1. Dunning Letter In Sap

Advertisement Welcome to the tutorial about SAP Dunning Process. This tutorial is part of our free.

SAP Dunning program is. Line item grace period is an important feature within the configuration of the Dunning procedure that allows line items to. Dunning configuration in sap fico pdf. The dunning letter is generated via sap program and send at customer. Dunning configuration in sap pdf 2015.

An organization that sells goods or services will send invoices to its customers as a method of requesting payment. These invoices are required to be paid by the customer according to preset rules agreed upon by both the organization and its customers. To ensure payment is made according to these rules, an organization may need to remind its customers that invoices are due or payment is late. The reminders typically start gently and grow in severity as invoices continue to age.

In addition, an organization may require this reminder process to charge its customers for both the payment reminders as well as interest on unpaid invoices. To satisfy this business requirement, an organization can use the Dunning process within SAP Financial Accounting’s Accounts Receivable sub module (FI-AR). SAP Dunning Process Flow To understand the process that leads to Dunning, let’s review a typical AR invoice cycle and look at a few key elements that play a role.

Advertisement 1. Payment Terms Payment terms will ultimately determine which invoices are subject to Dunning. Each customer master record is assigned a customer payment terms code. The preconfigured terms code will dictate the rules in which the customer is required to pay invoices. There are various settings and combinations that can be used in configuring a payment terms code (see separate tutorials), but a typical terms code may be set up as shown below. Example of a typical Payment Terms Code When this terms code is assigned, the customer must pay invoices within 30 days from the document date, and it will receive a 2 percent discount if paid within 15 days.

Customer Invoice Invoices are entered into the SAP Accounts Receivable sub ledger to record receivables against a customer for goods and services. Standard FI document type DR is typically used for this purpose. This will record a debit entry against the customer master record and it’s linked FI-AR general ledger reconciliation account. The customer master record contains the payment terms explained in the first step, and again, this is what will determine when the payment for the invoice is due. Advertisement 3. Customer Payment Customer payments are entered into the SAP Financial Accounting sub ledger to pay for goods and services provided. Standard FI document type DZ is typically used for this purpose.

This will post a credit entry against the customer master record and the linked FI-AR general ledger reconciliation account. Invoice Clearing Invoices can be cleared against payments in the in FI-AR sub ledger using a variety of methods. This can either be done manually using an online dialog transaction or automatically using background batch jobs. Either way, each customer invoice is matched against a customer payment to clear the open items against one another. Remaining items that are deemed to be in arrears based on the terms code previously mentioned will be addressed using the Dunning program. Dunning Program SAP Dunning program is periodically executed to review open (uncleared) items.

Dunning Letter In Sap

If you are familiar with the payment program in FI-AP, you will notice that some similar features exist in this program in terms of user screens, processing steps, etc. For purposes of this document, execution of the Dunning program is the last step in the AR process and is simply a communication to customers to comply with the payment terms as agreed on. This “reminder notice” to the customer will accomplish several things. First, it will simply remind the customer in writing that there are open invoices that are required to be paid. Second, it has the ability to charge a fee for sending the reminder notice, as no reminder would have been required if payment was made on time. Thirdly, the program can charge the customer interest on unpaid invoices. Advertisement Key Elements in SAP Dunning Process The Dunning program can be executed either as a batch job or using an online dialog transaction.

The program will review open customer invoices based on the criteria entered into the program’s selection screens. A separate tutorial will explain more detail on how to execute the Dunning program, but here we will discuss some of the main settings and features behind the Dunning process. SAP Dunning Area The Dunning area is the starting point for understanding SAP Dunning process. A Dunning area is configured in the IMG and assigned to a company code. This is the first step in configuring the Dunning process and is used as an overall grouping level when executing the Dunning program. Details of Dunning configuration will be discussed in separate posts, but to gain an initial understanding of the overall process, be aware that the Dunning area is the high level organizational unit for processing Dunning for individual units within a company code. This is an optional step and is only needed if the organization requires separate Dunning processes within a company code.

SAP Dunning Procedure SAP Dunning procedure is where most of the control of SAP Dunning process takes place. The procedure is configured to hold Dunning level interval days, number of levels that apply to a particular procedure, Dunning charges (cost of the reminder to the customer), minimum charges, whether or not interest is charged and if so at what level, etc. SAP Dunning Procedure is assigned to each customer in the company code correspondence tab in the customer master record (only one Dunning procedure can be applied to a customer at a time). 3.Dunning Levels The dunning levels are a key fundamental in understanding SAP Dunning process. Dunning Levels are an element within the Dunning procedure that control which invoices are subject to Dunning based on how late they are. Each level within a Dunning procedure can treat invoices uniquely based on the settings assigned.

For example, as an invoice reaches each level based on the number of days in arrears, the severity of SAP Dunning procedure can intensify. An example could be early in the process, such as level 1, no Dunning letter may occur, but instead a report is generated to list all items at this level. Level 2 could be defined to produce the Dunning letter only as a gentle reminder but no charges. Level 3 could be set to produce a firmer letter and a charge. Level 4 could produce a demanding letter, a Dunning charge, and an interest amount.

Dunning Forms The main intent of SAP Dunning procedure is to communicate the status of overdue invoices to customers. Dunning forms are usually the final product of SAP Dunning process. Within the Dunning procedure levels, you can assign form letters that will have unique texts indicating what the status of the invoice is, instructions on payment, etc. Each level will contain a unique form with escalating level of severity. SAP delivers standards forms; however, it is common practice for organizations to develop their own forms with customized verbiage, logos, etc.

Advertisement 5. Additional Features Allowing Bypass of Dunning There are many details that can be configured and utilized within the Dunning process based on an organization’s requirements, but a few features worth noting early in your understanding are Dunning Key, Dunning Block, and Grace Periods.

Dunning Key is used to allow specific levels of a Dunning procedure to be bypassed. Dunning Blocks are used simply to exclude items from Dunning. These blocks can be placed on the customer record to completely exclude it from the process, or they can be applied to individual invoices to prevent them from being considered for Dunning. Again, you may find this to be similar to AP when thinking of payment blocks. Line item grace period is an important feature within the configuration of the Dunning procedure that allows line items to be bypassed that are less than or equal to a specified number of days. Conclusion SAP Dunning process is a very useful tool that organizations can utilize within FI-AR that will help them with their unpaid invoice collections.

This tutorial was intended as a brief introduction of some of the major points of understanding. Future tutorials will explore more details on the, execution, and modification of the Dunning program.

Advertisement A previously posted tutorial gave an introduction to the within the SAP Financial Accounting Accounts Receivable (AR) submodule. Hopefully, that tutorial gave a general understanding of the purpose of Dunning, listed some of the key elements that must be configured to use the functionality, and a provided a brief explanation of the Dunning program itself. This tutorial will expand on that understanding by explaining the key steps in SAP Dunning configuration within the IMG. SAP Dunning Configuration SAP Dunning configuration includes several steps and we will discuss each of them in a separate section of this tutorial. Advertisement SAP Dunning Area As noted in the previously mentioned tutorial, the Dunning area is the starting point for understanding the Dunning process.

Dunning Area is typically used by an organization that requires Dunning for specific organizational units within a, such as a, etc. A Dunning area is configured in the IMG and assigned to a company code. This is the first step in SAP Dunning configuration and is used as an overall grouping level when executing the Dunning program. This step is optional and not required if SAP Dunning process is to be carried out for an entire company code. The IMG path to configure the Dunning area is as follows: Transaction SPRO SAP Reference IMG Financial Accounting (New) Accounts Receivable and Accounts Payable Business Transactions Dunning Basic Settings for Dunning Define Dunning Areas IMG Menu Path for Dunning Area Configuration Click on the execute icon to enter the configuration screen. Once in the configuration screen, either click on the “New Entries” button or simply highlight an existing entry and click on the “Copy As” button: Dunning Area Configuration Screen In this example, we will copy the entries from an existing company code to a new company code: Dunning Area Configuration Screen – Copy Existing Entries Once your Dunning Areas are configured, save to a transport.

Advertisement SAP Dunning Keys The next basic setting to configure are Dunning Keys. These are used to limit specific AR line items to a Dunning Level and/or to print them separately on Dunning Notices. The IMG path to configure the Dunning Keys is as follows: Transaction SPRO SAP Reference IMG Financial Accounting (New) Accounts Receivable and Accounts Payable Business Transactions Dunning Basic Settings for Dunning Define Dunning Keys IMG Menu Path for Dunning Keys Configuration Click on the execute icon to enter the configuration screen.

Once in the configuration screen, click on the “New Entries” button or highlight an existing entry and click on the “Copy As” button (same functions available as with Dunning Areas, so we will not show the screenshot here). Again, we will copy existing entries in this example. Dunning Keys Configuration Screen – Copy Existing Entries Once Dunning Keys are configured, save the table to your transport. Advertisement SAP Dunning Blocks Dunning blocks can be used to prevent line items from being subject to Dunning. They are configured as followed and either assigned at the specific invoice line item level or at the customer master record level. The IMG path to configure the Dunning Block Reasons is as follows: Transaction SPRO SAP Reference IMG Financial Accounting (New) Accounts Receivable and Accounts Payable Business Transactions Dunning Basic Settings for Dunning Define Dunning Block Reasons IMG Menu Path for Dunning Block Reasons Configuration Click on the execute icon to enter the configuration screen. Once in the configuration screen, click on the “New Entries” button or simply highlight an existing entry and click on the “Copy As” button (same functions available as with Dunning Areas, so we will not show the screenshot here).

Again, we will copy an existing entry and give it a unique text. Dunning Block Reason Configuration Screen – Copy Existing Entry Once the Block Reason is configured, save the table to your transport. Advertisement SAP Dunning Procedure Let’s talk about the role of the Dunning procedure in SAP Dunning configuration.

As previously noted, the Dunning procedure is where most of the control of occurs. The procedure is configured to hold Dunning level interval days, number of levels that apply to a particular procedure, Dunning charges (cost of the reminder to the customer), minimum charges, whether or not interest is charged and if so at what level, etc. The Dunning Procedure is assigned to each customer in the company code correspondence tab in the customer master record (only one Dunning procedure can be applied to a customer at a time). Keep in mind that Dunning Procedures are company code independent. The IMG path to configure a Dunning Procedure is as follows: Transaction SPRO SAP Reference IMG Financial Accounting (New) Accounts Receivable and Accounts Payable Business Transactions Dunning Dunning Procedure Define Dunning Procedures IMG Menu Path for Dunning Procedures Configuration Click on the execute icon to enter the configuration screen. Unlike previously explained screens in which we copied existing entries, we will create our own new entries, so click on the “New procedure” button. IMG Configuration Screen for New Dunning Procedure After clicking on the “New procedure” button, the following screen will appear.

A brief explanation for each setting we are using is given. IMG Configuration Example of a New Dunning Procedure Dunning procedure – assign a new and unique 4-digit ID. Name – assign a meaningful name.

Dunning interval in days – assign the number of days that will trigger the procedure; this is the number of days between each Dunning run. Of Dunning levels – this is the number of levels for the dunning procedure. Days in arrears (acct) – Days in arrears which at least one item in the customer account must have for a dunning notice to be created. Line item grace periods – grace periods taken into consideration when calculating Dunning notices due. Interest indicator – this field is used to specify the interest indicator for items on the customer master using this procedure. Public hol.cal.ID – this is used if a public holiday calendar is to be considered when analyzing overdue items. Dunning Procedure for Texts – use this field to reference form names from another procedure that has the same number of levels.

Next, click on the “Dunning levels” button and complete field settings as required. The screen will appear as follows and explanations for fields we are using in this example will be given. IMG Configuration Example of Dunning Levels within a Dunning Procedure Days in arrears – this indicates the number of days in arrears that will trigger each level. Calculate interest? – check this field if you want to calculate interest for the specified level. – use this setting for each level you want to Always Dun regardless of whether or not a change has been made to a Dunning proposal; typically used at the highest level of the procedure.

Print all items – use this setting if you want to print all open items for the customer to give them a complete picture of their account balance. Once the required settings on this screen are completed, click the “Charges” button. This is where we can specify what the Dunning charge is for each level. These charges are dependent on currency, so you will be prompted for a currency key when you click this. The charges screen will appear as follows. IMG Configuration Example of Dunning Charges within a Dunning Procedure After completing this screen by entering the total open item amount and the required charge for each level (can be either a fixed charge as in this case, or a percentage), click on the “Minimum amounts” button.

Again, this will be currency dependent. As the button name indicates, this is where you set the minimum overdue line item amounts that trigger each level and interest. An example of a completed screen will look as follows. IMG Configuration Example of Minimum Amounts within a Dunning Procedure After completing this screen by entering the minimum amount (can be either fixed, as in this example, or a percentage) and minimum interest amount for each level, click on the “Dunning texts” button. As the button name indicates, this is where you set the dunning text for each level. As noted earlier, each level can have a different text which typically escalates in verbiage severity. You can use SAP standard delivered texts, or you can customize your own to meet specific requirements.

To see available forms, click into the field and click the drop down. Select either an active standard delivered form or custom form, depending on your business requirements. In this example, for simplicity, we will use a standard for each level. Note: this will be company code dependent, so a company code dialog box will appear prior to entering this screen (not show here).

Enter the you want and proceed. An example of a completed screen using the same form for each level is as follows. IMG Configuration Example of Dunning Texts within a Dunning Procedure Once complete, click the green arrow to go back and save the completed configuration to your transport. IMG Configuration Example of a Newly Created and Saved Dunning Procedure This completes SAP Dunning configuration required in the SAP implementation guide to use the Dunning functionality. Conclusion These steps outline the basic configuration required to use the Dunning functionality within SAP Financial Accounting Accounts Receivable, however, depending on specific business requirements, other settings may be needed. Explore the help features within the IMG to learn more as you proceed with SAP Dunning configuration. The next steps, which will be outlined in later posts, will be to assign the Dunning Procedure to customer master records, the Dunning program, and change the Dunning proposal if required.

Additional information will also be provided on Dunning notices.