Dunning Process

Hello everyone. In our today’s session, we’ll learn about the Dunning process related to sales and distribution. Now dunning in simple terms is a process of reminding the customers about the outstanding payments period wise. So dunning process is nothing but reminding the customers about their payments. Now let us see the course content about this session. First, we’ll see correspondence with the help of a transaction code FB12 and F64. Then we’ll see the interest calculation of MSMED. Then we’ll see calculating interest on areas without postings using transaction code F4C. And last, we’ll see how to maintain the interest rate using transaction code OB83. Now first, we’ll see correspondence.

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Correspondence (FB12 & F.04)

Now correspondence in simple terms is received from the vendors as in the form of letters or fax or emails. Now let us see what does correspondence mean in sales and distribution module.  Correspondence types differ with respect to the contents and the structure of the letters we can send to our business partners. Now here we have something called as account statement and open item list. So an account statement and an open item list are 2 types of correspondence. They differ with respect to the information they contain and the way it is displayed. Unlike an open item list, an account statement displays all items in a specified period along with the balance carried forward. The open item list merely displays the open items for a certain key date. So here in the correspondence, we have an account statement and an auto open item list, which are sent as in correspondence to the vendors, and an account statement consists of the balances, which are carry forward. So it displays all the items related to the balances, which are carry forward, and it has an open item list. So it displays all the open items for that particular or specific period. Now here this topic describes the different correspondence types that are delivered with the standard system. Now here we can define our own types of correspondence and allows the users to choose the one which they require. For this, we have to contact our system administrator for having more information on this related to correspondence creation. Now first, we’ll see what is an account statement and an open items list.

Account Statement and Open Items List

The account statement can be created for our customers or vendors. It’s an extract from the customer’s account, which enables him to check the items there or is merely for information purpose. The account statement displays the balance carried forward, all items in the chosen period, and the closing balance of the account. So account statement is nothing but similar to our email statement, which we receive from a bank.

Next, we have something called as open items list, it is a special form of account statement. It is also sent to the customer for verification or information purpose. Occasionally, the list is also used as a reminder letter. The open items up to the chosen key date are displayed in this list. So here under open item list, we can send the letters as a reminder to the customers, reminding them upon the open items which are displayed in the list. Both the letters contain the document number or reference number, the document date, the document type, the currency, and the amount for every item as well as the balance of the open items at the key date. Account statement may also contain the clearing document number. And if branches were included in the letter of head office, their addresses are listed at the end of the letter. So here it describes the content, which the account statement and an open item list contains. So it contains all the fields, like document number, the document date, the types, the currency, the account balance, etcetera. And an account statement can also contain a contain a clearing document number. Now sometimes if we have the addresses of the branches, then those addresses are mentioned at the end of each letter. The layout of the letter is determined via a form that is a smart form or a subscript form. And depending upon the forms used, the letter may also contain the days in areas per item at the key date or other information. The form must be defined and stored in the system. So this is how a correspondence works based on account statement and the open items list. Next, we have something called as document extracts.

Document Extracts

Now here we can use document extracts to inform our customers about specific line items, like credit memo. These line items that we select for this are defined in the systems. So this is something called as document extracts under correspondence. Next, we have individual letter and standard letters.

Individual and Standard Letters

Now what is individual letters? We can use individual letter to enter an individual text when we request correspondence. This text is stored separately. Information on the customer, such as the address, is entered automatically by the system. We enter the individual letter like an individual text. So individual letter is nothing but an individual text, which we request for correspondence. And this is stored as an information on the customer such as the address, which is automatically entered by the system. So we not we did not need to enter this particular piece of letter head again and again.

Next, we have standard letters. There is a fixed text defined in the system for the standard letter. All we have to do is request the standard letter for the customer account we are currently processing. Information on the customer, such as the address, is entered automatically by the system. We would send a standard letter to the customer if we have a new accounting log. So these are individual letters and standard letter description. Next, we have Statement of Bill of Exchange Charges.

Statement of Bill of Exchange Charges

Now here, the system automatically creates a correspondence request for the statement of bill of exchange charges when we post a bill of exchange charges. Now these are always related to documents. That is, these are document related stuffs. Which company codes we can specify should incur bill of exchange charges for entering a payment by bill of exchange depends on how our system is configured. More information on entering payments by bill of exchange can be found in bills of exchange receivable. So this is a statement which we get for bills of exchange, and these are configured in the system. And it depends upon the system configuration for each company goals. Next, we have something called as payment notices for vendors.

Payment Notices

Now we use payment notices to inform our business partners which open items have been cleared with received payments. If payments have been made, which we cannot allocate to open items, we ask our business partner to specify for which item the payment was made. So here we send notices, that is, payment notices, to the vendors or the business partners for informing or for making them understand about the open items for which the payments have been received and for which the payment was made to this company. In the standard system, we can select from 2 correspondence types for payment notices. Now one, we have notices with line items and notices without line items.

Let us see notices without line items. Here, a payment notice is created for the total payment amount without the line items. If residual items or payments on account were posted during the clearing procedure, they are displayed separately. So here, notices are sent without the detailed description of a line item. So it is created for total payment amount.

And we have notices with line items. Here, the line items cleared due to incoming payments or partial payments are listed individually. If we want to allocate two open item payments on account or other non allocated credit memos, which were to be posted during the clearing process here, it is possible to also create a reply slip. This lists the open items of the customer. He can indicate the open item to be settled and make further notes. So this is how we make payment notices to the business partners.