In a Normal Business scenario, business issues Credit memos also in addition to Normal Invoices. Credit memos are normally issued if an invoice is already been sent to a customer and at later point of time, some part of the amount is to be credited back to Customer. The various reasons for the same can be –

1. Customer returned some or complete part back to Business.

2. Customer paid excess amount

3. Business, by mistake, charged the customer with excess amount and thus, returning it back by issuing credit memos etc.

The Dunning Program in SAP behaves in a different fashion for credit memos and Normal invoices. This doucment tries to explain the credit memo dunning functionality with appropriate examples.

1. Introduction

Dunning, in Lehman Term, is a reminder notice to customer for the payment which has not been received by the business for its services and is overdue. In case of vendors, dunning notices are issued if there is an advance payment made to the vendor for supplying the material and the same has not been received on the delivery due date.

A Credit memo in general term is a transaction to reduce the amount receivable from the customer. It is normally issued if an invoice is already been sent to the customer and at a later point of time, some part of the amount is credited back to the customer.

2. How Dunning Level is determined in SAP for Credit memo

Credit memos can be issued against an invoice or it may be issued alone to refund the amount back to customer.

  • In case of Invoice related Credit Memos, the dunning level is determined from the dunning level of the invoice, provided that the invoice is entered in the invoice reference field in Credit memo line item and the dunning run is carried out for both the invoice and the credit memo together. When Dunning is carried out in this case, the dunning level of the invoice is being considered for dunning and is assigned to the credit memo.
  • The Non- invoice related Credit memos consider the highest dunning level of the same customer account they have been posted to and are included in the same dunning run. In other words, if a non – invoice related credit memo is dunned with other invoices of the same customer, the credit memo gets dunned with the highest dunning level achieved in this run.

3. Different scenarios for credit memo dunning

Below are the different scenarios and messages which appear when credit memo dunning is done.

A Credit Memo is posted for an account in a co. code

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A) Scenario 1

If the Credit Memo (WIthout invoice reference) is dunned alone, it will be dunned with dunning level 0 and the following message appear

Credit Memo has new dunning level 0. WIthout Invoice reference.

This is because, in this particular run, no other invoices are included for this account.

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As can be seen above, only credit memo is dunned in this dunning run, hence, it has take dunning level 0.

B) Scenario 2

If the same Credit memo (Without invoice reference) is dunned along with other items of the same customer, it will be dunned with the highest level achieved in dunning. If the highest dunning level achieved is e.g. 2, the following message will appear

Credit Memo has new Dunning level 2. Without Invoice reference

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As can be seen in the screenshots above, there are invoices with both dunning level 1 and 2 for the same customer acocunt, however, the credit memo has considered the dunning level 2 (i.e. highest dunning level in this particular run).

C) Scenario 3

If the credit Memo (With Invoice reference) is dunned along with the invoice reference, it will be dunned with the dunning level of invoice in dunning run. If the dunning level of invoice is e.g. 1, the following message will appear

Credit Memo XXXXXXXX has new Dunnning level 1. Invoice reference YYYYYYYY

Credit memo with invoice reference posted

Credit memo # 6851000003

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Credit Memo # 6851000001

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As can be seen in the dunning log below, invoice 6801000015 is also included in the dunning notice. Hence the credit memo 6851000003 has picked the dunning level of original invoice 6801000015 i.e. dunning level 2.

For Credit memo 6851000001, the original invoice is not included in the dunning run. Hence it has picked the highest dunning level of the account in the dunning run i.e. 2.

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D) Scenario 4

If the same Credit Memo (With Invoice reference) is dunned alone, the following message will appear.

Credit Memo XXXXXXXX with invoice reference YYYYYYYY is not in the dunning proposal.

Credit Memo XXXXXXXX has new Dunning level 0. Without Invoice Reference.

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As can be seen in the above shown dunning log, because the credit memo is dunned alone without Invoice reference, it has taken the dunning level 0.

E) Scenario 5

Credit Memos and Invoices of different customers are included in the same dunning run with different dunning levels.

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As can be seen in the above two screenshots from dunning log, customer account 0132261009 and 0992000011 have been included in the dunning run.

For account 0132261009, the highest dunning level is 2. Hence the credit memo is also dunned with dunning level 2 (If the credit memo is with invoice reference and this reference invoice is also included in the run, credit memo would have taken the dunning level of the invoice)

For acocunt 0992000011, the credit memos are dunned with dunning level 1- the highest dunning level of this account in the dunning run.

F) Scenario 6

In order for the dunning program to take credit memo payment terms in to account, the credit memo must either be reference to an invoice, or the credit memo must be entered with specific due date.

In the former case, the credit memo will be due with the due date of the reference invoice.

For the later, alphabet V needs to be entered in the invoice reference field. The credit memo in this case is due once the baseline date and maximum number of days specified have been exceeded.

e.g. for the below invoice related credit memo, the memo is due with the due date of the reference invoice 2900000023

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For the non- invoice related credit memo, the payment term will be considered by the dunning run if the letter V is entered in the invoice reference field and the memo willbe due once the baseline date and maximum number of days specified have been exceeded.

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As can be seen in the above scrrenshots, the letter V is entered in Credit Memo Invoice reference field and the due date gets calculated as 22.09.2011 (i.e. it considered the payment term)

For the same credit memo, if the letter V is not entered in invoice reference field, the payment term is not considered for due date calculation (as can be seen in the screenshots below).

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Based on this due date, the documents are then considered in the dunning run.

So, in a nutshell, when dunning the credit memos, either they should be referenced to an invoice and the reference invoice should also be included in the dunning run so as to get the same dunning level as invoice. Else, the credit memo will be dunned with the highest dunning level of the account included in the dunning run. When dunned alone, the credit memo takes dunning level 0.

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10 Comments

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      1. prasanna dash

        Dear Amit,

        Really it is nice material . Many many thanks for your effort & valuable time for us. For such kind you people, we are learning very smoothly. Now a days our expectation more and more . Coming future please share more article.  Good luck

        WBR

        Prasanna

        (0) 
  1. CA. Prasad Atmakuri

    Hi

    Thanks for sharing a detailed document

    However i have a small query, on which business case we will do dunning run for credit memos. Credit memos are nothing but reduction in value that we going to receive from customers. So i was wondering in which cases we will do the dunning for credit memos

    Please clarify

    Thanks in Advance

    Prasad

    (0) 
  2. Lakshmi Kumari Sama

    Hi Amitash,

    Itz really a good doc but please add t code details & SPRO paths for the concern transactions in order to make understand easily even to beginners also.

    Best Regards,

    Lakshmi S

    (0) 

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