Lockbox process

The predominant way payments are made in US is by checks. Lockboxs help in speedy deposit of funds and clearance of customer accounts. Lockboxs are special depository accounts set up at a bank to which customer remit their invoice payments.

Banks daily than submit company’s an electronic file listing all deposits and invoices that are paid against. Company’s than upload these files in SAP and update their balance and clear customers i.e. A/R accounts.

Some company’s setup single lockbox whereas others set up lockboxs at different locations thought the country in order to decrease the time it takes to receive the customer payments.

     Figure 1: Lockbox Process Flow

Lockbox File Formats

SAP supports both US lockbox file formats – BAI & BAI2.Each bank has its own standard BAI and BAI2, hence configuration and testing needs to be done depending on bank file configuration.

Hence if you are not comfortable with bank file format either you can approach them to modify it depending on your requirement else ABAP can help in writing a preprocessing program and make file fit with SAP standard format.

Difference between BAI and BAI2

BAI2 is advised as because it has greater probability of producing automatic matches in the processing and because it allows one to record deduction information and create proper residual postings.

Relationship between EBS and Lockbox

Assume on Day 1 company receives Lockbox file from bank and on Day 2 receives EBS file.

Day 1 When the bank receives a check from customer with remittance information its sends it in Lockbox file. Lockbox file when processed will generate below accounting posting

          Dr Bank Clearing account – incoming

     Cr Lockbox Clearing Account

          Dr Lock box clearing account

     Cr Customer account (customer sub ledger)

Day 2 when the check is cleared in bank, it appears in EBS. EBS when processed produces below accounting entry

Dr Bank Main GL

          Cr Bank Clearing Account – incoming

Lockbox Configuration

House Bank Configuration

Create House banks

1. Menu Path: Financial Accounting à General Ledger Accounting à Bank – Related Accounting à Bank Accounts à Define House Banks

Transaction Code: FI12

Under the house bank create Bank account from FBZP transaction code.

After creation of House bank and Bank account under company code, it should look like this in FBZP transaction code.

Lock Box Configuration

1. Path: IMG à Financial Accountingà Bank Accounting à Business Transactions à Payment Transactions à Lock box àDefine posting parameters

T Code: OBAX

Select highlighted row and click on change item button.

Document Number Length: Field is only applicable for BAI record

1. Num. of doc numbers in type 6: Field is only applicable for BAI record
2. Num. of doc numbers in type 4: Field is only applicable for BAI record

G/L account Postings: Activate this indicator to make postings to your cash account in the G/L for deposits. Activating this field is recommended

Incoming Customer payments: Activate this indicator to make postings to A/R sub ledger in order to clear customer accounts and create residual postings. Activating this field is recommended

Insert Bank Details: Applicable for batch input session name that updates bank details of master records for customers who have either changed bank information or did not have bank information maintained for them

G/L account posting type

1 – Creates posting to G/L account for every check in the file     

2 – Creates one posting to the G/L account for entire lockbox file

3 – Creates one posting to the G/L account for entire batch

Automatic Posting from lockbox        

1. IMG à Financial Accountingà Bank Accounting àBusiness Transactions àPayment Transactionsà Lock boxà Define posting data

OBAY

Destination: This field should contain the destination code the bank submits to you in your lockbox file

Origin: This field should contain the your lockbox number (bank account) number at the bank

IMG à Financial Accountingà Bank Accounting àBank Accounts à Define Lockboxes for House bank

Click on first option

Customer Master Data

Transaction Code: XD03

Maintain Bank details in customer master data which bank will send in lockbox file

.

Customer Invoice Posting

Post one 600 amount customer invoice. Invoice will display in open state.

T code FB70

Open the invoice

Transaction code: FB03

T code: FBL5N (Customer Report)

Below report shows customer item and it’s not cleared.

Lockbox file processing

SAP gives option of using one of the two standard algorithms for lockbox processing. A common misrepresentation is that one can create own algorithm which is not correct. We can only use the pen delivered by SAP. Program RFEBLB00 is the processing program. Documentation can be viewed for this program from SE38 transaction code. This program contains lot many user exits whether one can add any additional business logic.

Two algorithms that are used are 001 and 003. If file contains checks that cannot be applied against specific invoice but for which customer account is known, SAP posts them on the customer account without reference to any specific invoice. Using algorithm 003, SAP distributes the check across open invoices, beginning at the oldest invoice and working its way forward until the check amount is fully distributed.

File Import:

1. Menu Path: SAP Easy Access à Accounting àFinancial Accounting àBanks  à Lockbox à FLB2 Import.

Transaction Code: FLB2

Save the lockbox file attached with this document and modify the document number in file with open customer invoice.

Click on green execute button.

Click on back button.

Transaction Code: FLB1

Enter Lockbox details and click on execute button

Select the one which contains data in file. For example if file contains 1123456 is second session name will be 1123456. Right click on 1123456 and select Process Checks options.

Right click on Session name and click on Process option.

Vendor Document Clearing Report

Again view customer invoice it will be displayed as cleared from the payment received and posted via lockbox

Notes

1)   If you get below message, modify the following in file. Unique key for each lockbox file is its header record i.e. Destination, Origin name, Date and time. Modify the seconds’ part and rerun the file.

1)   Sap file generation

            Use Test Lockbox Generation Programs RFEBLBT2 to generate BA12 format and RFEBLBT3 for IDOC format. These programs will generate customer open items and a lockbox file for processing.  Utilize program RFEBKA96 to delete loaded test data

2)   Sample File Understanding

100MANGDESTINMANGORIGIN130903123557

20000000000000000000000

56660011123557130903MANGDESTINMANGORIGIN

666600200000600000110003900345205865100000002

466600360191800000023   00000000600000000000

766600411235571309030010000060000

8666005112355713090300010000060000

9000000

File content explanation with help of differnet Color Codes

100000002 =Check Number

666 = Batch ID

1800000023 = FI customer Invoice

123557130903 = Date & time in Header (i.e. first record) and Time & Date in below records.

600000 = Check/Invoice Amount depending on Row

110003900345205865 = Customer Master Record Bank details.

3)   Sample file of BAI2 program can also be generated from SAP directly on execution of programs

Same can be downloaded and uploaded with just modification of document number else copy from below location

100MANGDESTINMANGORIGIN130903123557

20000000000000000000000

56660011123557130903MANGDESTINMANGORIGIN

666600200000600000110003900345205865100000002

466600360191800000023   00000000600000000000

766600411235571309030010000060000

8666005112355713090300010000060000

9000000