The Idea of creating the document came to me from my difficulty in creating/finding a BAI format file for testing Lockbox setting. Otherwise SCN offers very good documentation on Lockbox functionality with each phase of documents posting from Sales, Lockbox posting to finally EBS postings.

Below I have discussed the concept in question and answer wise for more clearer understanding.

I welcome esteem members thoughts, comments and suggestion. I will incorporate them accordingly in my updates

In this post I am discussing only about BAI format not BAI2 format. For BAI2 format please refer to the link – This is published by Leonardo Cunha  https://wiki.scn.sap.com/wiki/x/NQu0Dw

References –  wikipedia, SCN, SAP online documentation

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What is Lockbox? Concept of Lockbox

In general, a lockbox is a post-office box (PO box) that is accessible by a bank. A company may set up a lockbox service with its bank for receiving customers’ payments. The company’s customers send their payments to the PO box. Then the bank collects and processes these payments directly and deposits them to the company’s account. Typical costs are several cents per transaction to as high as one dollar or more. Lockbox services are sometimes called “remittance services” or “remittance processing”.

What are the advantages on taking Lockbox services from Bank?

Below I have discussed some points, but the list of advantages is exhaustive.

• Speeding up cash collection

  One benefit of the lockbox service to the commercial customer is that it can maintain special mailboxes in different locations around the country and a customer sends payment to the closest lockbox. The company then authorizes a bank to check these mailboxes as often as is reasonable, given the number of payments that will be received. Because the bank is making the collection, the funds that have been received are immediately deposited into the company’s account without first being processed by the company’s accounting system, thereby speeding up cash collection.

• Manual Handling of checks can be avoided
• Checks are processed in time.
• Easy reconciliation

Are there any kinds of Lockbox services for kinds of business?

Lockbox services are generally divided into wholesale and retail.

Retail lockboxes are for companies with high volumes of consumer-oriented payments such as utility payments, loan payments, etc., and these remittances often include a standardized “payment coupon”.

Wholesale lockboxes are for corporate-to-corporate payments and tend to be higher dollar amounts than retail lockbox transactions. These transactions usually do not include a standardized payment coupon and require more manual effort for the bank to process.

What is BAI and BAI2? When they come into picture of processing invoices?

BAI and BAI2 file format is a specialized and standardized set of codes used for cash management by the Bank Administration Institute (BAI). The BAI and BAI2 files come to an account holder from a bank. The account holder then imports the files to a bookkeeping application (in our case SAP) and performs bank reconciliation if necessary.

The difference between BAI and BAI2 file formats is that of Information, the files carry. BAI carries less information compared to BAI2 file. The success rate of processing file without error is more in BAI2 then BAI file.

What is the process in SAP?

1. Sales invoices are posted in SAP creating customer due items for payment.
2. Customer sends payment in check to Lockbox with remittance information.
3. Banker collects the Check and remittance information and is formatted in selected file format as per company choice, that is either in BAI or BAI2.  The information file is then sent to company.
4. On receipt of file, company uploaded the files in SAP
5. SAP matches the files information to clear the open customer invoices.

What are posting made in SAP when lockbox transaction is processed with file?

First, a bank posting.

Bank Incoming A/c Dr

To Lockbox clearing A/c

Second, Accounts receivables posting.

When the information is matched with SAP

Lockbox clearing A/c Dr

To Customer A/c

When information is not matching

1. When customer is identified, an on-account posting is made to customer

Lockbox clearing A/c Dr

To Customer A/c

1a. Later user has to manually clear the customer open invoices with payment receipt.

Customer A/c Dr

To Customer

2. When customer is not identified, the on-account posting is does not happen only back posting is made

                 Bank incoming A/c Dr

To Lockbox clearing A/c

2a. Later user has to make Accounts receivable posting with clearing

Lockbox A/c Dr

To Customer.

To sum up there could be two to three posting when the entire cycle of lockbox process is complete.

1. Bank posting
2. Accounts receivable posting
3. Accounts receivable clearing posting.

From where I can get the sample files for testing the lockbox settings?

Using below programs can used to create your test data as per need.

RFEBLBT1 – Create test data for BAI

RFEBLBT2 – Create test data for BAI2-Format

RFEBLBT3 – Create test data for IDoc-Format

Below is the sample file, using which you can create your own BAI format.

(Note : this is only a sample file for your testing. Once you get file from Bank, one need to test the settings using Bank provided file.)

100ZZDEST0910ZZABA009101608171539

58000009100009160817ZZDEST0910ZZABA00910

60010010000026000                   3939393900018000008

8000000910000916081700010000026000

9999900

1608170616 – Date and Time (DDMMYY) – Change

ZZDEST0910– Destination – Change as per need

ZZABA00910– Origin – Change as per need

800000 – Batch number – Bundle number and Item number

9100009 – Lockbox number

0001320000 – Amount (2 decimals) – Change

373737260 – Cheque Number – Change

0005 – Number of Remittance

0003630000 – Total Amount (2 decimals) – Change

999900 – Number of records (no change required)

For configuration steps – By Gagan Pareek Lockbox Configuration

Two Accounts are needed for lockbox in any format –

Bank Check In A/c – Balance Sheet Account

Lockbox Clearing A/c – Balance Sheet Account.