FI AR – Tolerance Group, Payment from Customers

So, we have, done 5 steps. Number 1 is find, define account groups with screen layout customer. And there, we have created the customer account groups. So just I’ll recap fast. Define account groups for the customer’s this is. Account groups is nothing but for the purpose of say for example we are going to have domestic customers, foreign customers, business customers. Like that three groups we have. So, like that we have defined here. Domestic customer, foreign customer. Only 2 we have defined. Each group because all the domestic customers are grouped into one domestic customer group. Foreign customers are grouped. So, for each group, alright, we can create any number of customers again. And, subsequently what we have done, we have created the number ranges for the customer accounts and some number ranges we have defined. And, subsequently, we have assigned the number ranges to the customer account group because in each group I’m going to create number of customers. See domestic customers, I have 1, 2, 3, 4 like that any number of customers I can have. So here what we have done, my group name is, DRDC, that is Doc Reddy Labs domestic customer group. And similarly, foreign customer group for a DRL. So, like this, we have created 2 groups. For each group, I have created 09 and 10 number range. What is that 09 and 10? That is nothing but see here 9 and 10. Right. 6 lakh 1,021, 6 lakh 10101.

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So, this both the number ranges Here, when you create customers in this group, system creates customer 1, 2, 3, 4 like that, it will go on creating the number of customers. So, for that purpose to identify the number of customers, I’m going to give this number range. So afterwards, what we have done, we have defined document number ranges. Document number ranges are nothing but, say, for the sundry debtors, that is customers, we have documents like DG, DR, DZ. Customer create memo, customer invoice, customer payment. Select the 3 documents we have defined in OBA7. And, okay, specify number ranges, system will ask 16, 18, 14. We should not change that. But, logically, I’m giving which is indicating 16 indicates 16 here. 18 indicates 18 here. Like that, I have given the number ranges. 16 lakhs, 1 to 70 lakhs.

18 lakhs, 1 to 90 lakhs like that I have given. And, so many people will get confusion with number ranges previously I have defined and this number range. So, you don’t get confused in this. That number range is for the purpose of creating the customers and the customer number range. That is to create customers, maybe any number of customers, that number range is created and assigned. But this number range is for the customer documents. Whatever the document that I’m going to generate, right, for customers, that is DG customer create memo and DR customer invoice and the DZ customer payment. Like that, these are the documents which I use. This is document number range. Previous one is customer number range that is. And the fifth one is defined tolerance groups. Here, we have done nothing. Very small. Only one single step we have done. I have created like a one group. I think, business transactions, incoming payments, manual incoming payments, define tolerance groups employees. Let me activate T-code. IMG activity. Right. OBA3. Define tolerances for customers. 

So here we have defined our own group. But that group indicates. See here we have not done much. We have created for company code DRLB. 

DR01 we have defined. Right. This is the company code. This is the currency. This is the tolerance group. I can create any number of tolerance groups. What is the purpose of tolerance group? What is that it going to be? What is that it is tolerating means? Here, the toleration is nothing but, say, for example, grace days, areas due date. If any permitted payment difference, it may be gain or loss if you are receiving, how much I can tolerate, how much percentage I can accept if payment is given less amount by the customer. So, like that, all those things parameters we can define. And, to be frank, we don’t use much of this. Right? And that too, this is only for specific purpose only we use. Though this facility is given, it doesn’t mean that we have to use it. But for the time being, what I said, grace days in case, if payment, due date is going to be maybe 1 week as maybe 10 days or 15 days or 20 days, what are the payment days? We are giving additionally 3%, 3 days of grace period. 

So, like that cash discount. Say cash discount terms displayed. See to whom we can give card discount, to whom we cannot discount I mean, give any discount. 

See current cash discount. First cash discount. Second cash discount. See, depending upon the group of customers, I can define tolerance. For one group, if rich customers are there, I don’t give any grace days and my pricing may be different depending upon the location. If I classify the customers as medium etc, then I’ll be giving more liberal terms etc because to facilitate them. So that kind of tolerances can be defined. And, so for the time being for us, defining a tolerance group is a must. All these things we have defined on the day and created the customers. Here, let me show you, how we have created even customers. We have created 2 customers. See here, GL account is what is a master record. Similarly, customer account is also a master record. See there are 2 things, one is master record, another one is transaction record. So master record is permanent nature. Transaction is nothing but see, creation of your customer account is a creation of customer master. And if you post an invoice to the customer account, that is a transaction record. Transaction records are the day to day transactions. Whatever we execute for each and every customer, they are transaction records. And, Master records are of permanent nature. And we have created 2 customers. 6 lakhs 1021. What are the numbering that we have given there?

System picks up the continuation number from there. So, we have created the customer Master record. So here we have given the name, address, everything we have given. And this is the general data, and control data, payment transactions. All these things generally used by the SD consultants because in real scenario, regular customers will be created by the sales and distribution consultants. All this configuration, everything will be done by them. But why we are doing is unless we create all those things, you cannot post accounting entries. So that’s why we are doing it. And one more thing I told you, any invoice that is going to be generated from the sales and distribution module and that will be flowing into financial accounting. But since we do not have SD module, we are creating the customer accounts, etc, and we are posting the accounting entries manually into the system. There is a purpose. And in the complete code data, what we have done, we have linked up the recon account. Recon account is nothing but 200301, this is the sundry data for domestic customers. So, I told you we have created 2 groups. For each group I have created a recon account that is sundry debtor account. So, we have used general ledger, Master record, GL accounts, FS00. 

Certain T-codes you have to remember so that you can work fast. So, in FS00, we have created, say, 200301. So, 200301 is nothing but Sundry debtors account. What is Sundry debtor? I told you already. And Sundry debtors is a reconciliation account, and each and every customer account will be linked to this Sundry debtors account. We cannot post directly any entry to this Sundry debtors account because this is a reconciliation. Any entry to be posted only routed through customer account. That’s all. You cannot directly post to this account and which identifies the main identification is see recon account for account type is customers. This is recon account. Because of this, it will get a special feature that it will not allow any direct postings to this account. And I have given you already sufficient examples here. In every customer account is linked to Sundry debtors account. So, like that in customer account, I have given. See here.

This is a Sun Pharma dealer. Here, recon account. This Sun Pharma dealer is linked with recon account here. And this is recon account 200301, the other one, same account we have linked here. The purpose is whenever I’m going to post any accounting entry to Sun Pharma, it should be posted to recon account. Because the purpose of this recon account is it should be reflected in the balance sheet. The total of all sundry debtors at any given point of time, the balance will be reflected in this sundry debtors and in the balance sheet, if you see any balance sheet, in that balance sheet, you will find the total one cluster figure of Sundry debtors. That is nothing but that is derived from Sundry Debtors GL account. And because you cannot because you may be having 100 customers, 200 customer, 300 customers. Recently, in, one company means around 1 year back, we have implemented 1, SAP. And there, they had around more than 5,000 customers. So, any outstanding balance in customer account is a current asset for us. So, in such case, how you are going to reflect the sundry debtors is only with one single figure of sundry debtors. Because all 3,000 customers, they cannot reflect in the balance sheet. So that’s why the total net figure of Sundry Debtors is going to be reflected in the Sundry Debtors account. Right? So, every entity, whatever you post, that will be posted even here also. And, whether it’s a debit or credit, it will be reflected and that balance is seen here. This net balance is going to be reflected in the balance sheet. All these things we have discussed, I have recapped again. Now we have posted few accounting entries also.  Accounting entries is nothing but, invoice. We have raised invoice. I have created 2 this one, 2 customers. We have already posted 2 invoices but let me post one more invoice. As I told you, in case of real scenario, where SD module is there, you need not post any accounting entity directly like this. The data will be posted from sales and distribution module. As soon as they raise a billing document, system triggers one accounting document with the customer account data to sales that will be posted in financial accounting. Since we do not have sales and distribution module with us, we our results raising an accounting entry as if invoice is raised. So, when invoice is raised, whatever is the accounting entry that is going to be triggered, same entry we are manually posting here. And, so it is always better to practice immediately after the class that is going to complete because SAP is so volatile. And, that too is a new subject, new jargon, new terminology. Like, new way of functioning, new way of working. Definitely, I can understand that. You feel bit confusions and a bit confusion, and, some doubts will be there. Right? And, but once you practice, all those things will get, resolved. And, don’t forget to read the documentation in the SPRO. At the same time, you can go through the SAP library, which I have already shown you. 

Now let me raise one more invoice. This is accounting, financial accounting, accounts receivable, document entry, F-22 or FB70. Even here you can raise the invoice or you can raise even here also. We want to see what the FB03 display are. 

FB03 also, you have to constantly remember that T code. So, these are the 2 DR. 

DR means document type. DR means nothing but invoice. We have given 18 lakhs 1 to 19 lakhs. So that’s why 18 lakhs 1, 18 lakhs 2 like that system generating the number range. If I want to see this, just double click on the document number. 

Sun pharma dealers to sales. Alright? And the beauty of SAP here is, see, Sun Pharma dealers account, debit, and the sales account is credit. Always credit amount will be reflected with minus figure. And, right. This is the document the way which we have entered. That’s why this is called entry view. Now I want to see this general ledger view. General ledger view means how it is posted in the general ledger because this is customer ledger not general ledger. See if you click on general ledger, it will go to sundry debtors account. Sundry data account, debit and sales pharma product. Sales account is credit. Right. Now if you want to see entry view, entry view is customer. But this customer to which account it has posted to sundry debtors account. Similarly, second entry. 1 lakh 33. Sun Pharma. First one, what are the amount? Right. So, we can post you an accounting entry in not only in F-22, even you can post in FB70 also. What is FB70? The relation between F-22 and FB70 is the same relation which you have in case of FB50 and F-02. Here is a multi line item. It is screen by screen you can post. If you want to post an FB70. So, it is multi line item. See customer. You can select the customer. 201 invoice dates. Same today’s date I’m taking. Say here GL account. Sales account I need to take. Let me see how many sales accounts do we have. 3 lakhs 1, 3 lakhs 2. Sales music systems and product 2. So, what I can do, I can take say 3 lakh 1 and t lakh 2. So, if you have more number of products, sales can be reflected like this. It is credit anyway. Customer account is debit. Sales account is credit. Say here. Say 75,000. 50,000. Total is going to be 1 lakh 25,000.

You can simulate and see the entry. 

TMC Electronics account is debited and sales music system, 2 accounts got credited. Save it. So, like this, we can raise any number of invoices. And, so now, say we have posted invoice. After posting the invoice, I need to receive payment from customer. 

 

Posting of invoices, we have completed. Then we receive payment from customer. When you receive payment from customer, there are two points. One is see whenever you receive any payment, we clear the outstanding item. Let me show you. Customer account, Account receivable, Account. FD10N display balances. Do you remember what is the T-code for looking at the GL account? FS10N. Here FD10. S stands for GL and D stands for customer. In case of accounts payable, FK10N. Right. Display balances. 

So, this is the first party. 610,021. Just execute. DRLB. So, like that, you can post F-22. Right. Now what I will do is Account receivable, Document entry. F-22, we have raised invoice here. Now F-28 incoming payment. So. whenever you receive any incoming payment, what I will do, I will clear the open item. So, but before clearing open item, let me show you under Account. So FD10N. We are in FD10N. Let us see this F-21. This is the customer account.

And customer account is reflecting debit balance. 

See here. Two invoices we have posted on 6th. And if you keep the customer here, it is open. Open means outstanding. So, this is open. There is parked. There is cleared. Cleared means for which we have received the payment. So, till now we have not received any payment for this. So now let us suppose. See here, what I wanted to tell you is that there are 2 things. One is when you receive payment, then we call it as clearing the open item, that means whatever the indication or the symbol system is showing open, that has to be cleared. Open means outstanding. So, that has to be cleared. Open means it when it will be closed, it is cleared. We call it as clearing. When we receive exact payment, then I link up that with this 22, 122, then I can clear it. But here, always, it may not be possible. That’s why here, when you receive an invoice, when you receive payment equal to the invoice amount, that is called complete clearing. Because if I’m receiving, say, for 1 lakh 25,000 invoice, if you receive 1 lakh 25,000 payment, then we clear this open item with 1 lakh 25,000 payment. That is called complete clearing, means without any balance, complete invoice will be cleared. Instead, if you receive, payments in 2, 3 times, so that is called partially we can clear the invoice. How this works, we’ll see. So, when payment is received, incoming payment F-28. 

11/9. So, this is DZ. See? By default, system is showing DZ document. Why DZ? Because there is a customer payment. DZ customer payment, 14 is the number range. DZ. Let us see when you post an entry. So, by default it will display. This is DZ, customer payment. When customer payment you receive. Let us, enter the details. See for example, I have received payment through check number. So, document header text. So, I can say this is example for full payment received from customer. Doctor Reddy Labs These are document type. Period system will pick up. Current say ANR. Right. Check number we have received is 1, 2, 3, 4, 5, 6 and bank data. So, whenever we are going to receive a check, I’m going to deposit into bank immediately. That’s why let us take that accounting entry, bank account data to customer account. Customer account is going to be given credit. So, debit what comes in and credit the giver. So, in the same principle. Bank account number 200405. And the amount is going to be 1 lakh 22. Text. Complete clearing. Alright. Complete clearing. You can take from business area. Now go to customer account. So, 6,101. From this customer, we are receiving the payment. 

Click on process open items. 

See, 1 lakh 22, 1 lakh 33. Both are outstanding. These are the 2 outstanding invoices which system is displaying to us. Now the thing is we have 1 lakh 22,000 amount entered. And if I want to save, system will not allow me to save.

See, Difference is too large for clearing. What system is thinking here, I’m going to clear the total entire 2 lakhs 55,000 with 1 lakh 22 000. So, since these figures if you observe, these are all blue in color. Means that it is in active mode. So, in order to link up the payment, we need to deactivate other line items. Because, say for example, this amount 1 lakh 22000 is going to be linked to this amount. So that’s why this has to be kept in blue. Other account, other line items, whatever it may be, deactivate. 

Now here amount entered and amount assigned will be equal. Always see that both of these things should be equal. Then only the system will accept and it’ll allow you to save. Now 14 lakhs 1 document posted. 

Let us see account FBL FD10N. 

See. 1 lakh 22,000 payment created. Here, if you double click on debit column, it’ll show you the debit amount. 

And for this 1 lakh 22,000, whatever the doctor amount. It is showing now green in color because that has been cleared. If you show credit, see this is only create item, line item with minus figure. 

And since this is already cleared, it will be showing green. If you want to see balance amount, 1 lakh 33,000. 133 is outstanding amount. 122 debit, 122 credit. So once amount is posted like this, it will be cleared. So, this is, see, open item will get clear like this. But in real scenario, this may not happen regularly. And getting payment for exact invoice amount may not be possible. So that’s why what we do, we’ll say partial clearing. Say, for example, now 1 lakh 33000 is there, outstanding amount. Let me check for in the 3 installments I received. Right. 1 lakh 33000. So, 1 lakh 33000 incoming payment F-28. So, what I’ll do is that okay. Check number. 1, 2, 3, 5, 4 okays. 7. Right. This is partial clearing. Partial payment received. Bank data. Bank account 200405. Say, first of all, we have received payment for 70000. Partial payment received. 6 lakhs, 10021. DRLB. 

Right. Process Open Item.

Now even if you want to save, system will not accept. Difference is too large for clearing. What does it mean? Outstanding amount is 133, 70,000 is amount received. So, system will not allow us. Click on partial payment tab.

So, in the partial payment tab, payment amount received. How much payment we have received? We have received only 70,000. What you do? Double click on the payment amount field. Then system will pick up exact amount whatever we have received that will be picked up. Now here amount entered and amount assigned will be same. That means we are what are the amount that is received? That is linking assigned means we are linking up to the invoice. So only this much we are linking up. Now system will allow me to save it. 

Document number 14 lakh 2 was posted in company code. Now say, I’ll show you one more scenario also. If one more invoice is also there, how to do that? Let, me post one more invoice in the same party. One more. Say, 1 lakh 44,000 invoice I’m posting. Customer invoice posted. Customer account data to sales. Right. 50. 3 lakh. 1 is my GL account. 

Sales pharma product. 144. Now out of 133, we have received 70,000 first. Now incoming payment F-28. Let us imagine we have received. Check payment. What are the check numbers? That’s why you can enter it. Of course, it’s not a mandatory.

You can account 204. Amount, say now I have received 30,000. Out of 133, 70 first payment. 30,000 second payment. Process open items. 

See now? 1 lakh 33,000, the invoice for which we have faster payment received is 70,000. Now we have received 70 30,000. Now one more invoice is also there. So, in such case, what you do? You deactivate all other invoices. Go to partial payment tab. After make partial payment tab, even this also you can deactivate because this is payment received.

This also should not be active. Deactivate. Right now, the 30,000 has to be linked to 1 lakh 33,000. Keep the cursor in the payment amount column. Double click. Next system picks up the same amount. Now amount entered and amount assigned are same. Now system will allow you to save. 

Go back to FD10N21. 

See? Here, the problem is unless final payment is received, system will not clear the open item. See, 1 lakh 44 is the first this invoice, extra invoice which I have posted. Now against 133, we have received 1730. Still have to receive 33,000. Unless I receive total payment, system will not clear the operator. That’s why until then it shows all DZ means customer payment. So that also will be shown as open item. Come back. Now finally the balance 33,000 we have received. So, imagine. And one more thing. Let me show you this first. At a FBL5N, there is one more T code after the in the account, FD10N display balance. FBL5N here, it will show you options here. 

See here for this party, open items, clear items, all items. Anything I can see. Say for example, I want to see only open items. In such case, set up the radio button open item. Click execute.  

See all open items are seen. 70, 30. Now so like this, open items can be seen like this. And if you want to see one of the cleared items, select radio button cleared items.

Look at this. Only cleared items. Want to see all items? Select radio button all items. I can see all the items. All open items as well as cleared items.

So, you can use FBL5N like this. To view the customer account, we can see FD10N. To view the balances, you can see FBL5N. Now balance amount 33,000 we have received. For example, incoming payment F-28.

Say balance 33,000. Right. Click on open items. 

Now here what I can do is just simply 1 lakh 44,000 invoice whatever is there. Rest of the things for 133 amount, 30000, 70,000, this 133. All these three belongs to 133 invoice. Double click and deactivate other invoice. Now here it will be 33,33. You even need not go to partial payment. Though this is a partial payment, I’m not going there. Because here itself, I can resolve it. And in real scenario, that means in the case of companies, generally, when accountant, those who are working on accounts receivable, a separate team will be there. Accounts payable, separate team will be there. Their job is continuously clear the open items, see that all entries are being posted in the customer accounts or vendor accounts, etc., and constantly, they have to clear the open item, exclusively for the purpose of account receivable, maybe one team will be there, especially in all big companies. You and I have seen so many job requirements in UK, US. We need accounts payable, SAP consultant. Accounts receivable SAP consultant like that. Specifically, that end user companies will ask, not consulting side, but from the end user companies perspective, they’ll be recruiting separately a team. In case if the customers are maybe 1,000 and 1,000 will be given to 1 consultant. Another 1,000 like that, 4 consultant will be given. Each 1,000 consultants will be given. Their job is to see that each and every in his area, whatever the payment that he has received and what are the credit notes to be posted. Everything with respect to 1,000 or 500 customers, depending upon the size of the company, they’ll allot.? If 500 company customers are given to me, I’ll be taking care of everything. Constantly, I need to check what are the open items, what are the payment received, what are the clearing the open items. Everything is my job. So, that is the case. Now once you deactivate this, you can clear it and save it now. Come back. Again go to FBL5N. Select open items. 

Only 1 lakh 44,000 will be there. See here.

You see all items except 144. 

See now 122, 122. 70, 30, 33. All these 3 will get cleared. All the incoming payments cleared against 133. So though this is a tedious job, I know that it is a bit difficult. Why is this required first of all? See, simply what I can do is, in case of manual accounting system, what people used to do, say, in case of customer account, say, 122, 133, 144. Three invoices are there. What are the payment that I receive? What I will do whenever I receive payment, say, 1 lakh 22,000 is invoice amount. 

Now by bank payment received 122. So, what we are doing? We are clearing by bank and to sales. After receipt of this amount, what is the balance? 277. Right? 2 lakh 77,000. Then it will be 3 lakh 99. Both are totals. Now 277 is outstanding. This will be reflected in the balance sheet. Now say for example, this invoice has been raised on September 11th. Say this is 10/08/2013. This invoice is raised on this date and now payment is received. That’s why both of them will be cleared. So here we can identify that. 122 and this is going to be cleared.

Right? Now if 133 is received in 3 installments. This is, say 70 then 30,000 then 33,000. This. Now here 1 lakh 33. If you receive only 70, so balance is going to be 63,000. 663 plus 144. So, like this outstanding amount, whatever the outstanding amount, we have to analyze based on the date. Every company will be preparing on age wise analysis. Say, if Sundry Debtors is there, for example, I’m accounts receivable accountant, Management has asked me what the outstanding amount is today. Means I said, say, 1 crore. 1 crore outstanding that is correct as per my books. Out of this, say, this invoice is raised on 0109. This invoice says raised on 0509. My outstanding amount, if management is going to ask me, say, these both are, say, 15 days credit. Payment term, 15 days credit. 15 days credit means here what is going to happen? Am I due today? As on today’s date, these two investors are not due. But if management is going to ask me, say for example, even 122 also I have not received. My total outstanding amount is 3 lakh 99. If management is going to ask me what the outstanding amount is, I’ll say 3 lakh 99. Now out of that okay. How much is to be collectible and how much is not collectible? If that question is going to be asked by the management, so what should I say? 1 lakh 20,000 bill is collectible. 

Mean, that is due and these 2 are not due. So, this kind of age wise analysis that is and also management may ask me what is the age of the debt? So, this is going to be 40 days and this is not due. And sometimes it may be 0 due. So, I have to analyze my amount of the debt by not due, 0 to 30 days, 30 to 60 days, 60 to 90 days, like that I need to analyze and give it to management, because if you take working capital from the from the banks, I need to submit on or before 10th, almost every whatever the country may be. I have to submit my account receivables and inventory values to the bank. When I submit my outstanding amounts to the bank because, see, I’ll show them, yeah, this is the amount that I’m going to my receivables are this. If I submit 1 crore, maybe my working capital loan granted maybe around 70 to 80% of that receivables. Banker will not consider if the amount is, an outstanding amount is more than 6 months. So that’s why I need to submit age wise analysis. We’ll get one beautiful age wise analysis from SAP that I’ll show you at the end. When we go to the MIS, I’ll show you. So, for the purpose of preparing age wise analysis of the outstanding amount, I need to clear the operator like this. There is a reason I’m going to take the pain of clearing the operator’s partial everything. Though it is bit tedious for me, I’ll be employing few people. And my report will be perfect. Some people think that, once SAP is implemented, I can dispose of some of the employees, I don’t require them because SAP is going to give me everything. But that is wrong thinking. If SAP is going to be implemented, I need more people because SAP is going to give me perfect documentation and perfect reports.

For generating the perfect report, right, I need to provide more information. Of course, in some of the cases, I can reduce. My job is going to be reduced a lot. But in some of the cases, I need even more people. Say, for example, for, automatic payment program, certain things are there, there my manpower can be reduced. But in some of the cases, I require more attention of the people. So whatever it maybe, clearing a form item concept is going to be used for the purpose of generation of report like age wise analysis. The purpose is to analyze the age wise debt of the customers. And for people like so many companies, I told you there are 2000 or 3000 customers there. So, generating the age wise analysis for that many number of customers is a very tedious job. So, here, I remember that when I was working in one of the companies, in 1995 between 95 and 2000, at that time, we have not implemented SAP. We used to round up like this. If payments are received, round up this, this, this, this, like that, and used to create the age wise analysis. Then we have gone for SAP implementation, and subsequently, our job became very much easier. So, for the purpose of age wise analysis, I need to link up payment as well as payment to the invoice. That is my purpose. Anyhow, you’ll get more clarity once I show you the report also. So, this is called the clearing of open items, the posting of invoices, clearing of the open item. Open items can be cleared partially as well as complete clearing.