Incoming Payment
Okay, now that we have seen the sales returns, we can go to the next tab, which is the incoming payment of 1800 for sales 2000 from customer C001. I have mentioned 1800 here for this sales here, because remember the customer has already written 200, so 2000 minus 200, the balance is 1800, so the customer is making a full payment of 1800. For the balance also, 1800. We’re going to see how we can post this.
Thank you for reading this post, don't forget to subscribe!Just bear in mind that incoming payment can be very complex sometimes. Let’s say if the customer makes a partial payment, out of the balance of 1800, he makes a partial payment of 500, then it’s not so easy to post it but we will see the partial payment posting in the advanced training session. Now, we will see only full payments.
Let me show you this graph. Okay, incoming payment of 1800. Let me just change this to 1800. So, this is supposed to be 1800. You know right, the reason why we are making 1800 and not 2000? It’s because the outstanding balance is only 1800 after deducting the sales returns, so 1800 will be the full payment for this sales invoice.
Okay. Let us go. Come here, come here, come here. Let’s see this. Incoming Payments is under accounting, financial accounting, account receivable, document entry, incoming payments, and the T-code is F-28. So just select the current date, company code is Sun. The currency is USD, posting period is 4. This four is taken from this posting period here, April. The double entry for incoming payment is like this.
The bank account is debited and customer account is credited. That’s double entry. Because we are getting payment from customer, so we need to debit the amount into our bank account, so we have to choose a bank account first. Let me do that.
This one, cash in bank. Let me choose that. The amount, I just put in 1800 and the account. This is where we specify the other side of the double entry, which is the customer account, because we are getting the payment from the customer account, so we need to choose a customer account here. Customer is B, right?
Okay. So now click this, process open items. Alright. You see this? The original invoice posted is 2000, but we have a sales return of 200, so now how are we going to make a payment of 1800 now?
Alright. Before that, I want to show you something. You might have this, the selected items initially inactive. You need to check your system for that. Let me just show you. I just changed it to enabled, but if you have a fresh SAP system installed, you might have this disabled first, so I’ll show you what is the difference if it’s disabled. I save this. This is the editing options.
Let me go again. Let me go back. Okay, incoming payments. Let me choose cash in bank, item selections, customer account, okay 1800, let’s process item. Do you see this, blue color?
Because I removed the check mark there in the editing options, so now it’s changed to blue color. So in your system, if you have a fresh system, the default option is that it will show blue, whereas the editing options here, it is selected items initially inactive is disabled, it’s not marked.
This means both the items are selected. You will hit some problem if you continue processing like this, so make sure you go to editing options, select this guy here, this checkbox, save it. Come back. You won’t see any change unless you quit and come back again, so let us quit now.
We come back, choose the bank account again, customer account, 1800, process of items. See, the blue color has gone. Now, this means that selected items are initially inactive. Okay, that means the items are not selected initially. This is what I want. Okay, let’s observe this one. Amount entered is 1800. This means that this amount corresponds to the amount that you entered in the previous screen. You know the first screen before coming here? The amount field, you have entered, 1800, so that’s what’s shown here. Amount entered is 1800. Okay. Now, if you choose the original invoice like this, you see this not assigned field here, it become 200. Once again, I disable it. first. Initially not assigned is 1800. That means amount is 1800. This plus this will be shown here, 1800. This plus this, okay, will be shown here. That means effectively the customer balance will be shown here. When you choose this, that means it will show the balance of the amount which is not assigned yet, so don’t confuse too much about it.
Let me just explain this. Now, we need to find a way to pay 1800, right? So, if you have selected this 2000, then you have a balance of 200, the system will not allow you to, because 1800 applied against 2000 means that there is a balance of 200. That means the double entry does not balance, so you can’t really post.
Let me just go here, simulate. I need to enter a date here, so I just put this to you on date. Don’t worry about it, just put a valid date. See, you will get this message here. The difference is too large for clearing. You cannot post this, because as long as this field is not zero, you cannot post.
You have to make sure this field here is zero. To do that, you need to select this as well. What it means is that, when you select this 200, the balance of 2000 plus/minus 200 is 1800. 1800 will be matched against the amount of 1800, so this will become zero.
Once again, if I remove this, assigned is only 2000, so you have a balance of 200. Let me remove it. This minus this is 1800. So if I select this alternatively, then I will say that not assigned is 2000, so you have to select both.
Okay. what I’ve explained here just now is only the technical way to understand this in detail, but in a layman’s term, if you want to understand this, just bear in mind that you are receiving a payment of 1800 from somebody, a customer, let me just disable this, 1800, now you want to make payment against the invoice that is outstanding with his customer, but at the same time, you also want to take into account all the sales returns which are posted for this customer. Sales returns are the credit memos. What do you have to do is that you decide invoice, correct, and you have to also take into account all the credit memos that are posted for this invoice and this customer. So based on that, you should select the credit memo so that it’ll be taken into account, so you get a zero value here. Okay. Once again, I repeat, don’t confuse too much about whatever I’ve said earlier. Just remember this very clearly. When you want to make a payment for invoice, okay.
SAP will not show the balance of the invoice at any time, okay. Even though you have posted credit memos and partial payments before against an invoice, you will never see the balance of the invoice, net amount of the invoice will not be shown. SAP will always show the original amount, which is 2000, but at the same time, it will also show all the partial payments and credit memos, which are paid earlier like this in a separate line item. So what you have to bear in mind is that whenever you want to make a payment, you make sure you select the original invoice, and also, take into account all the credit memos and partial payments made before for this invoice.
So to do that, once again, I’ll show you. This is entered, 1800, you select the original invoice and you want to take into account all the credit memos posted earlier. So you double-click so all three is grouped together. All these are grouped together and the balance will become zero. I know it’s very confusing but I’m trying my best to explain this concept to you.
Okay, let me also draw something so that I can understand this better. Okay, you have a customer, and he has bought goods worth 2000 earlier, and he returns 200, so the balance is 1800.
This is the problem here. You will never see this 1800 as a net invoice here. You’ll never see. Instead of that, you’ll see the individual line items. Individual items, 2000 and 200, what is shown here, 2000 and 200. So until and unless you select both of it, the system will not know that these credit memo is related to this invoice, so you have to select both. Now it’s unselected.
Now if you select these both, then the system will know that the balance is 1800, then you enter the payment of 1800, so that this will match with this. You have already entered the amount here, now this will match with this, so the balance is zero. Balance is zero. Then you post it.
Before posting, let us simulate this. Simulate. You will get this error here, “Exchange rate difference account are incomplete for account 20003, currency, USD.” What does this mean? Let me show you.
Okay. This is something that I wanted to cover in the advanced topic, but at the same time, we cannot proceed unless we resolve this error. So what I’m going to do is that even though this refers to advanced topic, I’m not going to pause the training session now. I will show you how I am going to fix this, then I’ll try to explain a bit. Try to understand this even though it’s very early for you to understand all these things.
Okay. What the system is saying is that, in our ledger, we have additional currencies for Sun company code. This is our company code. I will explain this in detail when we come to the advanced training, but for the time being just bear in mind, this is just a quick walkthrough of what it is. So we have a company code here, Sun. Our ledger book is maintained in three different currencies, USD, Euro, and USD, so just ignore this for a moment. This is not really needed, a hard currency. What is needed is these two.
This means that this ledger column, this means that any postings to our G/L account will be maintained in two different currencies. which is USD and Euro. It is something like, let me just show you something, you have a ledger book, our amount is here, G/L account column, one. So what it means is that each G/L account figures will be maintained in two currencies, USD and EUR. So, for example, if USD has got 1000 and will be converted to Euro amount of 900, depending on the exchange rate, and the same thing goes to second G/L account. Alright. This is 2000 or whatever it may be, and this is 1800, depending on the exchange rate, so this is our ledger book. Consider something like this.
So, any postings to any G/L account in our book for Sun Limited will be maintained in two different currencies. That’s what this configuration is here. Forget about all these things. It’s very complicated for you now. So what does this have to do with this error here? It has got something to do because what it’s saying, let me just simulate the error again.
Do you see this? The system is trying to convert this amount to Euro amount. Okay. Let me just put it here.
1800 is trying to convert to the Euro amount. Now, the problem here is it says 20003 in the account, right? You know what account is this? Let me just show you what account is that. I go to address, 00. This is a trade debtors account, which is a recon account for customers. Remember our customer that we put is 50001, that guy, that customer is linked to this recon account, so the system is trying to convert the amount of 1800, which is of USD amount, to post to this account as a Euro value. Do you see this? USD, no problem, it’s 1800, but Euro is unable to be determined because it needs to post exchange rate gain or loss when it’s converting to Euro, because when you convert Euro, any local currency amount to a foreign currency, we will realize exchange rate gains and losses. If you know accounting, you’ll understand what I’m talking about. I’m not going to explain the concepts of why the gains or loss are realized, it is an accounting concept, so you should know about it. The prerequisite for this course is that you should know about accounting, so just take it at a face value that any amount, in this case, any USD amount which is converted to Euro, will realize in exchange rate gain or loss, so we need to have a G/L account defined to post the gain or losses that realizes during this translation. Where do we configure that? Keep this open. We’ll just open another one. Where can we do that?
Yeah. This one. This is where it is under financial accounting, account receivable, accounts payable, business transactions, incoming payments, incoming payments global settings and here, or simply decode.
You must enter the chart of accounts. It’s Sun. Our chart of accounts is Sun, OB09. Decode is OB01. See, this is empty. That is why we are getting the error, because we need to specify something here.
We need to specify G/L account to which a foreign currency gains or losses can be posted to, so let’s do it now. New entries. It goes by the G/L account, so you need to enter the G/L account first. Let me just copy this G/L account. I’m not going to key in the currency, I’ll leave it blank. Oh yeah, I need to define a G/L account for this, loss and gain. I don’t have a G/L account yet. See, I can’t simply post it to any of these G/L accounts because otherwise then it will be wrong. You have to post it to a specific G/L account so that you can track how much is the gain and losses at the end of the year that is realized from the foreign currency translation. So let us create a jail account now. Let me see if I have any. Okay, let me just go to account group, you have to go here, here, here, here, here, account group, define account group. Do you know what I am doing? Let me just show you, just bear with me. Okay, we are in Sun right? I am going to define a new account range, specifically for these kind of accounts. These accounts are called technical accounts. A typical example is exchange rate gain and loss was posting. We need a G/L account, right? These are called secondary G/L accounts, which are needed in order to post certain type of transactions. For example, this exchanges gain and loss. I’m going to define a new account interval for that. Let me just copy this, the last range.
Copy this. I post this copy, and copy this.
Just hang on. I’ll be back. Okay. Now, change this to G/L accounts, and the range should be, let me just put the range here as 100 to 200.
Okay I’ve created the account range for G/L accounts, 100 to 199. Let’s save it.
So we can create a G/L account now to post the forex gain and loss. Let’s go to S00 for this account. G/L accounts. This is the one I created just now.
Bear in mind, forex gain and loss Is actually a P&L account, so I’ll just leave it as P&L account. Exchange rate difference. Gain or loss. Go here. Field status group, so general G/L accounts, I just choose this. Save it.
Now we are done. Copy this, come here
If it’s loss, post to the debit side of this account. If it’s a gain, post to the credit side of this account because a loss is considered as expenses, so it’ll be posted to the debit side. As for gains, it’s is considered as a income, it’ll be posted to the credit side. Alright, these three fields, you can leave it empty. It’s not really required. So what we have defined here is, for any forex gain or loss calculated for this G/L account, it should be posted to these accounts. Sorry, it’s only one account. So once again, any forex gain or loss calculated for this account should be posted to this account on the debit side and credit side, depending on whether it’s a loss or gain. Okay. You can also specify different account for the gains and different account for the loss, but normally, we won’t do it. We will just post it to the same account. Let’s not complicate this, because if you specify Euro, our company code currency is USD, right? If you specify Euro here, you can specify different set of G/L accounts for each currency. For example, if we set Euro, that means any conversion that is realized from USD to Euro conversion will be posted to this account. If you specify GBP, British Pounds here, and then you can set another separate G/L accounts for loss and gains if the conversion is from USD to GBP. But in this case, if you leave it empty, this means that you won’t differentiate by the currency. These settings will be applicable for all currencies if you leave it empty. That’s the purpose of currency. Just save it.
Almost done. Okay. We will be able to close it now. Simulate. Simulate again. The error message has gone. Okay. Do you see this? 1800, right? I’ll show you something. You choose this, display currency, change it to group currency. Our group currency is Euro, right? Let me show you something. See this, our group currency is Euro, so accordingly, if I go to group currency, Euro. Do you see this? Now it has changed to Euro. The amount has been changed to Euro and exchange rate difference is calculated here as one cent, and it’s posted to the G/L account that we created just now. The error was happening just now because the system tried to calculate the Euro equivalent and it has realized a gain of one cents, since it’s on the credit side, it’s a gain. It’s a forex gain of one cent, and it couldn’t find a G/L account to post the amount automatically, so that’s why it was throwing an error message.
So once you have set it here, the system will automatically know which account to post to when there is a forex gain and loss realized. See, it is taken from the screen here.
That’s the purpose of setting the screen. Now we can go back to the document currency. This one. Go back to USD. Again, post it now. Let’s post it. Okay. It’s done. Posted.
Let’s check our account balances. Go to customer account. See, the payment has been done. 1800. Earlier, there was 2000 and 200. This is a credit memo. 200 is a credit memo. This 2000 is the invoice. Now we have made a payment of 1800, so the color has turned to green. This means it’s settled. The invoice is settled. From red, it has turned to green. That means nothing needs to be settled now, so the balance is zero. The customer balance has come to zero. Good.
You can also check the bank account. Go to the bank account here., you will see an entry of 1800. The debit side of the entry. Let’s check here. Cash in bank, all items, 1800.
Here, cash balance is 9700, so our incoming payment is done.
We go to next topic now.
You may watch the full course on the following YouTube link
https://www.youtube.com/watch?v=KSHV3mGP6nA&list=PLN17Nn94liux88cwVwqbiRQQo1qK4sOdQ&index=16&pp=iAQB