes starting with the line item display, the
account analysis, and creditmanagement. The sheet contains the
following data:
q address and communication data
q credit limit, date of last notice to the customer
q fields from the credit management master record
q total open deliveries, invoices, and orders
q balance, days in arrears, texts to the customer, and payment
history
With integrated use of accounting and sales, sales documents are
displayedand edited from credit management.
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Credit Control in Order Acceptance and Delivery
To ensure that a customers credit limit is not exceeded, credit
checks arenecessary at the moment of order acceptance and then
immediately beforedelivery of goods. With integrated use of the SD
system, an automatic creditreview is available in which complex
validation rules can also be depicted.
Depending on the risk class to which the customer is assigned,
the followingchecks are performed:
q statistical credit limit checks
q dynamic credit limit checks, taking into account delivery
deadlines anddue dates
Other information can be considered as additional input values
for the creditreview. This includes:
q document value
q changes in critical fields such as terms of payment
q structure of overdue items
What are the characteristics of customer credit management?
Customer credit management offers a variety of options for
monitoring andanalyzing a customers creditworthiness. This allows
you to react to difficultsituations in a timely and appropriate
fashion.