SAP Implementation Business Blueprint S2-020 – Account Receivable Processing

SAP Implementation

Business Blueprint

S2-020 – Account Receivable Processing

© SAP 2007 / Page 2

This document describes the major design concepts for Accounts Receivable. The account receivable application component records and administers the accounting data of customers and this also constitutes an integral part of CMC “Cargo Management Control” System.

Sections: -

Customer Master Credit Management Account Receivable Processing Period End Closing

Introduction

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Table of contents

Customer Master Customer account Account group General master data field Account Group and Reconciliation Relationship Payment term Customer status

Credit Management (FI) Credit control area Credit limit

Account Receivable Processing Shipment related Billing and Credit note Non-trade related Billing and Credit note Customer Down payment Posting Post Receipt and account settlement Customer Account Clearing Dunning Notice

Period End Closing Foreign currency open item revaluation Balance carried forward

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Customer Master

Customer Account All business transactions are posted to and managed in accounts. You must create a master record for each account that you require. The master record contains data that controls how business transactions are recorded and processed by the system. It also includes all the information about a customer that you need to be able to conduct business with him.

Both the accounting (FI-AR) and the operating departments of your organization use customer master records. By storing customer master data centrally, you enable it to be accessed throughout your organization, and avoid the need to enter the same information twice. You can also avoid inconsistencies in master data by maintaining it centrally. If the address of one of your customers changes, for example, you only have to enter this change once, and your accounting and sales departments will always have up-to-date information.

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Customer Master

Customer Account Customer master records contains data that control how transaction data is posted and processed. In OTEL, trade (shipment related) customer master records have to maintained by CPAdmin in CMC system, and it will be created automatically in SAP system through an interface program. Account department is responsible for the creation of non-trade customer records. These customer records are classified by different customer account groups in SAP.

Account GroupThe account group in SAP determines the number interval for the account number of the customer, whether the number is assigned by the user or by the SAP system (Internal Assign).

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Customer Master

Account Group

List of Customer Account Group in OTEL: -

Account Group

Group Name Account Number Range

Assignment * Creation Process Flow

TCR Trade Customer – 3rd party

1 to 999999 External Assign Via interface from CMC to SAP

TCI Trade Customer – Inter-company

1 to 999999 External Assign Maintain FI company code configuration before create customer master via interface

TRC Trade Customer – Related company

1 to 999999 External Assign Direct create in SAP is not allowed

TAC Trade Customer – Associated Company


TJV Trade Customer – Joint Venture


NTC Non-trade Customer 3000000 to 3999999 Internal Assign Create in SAP directly, no record in CMC

Remarks: * External assignment means the customer number will be provided by external system (i.e. CMC). For Internal assignment, customer number will be generated by SAP automatically

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Customer Master

Customer General Data Fields Highlight

Vendor account For the business partner who belong to both your customer and vendor, the

vendor number is used by the payment and dunning programs for clearing open items. For line item display, link to the vendor line items is established using this number.

Trading Partner Trading partner field (i.e. affiliate company code) is a mandatory entry field for

inter-company customer account. When you post to this customer account, the company ID is transferred to the line item.

Tax Number / Business Registration (BR) Number The BR number or the tax number of the customer.

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Customer Master


Reconciliation Account The reconciliation account in G/L accounting is the account which is updated

parallel to the sub-ledger account for normal postings (for example, invoice or payment).

Customer Head Office The relationship between customer account and site/project account is linked

by customer head office. This field number is only specified for branch accounts i.e. site/project. All postings for which the account number of the branch is specified, are automatically posted to customer head office. The account number of the branch affected is noted in line items.

Customer Previous account If you renumber customers and/or vendors when implementing the FI System,

you can store the previous master record number of legacy system for reference in this field.

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Customer Master


Corporate Group (Group of companies with common shareholder) An affiliation of legally independent companies under the common

management of a controlling company. The corporate group field is freely assignable. (For example, group 7)

Region Region code is a country-specific setting and predefined in SAP. It facilitates

management reporting by customer geographical location.

Payment Term Key for defining payment terms composed of cash discount percentages and

payment periods. Payment terms will serve to determine the invoices due date and the discount amount as per agreed upon. The payment terms in the master data will be default to the respective invoice document and these individual invoices can be changed manually.

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Customer Master


Industry Key An industry key is a distinct group of companies with the same basic business

activity. Industry Key Description

A001 Customer (Shipper / consignee)

B001 Co-loader

C101 Agent-Primary-WCA

C102 Agent-Primary-Non WCA

D101 Agent-Non Primary-WCA

D102 Agent-Non Primary-Non WCA

E001 Airline – IATA

E002 Airline – Non-IATA

F001 Shipping Line

G001 Warehouse

H001 Trucker

I001 Customs Broker

J001 Hand Carry (Team)

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Customer Master


Credit Representative Group Customer can be allocated to a credit representative for credit control or

other account manner. This credit representative group in OTEL represents the salesman / account manager of the customer.

Account Clerk An identification code for the AR clerk which responsible for daily

accounting transactions with customer such as payment, dunning, account statement, etc.

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Customer Master

The Relationship Between Account Group and Reconciliation Account

The account group and reconciliation account are proposed to be maintain in one to one relationship. This facilitates the reconciliation between AR sub-ledger and general ledger.

Account Group

Group Name Reconciliation Account in General Ledger

TCR Trade Customer – 3rd party 20301001

TCI Trade Customer – Inter-company 20301002

TRC Trade Customer – Related company 20301003

TAC Trade Customer – Associated Company 20301004

TJV Trade Customer – Joint Venture 20301005

NTC Trade Customer – Non trade-inter GP Co 20301800

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Customer Master

Payment Term Description Short Description

A030 30 days after monthly statement (Cutoff) 30 Days AMSA045 45 days after monthly statement (Cutoff) 45 Days AMSA060 60 days after monthly statement (Cutoff) 60 Days AMSN000 Due Immediately CODN007 Net 7 Days 7 Days NetN030 Net 30 Days 30 Days NetN045 Net 45 Days 45 Days NetN060 Net 60 Days 60 Days NetC030 30 days after job confirmation 30 Days AJCC045 45 days after job confirmation 45 Days AJCC060 60 days after job confirmation 60 Days AJC

Payment Term

In SAP, payment terms are used to define baseline date for due date calculation

The list of payment term by default in OTEL is as follow: -

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Customer Master

Customer Status

SAP provides a customer status field which is used as selection criteria and sorting key for customer report. This customer status information will be maintained in customer credit group field under customer credit master record.

List of Customer Status: -

Status Description

01 Credit

02 Credit with Letter of Credit

03 Temporary

04 Casual Cash in Advance

05 Black Listed

06 Stop Supply

07 Under Legal Action

08 Account Closed

09 Dormant Credit

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Credit Management

Credit Management in FI

The credit control setting of SAP SD “Sales and Distribution Module” customization is not included in this project phase. The customer credit information such as credit limit, outstanding receivable, etc have to be maintained in SAP FI module. However, the actual Credit check and release of sales related document will be carried out in CMC.

Credit Control Area

Decentralized credit control area is applied in most of the OTEL’s companies. The credit control area and company code is in one to one relationship except for HKG1 “ON TIME EXPRESS LIMITED” (Hong Kong). The naming conversion of credit control area is as same as company code i.e. 4 digits.

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Credit Management

The Relationship Between Credit Control Area and Company (Sample)

Credit Control Area

Credit Control Area Currency

Company Code

Company Description

HKG1 USD HKG1 ON TIME EXPRESS LIMITED

BJS1 ON TIME EXPRESS LIMITED

CAN1 ON TIME EXPRESS LIMITED

CTU1 ON TIME EXPRESS LIMITED

DLC1 ON TIME EXPRESS LIMITED

NGB1 ON TIME EXPRESS LIMITED

SHA1 ON TIME EXPRESS LIMITED

SHE1 ON TIME EXPRESS LIMITED

SZX1 ON TIME EXPRESS LIMITED

TAO1 ON TIME EXPRESS LIMITED

TSN1 ON TIME EXPRESS LIMITED

XMN1 ON TIME EXPRESS LIMITED

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Credit Management

The Relationship Between Credit Control Area and Company (sample)

Credit Control Area


Company Code

Company Description

BJS2 USD BJS2 ON TIME EXPRESS CO. LIMITED BEIJING BRANCH

CAN2 USD CAN2 ON TIME EXPRESS CO. LIMITED GUANGZHOU BRANCH

DLC2 USD DLC2 ON TIME EXPRESS CO. LIMITED DALIAN BRANCH

NGB2 USD NGB2 ON TIME EXPRESS CO. LIMITED NINGBO BRANCH

SHA2 USD SHA2 ON TIME EXPRESS CO. LIMITED

SHE2 USD SHE2 ON TIME EXPRESS CO. LIMITED SHENYANG BRANCH

SZX2 USD SZX2 ON TIME EXPRESS CO. LIMITED SHENZHEN BRANCH

TAO2 USD TAO2 ON TIME EXPRESS CO. LIMITED QINGDAO BRANCH

TSN2 USD TSN2 ON TIME EXPRESS CO. LIMITED TIANJIN BRANCH

XMN2 USD XMN2 ON TIME EXPRESS CO. LIMITED XIAMEN BRANCH

HKG4 HKD SHA3 CITYNET LOGISTICS WORLDWIDE LIMITED SHANGHAI

HKD HKG4 CITYNET LOGISTICS WORLDWIDE LIMITED

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Credit Management

Note:

Each legal entity should have its own credit control area,, all branches of one companies should under the same

Credit Control Area.

The Relationship Between Credit Control Area and Company (sample)

Credit Control Area


Company Code

Company Description

HKG2 HKD HKG2 ON TIME SHIPPING LINE LIMITED

HKG3 HKD HKG3 ON TIME WORLDWIDE LOGISTICS LIMITED.

KUL1 USD JHB1 ON TIME INTERNATIONAL LOGISTICS SDN BHD

USD PKL1 ON TIME INTERNATIONAL LOGISTICS SDN BHD

USD KLA1 ON TIME INTERNATIONAL LOGISTICS SDN BHD

USD PEN1 ON TIME INTERNATIONAL LOGISTICS SDN BHD

USD KUL1 ON TIME INTERNATIONAL LOGISTICS SDN BHD

USD BTU1 ON TIME INTERNATIONAL LOGISTICS SDN BHD

USD KMN1 ON TIME INTERNATIONAL LOGISTICS SDN BHD

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Credit Management

Credit Limit

It can be maintained at total credit control area level and individual credit control area level.

Total Limit

With the total credit limit, you determine the credit limit allowed for a customer for all credit control area. The sum of all credit limits within a credit control area cannot exceed this total credit limit.

Individual Credit Limit

With an individual credit, you can determine a specific credit limit for a customer within a credit control area. This allowable individual limit must not exceed the maximum individual credit limit.

In OTEL, credit limit data is maintained at customer main account level normally. The site accounts at the sub-level are sharing the same credit limit of its customer main account. CMC system will extract and utilize the credit limit amount and outstanding account receivable amount from SAP for customer credit assessment.

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Account Receivable Processing

CMCCargo Management

Control System

SAP – FI/COAccount Receivable

The customer billing process will still handle by OTEL CMC “Cargo Management Control” System. The relevant accounting entries of billing data will be transfer from CMC to SAP (FICO) through an interface program. Since the customer settlement process will be done in SAP FI-AR module, the customer credit limit and the outstanding customer account balances have to be provided by SAP.

In order to distinguish between the manual AR posting and the posting generated by interface program for data analysis purpose, a separate document type has been defined specific for CMC.

Update AR sub-ledger and sales revenues

accounts in SAP

Update AR sub-ledger and sales revenues

accounts in SAP

Shipment Related Billing and Credit Note

Interface

Billing / Credit Note

Credit Control Data

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Document Nature CMC Document Type SAP Document Type

Accrual Credit Note E ZA

Accrual Invoice H ZA

Accrual Cost K ZB

Payable Invoice (Payment Requisition) P ZC

Group Payment Requisition GP ZP

Non-Trade Credit Note NC ZN

Non-Trade Invoice ND ZN

Credit Note C ZS

Invoice / Debit Note D ZS

Group Credit Note GC ZT

Group Invoice GD ZT

Internal Approved Cost w/o job (Deferred) P ZX

Shipment Related Billing and Credit Note

SAP Document Type for Interface Transaction

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Non-trade (Non-shipment Related) Debit note and Credit note

Prepare Debit Memo / Credit Memo (Status: Park) T-code: FV70

Print out the Debit / Credit MemoT-code: FB03

Post the Credit memo / Debit memo

(Status: Post)T-code: FBV0

Post Payment (clear the customer open

item)T-code: F-28

Send the Credit Memo / Debit Memo to

Customer

Receive Payment from

Customer

StartStart

EndEnd

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Customer Down payment Posting

Down payment (Deposit payment from customer) is posted into SAP by using the special G/L indicator. An alternative reconciliation account and special G/L indicator “A” and “D” have to be defined as follow: -

Special G/L Indicator

With this special G/L indicator, you let the system know that a special G/L transaction is to be posted and which transaction it is. The special transactions in account receivable and account payable that are shown separately in the general ledger and sub-ledger. Using the indicator, the system determines a special screen and the alternative reconciliation account in the general ledger which will be updated by the line item.

Standard Special G/L Indicator

Description Alternative Reconciliation Account

A Receipt in Advance 40301001

D Customer Security Deposit 40301002

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Post Receipt and Account Settlement

SAP use the post with clearing function to offset the customer’s open item against the bank account. Posting with clearing is done by entering the document line items and then select the open item that are to be cleared. Once the total amount of selected open items equals the amount of entered line item, the system will post and clear the open items. Open item management ensures that all items that have not yet been cleared are available in the system. Only after every open item in a document is cleared, the document can be archived.Moreover, SAP provides the flexibility in accepting any part payment in two methods, Partial Payment and Residual Payment.

Partial payment will keep the original invoice line item open until the full amount has been cleared, meanwhile a new line item will be created for the paid amount. However, Residual payment will clear the original invoice and a new line item with the unpaid amount will be cleared to replace of the original.

OTEL will use Partial Payment method for the incoming payment which is not paid in full.

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Post Receipt and Account Settlement Customer account Clearing is done by select the open items that are to be

cleared against the customer payment of the specific customer. In clearing these items, the system will assign a clearing document number and the date on which they were cleared.

If a customer is also a vendor at the same time, you can offset the open items receivables and payables against each other.

Incoming Payment / Remittance advice

received from customer

Full Payment?

Enter “Partial Payment”

(T-code: F-28)

Process Customer open item

Partial Payment Posted

Process Customer Open item

(T-code: F-28)

Payment Document

Posted

Start

End

No

Yes

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Customer Account Clearing

Account clearing is a procedure by which the open items belonging to one or more accounts are indicated as cleared. This process is applicable for balance sheet account which is managed in open item basis.

By using t-code F-32 (Customer Account Clear), you can manually select and offset the account line items if the total credit amount equals the total debit amount. By the t-code F.13 (Automatic Clearing), the items can be offset automatically. Provided that the credit amount equals the debit amount and the items are maintained with a identical value in a common field. The status of line items will change to “cleared” after clearing. It can reduce the number of “open” line item in AR sub-ledger and all cleared items will be shown on customer account statement.

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Dunning Notice The dunning procedure controls how dunning is carried out by the system. You

can define as many dunning procedures as you like. The dunning procedure can determine:

– Dunning Levels– The dunning levels are calculated based on the number of days open

items are in arrears. You can determine more than one dunning level per dunning procedure.

– Dunning interval in days– You must determine at which intervals the allocated accounts are to be

dunned for every dunning procedure. During every dunning run, the system then checks whether the run date is at least this number of days since the date of the last dunning run. If this is not the case, then a new dunning notice cannot be created even if new items have become overdue on the account or individual items have changed their dunning level.

User can assign this dunning procedure to individual customer master record. The default dunning procedure in standard SAP is “0001 – Four level of dunning notice”

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Period-End Closing

Open Item Foreign Currency Revaluation

In order to create your financial statements, you have to carry out a foreign currency valuation for customer open item in foreign currency.

All open items in foreign currency are valuated as part of the foreign currency valuation:

The individual open items of an account in foreign currency form the basis of the valuation, that is, every open item of an account in foreign currency is valuated individually.

The total difference from all the open items in an account is posted to a financial statement adjustment account. The account therefore retains its original balance.

The exchange rate profit or loss from the valuation is posted to a separate expense or revenue account for exchange rate differences as an offsetting posting.

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Period-End Closing

Open Item Foreign Currency Revaluation

Below is the account assignment of foreign currency revaluation: -

AR Reconciliation Account

Reconciliation Account Description Realized Exchange Difference

Unrealized Exchange Difference

Balance sheet Adjustment Account

20301001 Trade Customer – Third parties 84025001 62010005 20301900

20301002 Trade Customer – Inter company (Sub) 84025001 62010005 20301900

20301003 Trade Customer – Related Company 84025001 62010005 20301900

20301004 Trade Customer – Associated Company 84025001 62010005 20301900

20301005 Trade Customer – Joint Venture 84025001 62010005 20301900

20301800 Trade Customer – Non trade-inter GP Co. 84025001 62010005 20301900

40301001 Receipt in Advance 84025001 62010005 40301900

40301002 Customer Security Deposit 84025001 62010005 40301900

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Period-End Closing

A/R Balance Carried Forward

This program calculates the balance carried forward for customers.

The balances of the previous year are carried forward to the new year. When you carry forward the balances for customer at the end of a fiscal year, the system automatically update the balances when you post values to the previous year. The system uses an indicator to determine whether the balances have been carried forward. Once this has been done, the balance is automatically carried forward whenever a posting is made, even when a posting is made to the previous year. It is therefore not necessary to execute the balance carry forward again.

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SAP Implementation Business Blueprint S2-020 – Account Receivable Processing