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SAP FI Dunning Procedure for Customer Outstanding Invoices

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I. INTRODUCTION

Purpose:

When the customer misses the payment for the outstanding invoice within specified payment due date. The dunning letter is generated via sap program and send at customer address for reminding the customer outstanding payment

Requirement:

The dunning system enables to trace liable customers who have not paid their open invoices within a given time span. It enables you to handle the process from, for example, sending a reminder to customers of their outstanding payments through to referring such customers to collections agencies.

The dunning system covers the following documents:

1. Open A/R invoices, including invoices that are partially credited or partially paid

2. Invoices that include installments

3. A/R credit memos

4. Incoming payments that are not based on invoices

II. CONFIGURATION:

1. Create Dunning Keys

We define dunning keys in this step. Dunning keys limits the dunning level of an item.

Path: IMG > Financial Accounting (New) > Account Receivable and Account Payable > Business Transactions > Dunning > Basic Setting for Dunning > Define Dunning Keys

Tcode: N/A

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2. Define Block reason for Dunning Notices

In this step, we define the reasons for a dunning block under a key. The key can be entered in an item or in the account of a Customer master. Blocked items or accounts are not considered for the dunning run

Path: IMG > Financial Accounting (New) > Account Receivable and Account Payable > Business Transactions > Dunning > Basic Setting for Dunning > Define Dunning Block Reasons

Tcode: N/A

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3. Define Dunning Procedures

We can create Dunning text, Dunning level, Dunning Charges and Company code assignment in the dunning procedure

Path: IMG > Financial Accounting (New) > Account Receivable and Account Payable > Business Transactions > Dunning > Dunning Procedure > Define Dunning Procedure

Tcode: FBMP

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4. Create Dunning Interval in days to Dunning Procedures

We 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 (14 days) since the date of the last dunning run.

Path: IMG > Financial Accounting (New) > Account Receivable and Account Payable > Business Transactions > Dunning > Dunning Procedure > Define Dunning Procedure

Tcode: FBMP

Choose the Dunning procedure and click “Choose” Button

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5. Define  Dunning Levels to Dunning Procedures

In this step, we determine number of dunning level set up in dunning procedure.

Path: IMG > Financial Accounting (New) > Account Receivable and Account Payable > Business Transactions > Dunning > Dunning Procedure > Define Dunning Procedure

Tcode: FBMP

Choose the Dunning procedure and click “Choose” Button

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6. Define  Dunning Charges to Dunning Procedures

In this step we add the dunning charge as per the dunning level. This is like an administration charge to dun the customer. Currency Euro is assigned during adding the dunning charge

Path: IMG > Financial Accounting (New) > Account Receivable and Account Payable > Business Transactions > Dunning > Dunning Procedure > Define Dunning Procedure

Tcode: FBMP

Choose the Dunning procedure, click “Choose” Button, and choose “Charges” button

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7. Define Minimum Amounts to Dunning Procedures

Minimum Amount are customized to charge the administration charge to customer with reference to dunning level

Path: IMG > Financial Accounting (New) > Account Receivable and Account Payable > Business Transactions > Dunning > Dunning Procedure > Define Dunning Procedure

Tcode: FBMP

Choose the Dunning procedure, click “Choose” Button, and choose “Minimum amounts” button

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8. Assign  Dunning Texts and forms  to Dunning Procedures

For inserting dunning forms, click Dunning Texts and assign the required forms for the dunning text with reference to dunning Level. In case the customer has different language and the form contains different language, then please follow the document attached to translate the source language to target language.

Path: IMG > Financial Accounting (New) > Account Receivable and Account Payable > Business Transactions > Dunning > Dunning Procedure > Define Dunning Procedure

Tcode: FBMP

Choose the Dunning procedure, click “Choose” Button, and choose “Dunning Texts” button

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9. Define Dunning level  to Dunning Procedures

Click the dunning levels and input days in Arrears for each dunning levels.

Select Always Dun in legal dunning proc for not missing any dunning notices.

Path: IMG > Financial Accounting (New) > Account Receivable and Account Payable > Business Transactions > Dunning > Dunning Procedure > Define Dunning Procedure

Tcode: FBMP

Choose the Dunning procedure, click “Choose” Button, and choose “Dunning Levels” button

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10. Assign Special indicator to Dunning Procedures

In this step, we have assigned Special Indicator Reserve for Bad Debt to dunning Procedure.

Path: IMG > Financial Accounting (New) > Account Receivable and Account Payable > Business Transactions > Dunning > Dunning Procedure > Define Dunning Procedure

Tcode: FBMP

Choose the Dunning procedure, click “Choose” Button, and choose “Sp. GL indicator” button

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11. Assign Company Code to Dunning Procedures

We have assigned company code with reference to Dunning Level and not by Dunning area

Path: N/A

Tcode: OBVU

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12. Assign Sort Fields to Dunning Procedures

In this step, we assign Sort field K1 and Sort field P1 to Company code.

K1 will control the header content and P1 will control line item while printing the contents

Path: N/A

Tcode: OBVU

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III. PREPARATION OF CUSTOMER MASTER DATA FOR DUNNING PROCEDURES:

1. In this step, we insert Dunning procedures in the customer master (Correspondence tab).

2. We have to maintain the Language field in the customer master data (Address tab) to print the Dunning Notice as per there language, Dunning Text should also be maintained in reference to dunning level. So that the content of dunning notice will be different to dunning level.

3. For dunning run, this transaction should be performed by F150. This is a month end duty. Please insert Dunning date, Document posted up to date, Company code, Customer Number and save

a. In case we will specify the checks that are to be maintained by user before starting dunning the customer

– Dunning procedure should be maintained in customer master

– Verify in Customer master regarding Dunning block (Customer can’t be dunned if there is dunning block in customer master as well as line item)

– Verify in transaction FBL5N the customer Invoice should be overdue and Amount should be in debit balance and not in credit

– User should make sure the parameters are inserted correctly for Dunning date, Customer Number, Company code and Document posted till date

– Correct Printer should be inserted while printing the dunning notice

b. Dunning test for Credit Memo and Down payment

– Credit Memo

In the dunning run, we can offset existing credit notes with outstanding invoices. This affects the determination of the due date for payment and the dunning level. These are different for customer and vendor credit memos.

The dunning program assumes that credit memos are always due on the baseline date, unless they have been given a specific due date or are invoice-related. This means that credit memo dunning is not affected if you enter only one payment term manually in a line item.

For invoice-related credit memos, the dunning level is taken from the invoice, provided this is contained in the dunning proposal. All other credit memos due are assigned to the highest dunning level determined so far for the account they belong to. This means that these credit memos are cleared with the oldest invoices.

– Down payment

We can take down payments into consideration during the dunning run. When defining the dunning procedure we must specify which down payment types are included in the dunning run. To do this, we specify the special G/L indicators for these down payment types. The dunning program treats a down payment received as a credit memo and reduces the receivables by the amount of the down payment. Since down payments are only included in the dunning run in exceptional cases, each down payment item contains a field for the dunning block. The system sets this block automatically. The down payment also contains a due date field, which the system automatically fills with the document date. You can change these fields with the document change function.

III. EXAMPLE DUNNING LETTER: (German language)

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