AR Dunning
So we have customer account, we have outstanding balance of the customer and customer address, everything is available here. Hence, right, just generating the letter and sending, so it’s not a difficult job. A simple process. In case of, say, bills of exchange, we have seen bit heavy, that is accounting knowledge is required, business process is required, the configuration. But here, only the process is required, nothing more than that.
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So business transactions, dunning, basic settings for dunning, and dunning procedure. So here, we can start with the dunning procedure. We need to define all parameters in only one step, that is define dunning procedure. So the path is financial accounting (New), that is IMG side, Accounts receivable and accounts payable, Business transactions, dunning, and dunning procedure, Define dunning procedures. Dunning is a German word. To dun means to remind.
So I’m going to define our own procedure. New procedure.
Say what I can do is, in the explanation part, dunning procedure for DRL group. So I can define total dunning procedure for the group, any company code can use this procedure. Procedure name I’m giving as just DRL. So dunning interval in days. See, for how many days I’m going to generate this dunning letter means you can generate once in a week or once in 10 days or once in 15 days like that. Let us take on an average 10 days I’m doing. Number of dunning levels. I’m taking 4 levels. Total due items, okay, not required. Minimum number of days. Line item in grace period. So what I can do? I can give around 3 days of grace period. Means, system takes around 3 days from the due date. If it is 15 days, it’ll take 15 plus 3, take 18 days. After 18 because we’ll wait whether we may be receiving payment from the customer. So that’s why we’ll give around, so 3 days of some grace period I’m giving here. It doesn’t mean, you know I can give, 2 days, one day, 7 days, whatever it may be. In case if you require, we can calculate even interest also. Standard transaction dunning, so, generally, we have standard transaction dunning or special transactions we can use. Special transactions, you know, special GL indicator, that also can be done. And here, reference dunning data. Here, dunning procedure for, so what I can do is I can take some standard transaction that is the 0001 or something I can take reference. Say, 4 level dunning, this is every 2 weeks. Here, we are telling once in 10 days. Like that, we can take even this one also we can take. But if you take this one, everything will be copied to our procedure, that’s why we let us have our own procedure. I’m giving DRL only again, because this is a field that is required. So once you give this, click on save. It says that ‘Reference dunning procedure has 0 running levels.’ Right, no issues. Press enter. Right. Another message ‘Dunning levels: 4 not maintained; old dunning level is saved.’ Press Enter again.
Now click on Dunning Texts.
So company code is DRLB, and we are going to dun the customer transactions.
Right. And go to new company code, DRLB, press enter. Then dunning by dunning area and special notice per dunning level. So we can define even dunning areas just like business areas. I can divide my company geographical area into different dunning areas for each level because, sometimes for some areas, I may have to generate maybe weekly or sometimes I need not have to generate or once in 20 days that is sufficient. Like that, depending upon the different areas, I can generate different different dunning notices. So for each one, I can have different procedures also. Like that, which dunning area, which dunning procedure I’m going to assign. So all those things we can define here. That’s why here, ‘dunning by dunning area’ and ‘separate notice per dunning level’. So I said 4 levels. At each level, I want to generate a letter and send it to the party. Once you do this, save it.
Now again click dunning text. Enter DRLB.
So here, now I set four levels, four levels of dunning. Let us see. 1st level, 2nd level, 3rd level, 4th level. And each level, dunning form I need to assign. Because I told you at each level I can generate a dunning notice with some text. The text goes like, as per our books of accounts, your outstanding balance something like this. Some material will be some text will be there. All the text have been defined in the forms. So that form, I need to assign here. The form is F150_ DUNN underscore 01, F150 underscore 01. And next two 02. 1st part, 2nd part. There’ll be 2 parts there. Here also first part, second part. System will take depending upon the level. And I’ll show you how this Dunning level, mean, what is the content of the dunning letter. Standard content is there. If you want, we can even change that with the help of the ABAP consultant.
That these are the standard dunning letters provided by system. Click on dunning form, output device LP01.
Click print preview.
So this is a standard format. Once we configure and generate our company name, customer name, everything will come. But what is the content that Dunning letter contains? “Dear sir or madam, the invoice listed below are due for payment. If you have paid the amount due in the meantime, please disregard this letter.” This is first level.
Then second level, “Dear sir or madam, we have already sent you reminder about the due date of our invoices. Until now, however, we are unable to find any record of incoming payment for these invoices. Please transfer these overdue amounts immediately. If this dunning letter again fails to elicit the appropriate payments, we will unfortunately have to calculate interest on the arrears.”
Third level: “Since you have not reacted to our previous dunning letters, we have had no option but to calculate interest on years to the amount of so and so. We request payment of items due in the interest.” Like this, it goes on 3rd level. Then 4th level is going to be dunning notice. That is legal notice. In the court of the everything. What are the charges in USD? Everything we can get. So like this four levels, four letter contents are there.
So this will be yeah. So that content, you can get the content changed with the help of the ABAP consultant. So these are the forms I have assigned here. Come back.
Now dunning levels. If you want to see the dunning levels, click on dunning levels.
Once in 10 days, 3 days grace period I have given. So that’s why 0 plus 3, so 3 days. So first returning letter will be generated after 3 days. In case no grace period is there, right, it takes still it takes 3 days because I have given grace period. Now second, after 10 days, I have raised. So 10 plus 3, 13 days. Then 20 plus 3. So because if the first letter, he did not respond, then second letter. 2nd letter, he did not respond, then 3rd letter. Even 3rd letter is not respond, then this is going to be on 33rd day, legal notice will be sent. What are the content that is shown in the letter will be generated at each level. So here I need not anything. Just only 1st level at what days on which day it is going to be generated, it is given.
Next, minimum amounts. What I can do here, I can take minimum amounts also. First of all, let us take the charges. I can even generate some charges. Why? Because, see, my clerk is using time in generating the letter, and I’m sending, say, for example, reminder letter through courier. Say, I may be incurring around 40 to 50 rupees. So lot of time is being spent, money is spent, and why should I do? It is the responsibility of the customer in spite of that I’m doing it. For that that purpose, what I can do as a minority, I can charge some amount. Say, if you want to if you want some account copy from a bank, generally, they’ll be sending you monthly. But if you want something like for housing loan etc, they will charge 100 rupees. The system automatically charges you 100 rupees, ICICI Bank or Axis Bank, whatever it may be. So that is the process. So like that here also what I can do, I can generate certain charges here. 2nd level, 3rd level, and 4th level. Dunning charge, I can say 100 rupees at first level, 200 rupees second level, 300 third level, 400. Okay. 400.
See, when that fellow is not responding for 3 letters, I don’t think, 4th letter legal notice he is going to pay. Okay. As a process, I’m just giving like that. Even we can say, say, a dunning charge can be given as a percentage. But percentage looks to be, I think, a bit ridiculous because if, even if you give 1% on 1 lakh, it will be to 1,000 rupees. That will be very high. Like that, anyhow, up to the management decision whether to charge anything for dunning letter or not, that can be done. But provision is given. That’s what I wanted to tell you.
Then coming to minimum amounts. Even we can define minimum amounts also.
Minimum amount, I can say whatever the amount maybe, say, 10,000 rupees or you can give a percentage. Minimum percentage, say, for example, 50%. Whatever the amount of the outstanding, system takes that percentage amount. Right? So that also we can take. Just take your credit card. So what are the outstanding amount? Banker will send us, the due amount, only small amount. Even if you have around 30,000, 40,000, they’ll say, pay only 500 rupees or 5,000 rupees because he doesn’t want us to make the payment so that he can charge interest. So like that we can do. Of of course, I’m not doing any minimum payment. Right. Dunning text, everything is done. So these are the 4 parameters I need to define. Once you complete it, save it. Message “Minimum amounts have not been entered as yet.” No worries. Press enter.
So what we have done, first of all, we have given the company code, etc., then dunning texts, we have assigned, then we have different dunning levels, we have given, different dunning charges, we have done, different minimum amounts if required. Once your dunning procedure is ready, say DRL is available here.
Now this dunning procedure needs to be linked to customer account. So customer account, customer account creation is FD01. If you want to make any change, FD02. Display FD03. Standard. Master record FD02. Go here.
Assign dunning procedure for each and every customer. Write company code DRLB, customer 610022. Go to company code data, go to correspondence. Here, dunning procedure. Here, the dunning procedures will be visible.
DRL. Just assign here. Save it. Do the second one. So even here, DRL.
So for 2 parties, I was in dunning procedure.
Now I can execute the dunning procedure, generate the letter. But before you generate, see that at least outstanding amount is there in the party account. Go to FBL5N again. Because if you don’t have an outstanding amount, system will not generate.
Here, only one letter, only one invoice is outstanding. That’s all.
Let me post few entries. Go to F-22. Raise the invoice. With a little old date, we’ll enter 01/09/2013.
Save it.
Post with reference. So if you take post with reference, entire entry will be copied. So change the amount and just post the entry like this.
We’ll post a second party also. Like this, we have posted few entries. Let us see. Go to FBL5N and check.
So around, 4 account, 4 line items, 4 invoices here. Here around. 2 invoices. So outstanding amount is there.
Now we can execute the dunning process. Now it is a periodic processing. Maybe every weekend or once in 10 days we are going to generate it. F150, dunning. The t code is F150.
So here, dunning identification, we can give. So identifications, each time when we run, I give a number. Say for example, DR01. First run, DR01, 02 to 03 up to 99, I can give or any number I can give, of course. So when I’m executing this today’s date 17/09/2013. Now here, no parameters maintained as it. So click on parameter tab to maintain it. Dunning date. Today’s date, I’m dunning. Documents posted up to, I want to take up to today. My company code DRLB. So from to, you can execute for any number of company codes and customer numbers. And the additional log, additional log means in case of any mistake, I can give additional log. Their system will show you what it has done, the process and how it has executed. If any mistakes are there, even that mistakes will be displayed to us. So that’s why the log will be maintained. I’m giving only 1. If you are executing 100 in accounts, in that you can take say maybe 1 or 2 numbers I can give here. Since we have only 2, I’m giving only one number I’m giving. Right. Save it. Once you define the parameters, go to status.
See parameters were maintained. Right.
Next, schedule. So now I can schedule the Dunning run so that to generate the dunning letters.
Schedule it. Output device, LP01. What is LP? LP is nothing but LP is nothing but logical printer 1. This is standard printer provided by SAP. Because since we are during the practice session, we may or may not have the printer. In case of real scenario, what are the printer that has been configured to this system, we’ll give that. Otherwise, you can give by standard LP01. Logical printer 1,2,3, we can define any number. Okay. Today, we are generating it. Start immediately, telegraphic language. Right. Immediately, I’m going to start. Click on schedule. Dunning selection has been scheduled. Dunning selection is scheduled. Press enter.
Dunning selection is complete. So system goes to each and every party, looks for the outstanding amount, picks it up and prepare a schedule. Once you schedule this one, you can go for a sample printout. And one more thing to know whether the dunning has been done properly or not. Go to dunning log. So we have selected only one party. Let us see here.
See, if some material matter is available here, you can do this. So here, system, what it has done from the beginning. See log for the dunning run so and so on today’s date. DR01 is my first dunning. So company code is being processed. Reading the account data. Phase 0, phase 1. Read items 4, level 1. All are now first level we are generating it. So like this system, studies each and every level, each and every process, and it writes here. So that this is for our purpose. So in case of real scenario, just I can say 1 or 2 dunning levels, I can check here like this. So dunning data has been generated. If you find this okay. What are the dunning process that I have done? The configuration is correct. You can get confirmation. Come back. So dunn selection is complete. Now what I can do? Even I can take a sample printout. So how dunning letter is going to be generated? So click on sample printout. LP01, logical printer. Continue. I can give customer number from 610021 to 610022. Click print
Company, Sun Pharma. Sample printout. It is also giving sample printout. First returning notice.
So here, each invoice 6, 7, 8, and these 3, and date of generation, amount. And the due date and areas. 16 days, 16 days, 16 days, 6 days. Right? Level dunning level 1. And the total due items is 5 lakh 43,100 because we told the system 100 rupees is the dunning charges, so that’s why it is asking in dunning charges. Balance of the account is only this much. But total along the dunning charges, 5 lakh 43,000. And here, what I can do on the top of the letter, we can get the name of the company, logo, everything we can write. And below, what I can do? Since this is computer generated statement, no signature is required. Or if anybody’s passion of signing, right, then we’ll put his name. So let him sign it. So that can be done. So this is page 1. And, just go back. Page down.
See. Second part. If you just press page down, it will take you to the second page. Moon Pharma. It’s a blueprint. Only 2 letters are there. Here also, 100 rupees. Alright. This letter will be sending to party. Sample printing is all.
Now what I can do? Now go for printing. So generally, what we do, we use dot matrix printers because, I’ll be printing one plus one. Because I’ll be sending it to the sales officer, let him sales officer, personally take it to the customer. Because if I’m going to send it through post, I think he may or may not look at the letter or he may say that I have not received. Of course, because if I’m sending my courier, acknowledgement will be there. So depending upon the requirement, we’ll do. Sometimes what we do, we’ll get the signatures of the party because so that for the purpose of, legal requirement also, you can use that one. So go for the printout. So one plus one, I can take a print. So go to dunning printout. LP01, write output device, then Print. That’s all. Dunning printing scheduled. Press enter. Dunning printing is complete.
So we’ll connect it to the printer. System generate. Fast printing. Now we need not keep our copy because anyway, Dunning letters are available for us. If you want to see our letter, go to Dunning history because all letters will be stored here. Select account type. Account type is d, d for customers. D for customers, a for assets, k for vendors, m for material. Input company code, DRLB, and customer 610021 to 610022.
Keep the cursor here. Click on display done in notice. So in each notice, how many invoices are there? System will show us, say, 4 invoices.
Print the preview. You’ll see the dunning notice. Like this, you can generate any number of dunning letters. So this is the process of dunning.
I’ll show you one more thing. I can generate even a party statement of account. Our next topic is party statement of account.
What I can do next is, I can generate party statement of account. See, in case of customers, what I do see, sometimes sales officers maybe, wrongly, they have given a check instead of 1 part customer, he has given another customer name for the check. So instead of 1 party account, we have posted to the other party. Same maybe invoices also at the time of generating the invoice, if I give wrong number in the system, it’ll generate to the wrong party. So that’s why what we do, every month, we generate a party statement and send it to the customer. We’ll ask him if any discrepancies are there. Please let us know. We’ll rectify it. So even from bank, you get your statement. And below there will be a statement. Within 15 days, you intimate with the bank if any discrepancies. Right? So like that if any discrepancies are there, let them convey us. Like that we can generate a party statement. So for generating party statement, it’s a very simple job. Customer accounts, line items, correspondence, make and check settings for correspondence, define correspondence types, assign programs for correspondence types.
Here, define correspondence types. There are several correspondence types are available standard, for different purposes. system will generate ‘caution: the table is cross client’. No worries.
Here, see SAP 01, 02, 03, 04, like that so many forms are there. SAP 06 is the account statement. SAP 11 is customer credit memo, like that different formats are there. Now what I will do now, assign program for the correspondence type. Click on this, OB78 is the tcode. Just new test. So here, what I do now, Select form number SAP06. Account statement. Click on copy as.
I need to copy this to our company code. DRLB. Press enter. So for DRLB, SAP06.
Right. Save it. Just only single step. Come back. Now I can generate party statement. Say account. Correspondence. First, we have to make a request. FB12. Input company code, press enter. Take double click on SAP06. That’ll ask you the customer number.
Right. 6 lakhs 10,021, and, date, I’ll give 01/09/2013.
For this month, I’m generating the letter. Continue. Similarly, for a second party. Customer number 22. Account statement was requested. Go to F.64, Maintain correspondence
Correspondence SAP06, company code DRLB. Entries without print date.
Just execute it. Here, 21/22. Just double click on the customer number here. Press enter. Enter your output device, LP01. Continue. See Sun Pharma account statement. Account statement from 19 to 39.
So whatever the debit, credits, everything will be visible here. But in case of real scenario, what we are doing, here invoice number will be given on the top, invoice number and invoice date. Transaction DR means customer invoice. DZ means customer payment. Right here, DR, DZ, they don’t understand. That’s why what we do. We write invoice and payment. This is a clearing document, they don’t understand this, that’s why we’ll remove this. So in real scenario, we are doing some changes with the help of the ABAP consultant, and we change it. Below again, signature. Similarly, double click on this.
Now the difference between dunning letter and this letter is in dunning, only open items for which payment has not been received will be visible and will appear in this in the dunning letter. But whereas in case of party statement, everything will be visible, all debits, credits, everything.
Let me tell you one more thing, credit note. Here, what I can do, I have to give a credit note to the party even because that’s almost similar topic. Let me complete that also today. I want to assign program for correspondence. Go here. SAP11 is customer credit memo. If I have to raise a credit note, under what circumstances I can give credit note to a customer? So credit note is nothing but create note is a letter stating to the party that your account has been credited with so and so amount. I can give a credit note to the party for, say quantity rebate. Say, in case of bulk drugs, if the party bulk drugs or pharma, your party is taking, say, minimum of 1 lakh, I’ll give him, say, 10,000 rupees. That 10%, I want to give. Otherwise, say, 1% of, 10 lakhs. So 10,000 rupees. Like, that some credit note I can generate. Maybe quantitative bit in case of, number of systems. If 100 systems are they are taking, so per each system, I’ll give a trade note of 100. So 100 into 100, 10000. So like that, whatever the criteria maybe. So some companies will give credit note maybe quantity rebate or seasonal rebate. So what are the rebate maybe? The purpose what are the purpose maybe, but the ultimate action is going to be the same. So that’s why I can give grateful to any customer based on the policy of the company.
So in such case, first of all, just like SAP06, I need to assign SAP11 to the company code. Select SAP11 customer credit memo. Click on copy as. Enter your company code, DRLB. Press enter. Save. If I am giving a credit note to the party, say, for example, seasonal rebate or quantity rebate, that is an expenditure for me. So customer account is created and quantity rebate will be debited. So there is an expenditure since. So for that purpose, I need to create a GL account. So now, rebate. What is the GL account? How to create personal expenses, trading expenses? I’ll take trading expenses to increase the trade. I’m using this, trading expenses. 400201. Go to FS00. I hope that by this time all people are comfortable with the creation of GL account. FS00, 4201. Click on create. Account group Trading expenses. P&L. Say, quantity rebate to customer.
Since this is an expenditure, a line item display, 001 and, G001. So these are just simple GL account. That’s all. 400201. Now let me pass an accounting entry. Under Document entry. So in case of real scenario, what happens, you know, quantity rebate, etc, it will be triggered from sales and distribution module and it takes the quantity multiplied and the amount whatever is given. So, but here, since we do not have sales and distribution module with us, so what I will do, I’ll be passing an accounting entry. That’s all. Straight away. F-27. You can give FB75. So FB75 means FB70, F-22. Similarly, in document entry, FB50, F-02. It is multi line item, single line item. So here, posting key 11. 11 is nothing but customer credit memo. By default, system takes 11. So customer credit, let me take this
Say for example, 10,000. Just 10,000 credit note I’m giving. Customer credit note. Posting key 40. First line item, customer credit given. Second should be obviously debit. one is debit, other one is credit. So here, what is the GL account I have to use? 400201 quantity rebate. Customer credit note for quantity rebate.
So customer account is credited, quantity rebate is debited. Press enter.
10,000 rupees. Save it. So 16 lakhs 4. Come out. Then in the same way, correspondence. Account correspondence FB12 First generate the request. Press enter. Double click on SAP11. It’ll ask you what is the document number. So that’s the reason I have copied it. Fiscal year 2013.
Just continue. Maintain. Company SAP. No. SAP11. Correspondence SAP11. Company code DRLB. Just execute. LP01, same way.
See, ‘we have created the amount listed below to your account. Please remember to deduct this amount from your next payment.’ So 10,000 rupees. So that fellow while paying the next amount he will reduce this amount and pay it. And we can clear both this amount plus additional amount will be we’ll manually clear it. So this is the credit memo. If you go to customer account every time then,
See 10,000. It is showing open item. And next time, when this fellow paying 1 lakh 44, he’ll pay only 1 lakh 34 and 10 +1 lakh 34 both put together, I can clear the open item. So this is dunning credit note,and party statement of account.