V1D Incoming_payment Lockbox

SAP ECC 5.00

July 2006

English

V1D: Financial Accounting – Accounts Receivable Incoming Payment/Lockbox

SAP AGDietmar-Hopp-Allee 1669190 WalldorfGermany

Business Process Procedure

SAP Best Practices V1D: Financial Accounting - AR Incoming Payment/Lockbox - BPP

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Cross-references to other documentation.

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Process Flow Legend

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Contents

1 Purpose........................................................................................................................................ 6

2 Prerequisites................................................................................................................................ 6

3 Process........................................................................................................................................ 8

4 Scenario....................................................................................................................................... 9

4.1 Post Incoming Payment from Customer................................................................................9

4.2 Maintain Lockbox File..........................................................................................................10

4.3 Post Lockbox File................................................................................................................11

4.4 Postprocess Lockbox..........................................................................................................13

4.5 Run Batch Input to Update Customers................................................................................14

5 Appendix.................................................................................................................................... 16

5.1 Lockbox............................................................................................................................... 16

5.2 Integration Dependencies...................................................................................................17

5.3 Financial Postings...............................................................................................................17

5.4 Support /Closing Considerations.........................................................................................18

5.5 Common Customer-Specific Customizing...........................................................................19

5.6 Technical Requirements......................................................................................................20

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V1D: Financial Accounting – Accounts Receivable Incoming Payment/Lockbox

1 PurposeCustomer payments are posted into the system to represent the collection of money and the application of this money against Customer liabilities to the company. This can be performed two ways within the system, either on an individual payment-by-payment basis, or collectively, in what is commonly called lockbox processing.

Individual payment-by-payment processing will have the User entering one transaction per payment. Lockbox processing is a two step process: step one has User using one transaction to post multiple payments based on data file from the bank, and step two is a transaction to correct any un-applied payment data from step one.

Lockbox is a function, performed by a bank, which allows the Customer to send payments directly to a bank via ‘lockbox’ (a specific mail address set-up for the company at the bank). These payments are collected by the bank and applied to the company’s bank account, with data from the payments (like check routing number, Customer bank account number, check number, payment amount and invoices being paid) being made available to the company in a file format to allow for collective processing. The lockbox data is either sent daily to the company, or located at the bank, and retrieved by the company daily.

These are the business process alternatives in this scenario where you need to make a choice when testing this process:

Step 4.1: Are you processing the payment using electronic lockbox? If so, skip this step and go to the next step.

Step 4.3: Were the checks completely applied? If so, continue to the next step. Otherwise, re-run the step.

Step 4.5: Does the ADDBNKDETAIL session exist? If so, continue processing the step. If not, exit the step.

These choices are marked below with the icon.

2 PrerequisitesYou have entered the master data required to go through the procedures of this scenario. Ensure that the following scenario-specific master data exists before you test this scenario:

Field User Action or Values

Customer Information

Customer 100003

Company Code BP01

Description Pen Depot

Lockbox Information

GL Account 113016

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Field User Action or Values

Company Code BP01

Description Lockbox – Checks in

Bank details must be maintained in the Customer master. Use transaction XD03. Ensure that you have maintained the Bank Key (ABA routing number) and Bank Account (customer’s account number )on the Payment transactions tab.

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3 Process

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4 Scenario

4.1 Post Incoming Payment from Customer

UseThis activity posts the incoming payments from the customer. The customer sends checks directly to Accounts Receivable.

Option A: To process the payment directly, execute this step. Once you have executed this step, you are done with the entire process. Do not run any other steps.

Option B: To process the payment using Electronic lockbox, skip this step and run step 4.2.

Procedure

1. Access the transaction choosing one of the following navigation options:

SAP ECC menu Accounting Financial Accounting Customer Document Entry Incoming Payments

Transaction code F-28

Business Role Accounts Receivable Clerk

2. On the Post Incoming payments : Header Data screen, enter the following information:

Field name Description User action and values Comment

Document date

<today’s date>

Company Code

BP01

Reference <check number>

Bank GL Account

113016

Amount <amount of check>

Open item selection-Account

<customer number>

Special G/L ind.

F If posting down payment received

3. Choose Enter.

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4. On the Post incoming payments Process open items screen, double-click the invoices to be applied against the check.

You can optionally create residual items, partial payments, or charge of differences.

5. Choose Post.

To check document before posting, choose Simulate (F9) to display document, with cash discount, automatic pmt. difference entries, residual items

ResultThe payment is deposited in bank and invoices identified for the payment are cleared. You do not need to process any other steps in this document.

Debited Accounts Credited Accounts

Bank (Lockbox – Checks in) Customer

Cash Discount Paid Down payment – customers

Pmt. Differences Payment differences

Customer (Residual items)

4.2 Maintain Lockbox File

UseIn a productive environment, the bank will provide the lockbox file with the relevant payment information formatted in the BAI2 standard. For the purposes of this example, you will manually edit the lockbox file.

Prerequisites A customer invoice must be created.

Procedure1. Open the file YPCC_BAI2_00.TXT from the Documentation DVD (which is available in the Misc

folder under Baseline US).

2. Edit the following highlighted (in bold) text:

In the example below:

In the first line, replace the string after YPCCORIGIN (that is 031008) with your current date (YYMMDD format) and 0030 with your current time.

In the third, sixth, and seventh lines, replace the highlighted text with your current date in the format YYMMDD.

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In the fifth line, replace the invoice number with your invoice number.

100YPCCDESTINYPCCORIGIN0310080030

2IGNOREDBYSAP0000000000

58660010012345031008YPCCDESTINYPCCORIGIN

686600200000400000110003900345205865345205867

4866003601918000014 00000400000000000000

786600400123450310080010000040000

8866005001234503100800010000040000

9000000

3. Save the file to your hard drive with another name.

Result The payment information is entered into the lockbox file in the BAI2 format.

4.3 Post Lockbox File

UseThe lockbox process uses a 'lockbox clearing' account to post all payments directly to bank G/L account. This allows the bank account to have a correct balance while the clearing account has non-zero balance until all payments are applied to Customers or written off. The lockbox posting log should be printed for future reference (especially in resolving issues for post-processing). The lockbox posting log should be printed for future reference (especially in resolving issues for post-processing). The lockbox process will provide Customer updates to bank details, if the data does not already exist, and the program find payments that can identified to a specific Customer based on invoices paid.

The bank sends the lockbox file to Accounts Receivable. The system checks whether the lockbox file has already been processed based on date and time stamp contained in the file.

After executing this transaction, you need to view the log that shows the processing status of the checks.

Option A: If the checks were completely applied, go to step 4.5.

Option B: If the checks did not apply completely, go to the next step.

Procedure


SAP ECC menu Accounting Financial Accounting Banks Input Lockbox Import

Transaction code FLB2

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2. In the Main Lockbox program screen, make the following entries:

Field name Description User action and values Comment

Import into bank data storage

Selected

PC Upload Selected

Lockbox file YPCC_BAI2_00.TXT

Procedure Lockbox

Input record format

BAI2

Invoice numbers

<enter the four invoice numbers you generated previously>

Enhanced invoice no.check

Selected

Algthm: Checks with advice

001

Algthm: Checks without advice

001

Assign value date

Selected

Print statistics

Selected

We recommend that you create a variant with basic data that can be retreived before execution.

3. Choose Execute.

4. The system displays a lockbox activity report.

ResultPayments are deposited in the bank and invoices identified for the payments are cleared, where possible. A log showing processing status of the checks is created.


Bank (Lockbox – Checks in) Customer

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Bank (Lockbox – clearing) Bank (Lockbox – clearing)

Pmt. Differences Payment differences

Customer (Residual items)

Down payment – customers

Cash discount paid

4.4 Postprocess Lockbox

UseLockbox processing creates payments advices for any payment that cannot be applied fully. These payment advices are stored, and post processing uses these advices to correctly apply payments to the Customer. You can make changes to advices if needed, or just use the advice to show the Customer invoices and apply as partial or residual items.

PrerequisitesLockbox processing has been performed and lockbox data exists to be re-processed

Procedure


SAP ECC menu Accounting Financial Accounting Banks Input Lockbox Reprocess

Transaction code FEBA_LOCKBOX / FLB1


2. On the Postprocessing Lockbox Data screen, enter selection data (such as the creation date of

the lockbox file, or the check status) and choose Enter.

3. If a list of lockboxes displays, double-click the lockbox you need to work on. If there is only one lockbox that matches the selection parameters, the system displays it automatically.

4. On the Lockbox Data Overview screen, double-click the row for the batch you want to process.

5. Select a row to process, then choose Post.

6. Various Post with Clearing screens display. The system may also display a Document created message if a posting discrepancy was resolved.

ResultsThe lockbox clearing account has a 'zero' balance because all payments in the lockbox file have be processed by either applying to Customer account or being written-off.


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Bank (Lockbox - clearing) Customer

Cash discount paid Pmt. Differences

Pmt. Differences

Customer (residual items)

Down payment - customers

4.5 Run Batch Input to Update Customers

UseIn this activity, you run the batch input process to update the information in the Customer Master Records.

PrerequisitesUpdates have been identified by the lockbox program and added to a BDC session.

Procedure


SAP ECC menu System Services Batch Input Sessions

Transaction code SM35


2. In the Batch Input: Session Overview screen, select the ADDBNKDETAIL session and choose Process (F8).

Option A: If the ADDBNKDETAIL session does not exist, there are no updates that need to be made to the customer master. You can exit this transaction and end the process.

Option B: If the session does exist, continue with this step.

3. On the Process session dialog box, select Background then choose Enter.

4. Continue to choose Enter until the session disappears.

If the Transactions with errors column shows an error count, select the ADDBNKDETAIL session and choose Process (F8). Select Display errors only. Fix each error.

Results

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All Customer updates identified by the lockbox program have been entered into the Customer master records. The process is complete.

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5 Appendix

5.1 Lockbox

5.1.1 OverviewBanks offer lockbox service to help companies process incoming check payments. A company with a lockbox account asks its customers to send check payments directly to the bank. The bank processes the payment and transits the payment data electronically to the company in the BAI2 format. The information in this file is matched to the accounts receivable information in the R/3 system to clear the payments against the open items.

The Bank Administration Institute defines these formats.1 In practice, the standards published by this organization are not followed strictly. Banks usually offer several variations of each format, including the BAI and BAI2 formats that R/3 reads.

The BAI2 format is newer and contains more information than the BAI format. The main difference between the two formats is the invoice information associated with each check.

BAI Check, amount, invoice, invoice,...

BAI2 Check, amount, invoice_and_amount, invoice_and_amount, ...

The extra information on the BAI2 format allows better automatic matching of payments to customer open items when the data is imported. If automatic matching fails, your accounts receivable (A/R) clerk must manually clear the payments against open items.

When importing a BAI format file, unless the check amount matches exactly the total open invoice amount in R/3 (or within configured payment difference tolerances), none of the invoices clear and the entire check enters R/3 either as an:

On account posting (if the payment and invoice totals do not match)

Unprocessed posting (if no customer account and no documents could be identified)

With BAI2 format files, there is also a partially applied status. A check is partially applied when the import program can match and clear some, but not all, of the invoices within the check total. As a result, the hit rate—the percentage of matched invoices in each transmission—is higher with BAI2 than with BAI.

5.1.2 Customer Master DataThe following fields need to be maintained in the customer master record in order to be able to use lockbox processing for this customer:

Bank Details: Here you maintain the customer’s MICR (Magnetic Ink Character Recognition) data:

o Bank Key = the ABA routing number (American Bankers Association) of the bank

o Bank Account = the customer’s account number at the bank

Alternative Payer: If a different customer pays the bills, you would enter the customer number of the paying customer in the Alternative payer field.

1 You may contact the Bank Administration Institute by phone at 800-224-9889, or visit their web site at http://www.bai.org.

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Lockbox: It is optional to assign a lockbox number to the customer master record. This indicator is accessed during customer billing in SD. The remit-to address on the invoice will use the address from the lockbox bank instead of the company’s address. Lockbox ID 10 is maintained in the configuration.

5.1.3 General Ledger AccountsLockbox processing uses the following G/L accounts. There are field settings that have been maintained to enable proper A/R lockbox functioning.

G/L Account

Description Relevant Settings

113016 Lockbox Account – Checks InThis account will be cleared out through the electronic bank statement processing into the main Lockbox account (113010).

125310 Accounts Receivable - Lockbox Unapplied Cash

This account records the receipt of customer payments.

Not tax-relevant

Relevant to cash flow (to allow payments to clear items across an alternate payer worklist)

440000 Over/Underpayments and Unallowed Deductions

Not tax-relevant

700800 Customer Discounts Not tax-relevant

5.2 Integration Dependencies

5.2.1 Accounting PeriodPostings can only be made in accounting periods open for posting. Sales and distribution invoices/down payment request has already been created. Reference number/Invoice number must be provided in the lock box file to ensure correct matching to payment.

5.3 Financial Postings

5.3.1 Financial AccountingLockbox Account – Check in Accounts Receivable –

Lockbox Unapplied Cash

Step Debit Step Credit Step

Debit Step Credit

1

2

Amount received directly from customer (no lockbox)

Amount

3 Amount matched to invoices / customer by automatic lockbox

2 Amount received from customer (automated lockbox)

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received from customer (automated lockbox)

clearing

Customer receivables – Domestic Down Payments and Requests - Customers


Debit Step Credit

1

3

Amount received directly from customer (no lockbox)

Amount matched to invoices / customer by automatic lockbox clearing

1/3 Amount of down payment received

Small Differences Customer Discounts


Debit Step Credit

1/3 Minor differences (within tolerances) between check amount & total of (invoices –credit memos + debit memos + down payment requests)

1/3 Minor differences (within tolerances) between check amount & total of (invoices –credit memos + debit memos + down payment requests)

1/3 Amount of cash discount granted

5.4 Support /Closing ConsiderationsTransaction Code

Comments

FS10N Check lockbox clearing account to make sure the balance is ‘zero’ for month-end close

FBL3N Review line items in the lockbox clearing account

FD10N Display customer balance

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FBL5N Display Customer line items

FEBA_LOCKBOX Ensure that all unprocessed and partially applied transactions are reviewed and manually corrected.

5.5 Common Customer-Specific CustomizingTransaction Code

Comments How To

SM30 Update the Control Parameters for lockbox processing. Set the flag for the record format selected (BAI or BAI2). Decide to update Customer with bank data, post using ‘lockbox clearing’ and post partial payments

Enter table T049B. Click ‘Format’ chosen. Select ‘Details’ pushbutton. Make desired changes to parameters. Save changes.

SM30 You store information needed to process particular lockbox data and generate postings. The Destination and Origin are routing information and defined by your bank. For every unique destination/origin, posting information is needed to create the following postings: 1) G/L posting - Debit bank account (incoming checks) and credit payment clearing account. 2) A/R posting - Debit payment clearing account and credit customer account.

To do this enter the following posting details:

Specify a company code that holds the lockbox. Enter in Bank account number [Bank (clearing) acct] field the general ledger account number which corresponds to the lockbox (clearing) bank account. Enter in Bank clearing acct [Payment clearing acct] field the general ledger account number which corresponds to the AR clearing account (the balance in this account will represent all unapplied (lockbox) payments) . In addition, specify the document types and posting keys for these postings.

Work with bank to decide destination and origin that will be part of the lockbox file from the bank.

Enter table V_T049A. Unless you can get bank to use the /SMB11/BL_DESTN entry, you must make an entry with your bank’s information. Select ‘/SMB11/BL_DESTN’ line and click ‘Copy as’ to get defaults used for posting. Enter destination and origin codes from your bank’s lockbox file. Save changes.

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5.6 Technical Requirements

5.6.1 Data Base TablesArea Table Description Type

FI FEBKO Electronic Bank Statement Header Records Transaction

FEBEP Electronic Bank Statement Line Items Transaction

AVIK Payment Advice Header Transaction

AVIP Payment Advice Line Item Transaction

BKPF Accounting Document Header Transaction

BSEG Accounting Document Segment Transaction

KNBK Customer Master (Bank Details) Master Data

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V1D Incoming_payment Lockbox

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