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Dunning in SAP Business ByDesign

Definition & related terms:

 

Dunning – The process of sending dunning notices to customers with overdue payment items, requesting payment of the outstanding amount by a specified date.

In SAP ByDesign system, this functionality is provided to generate the dunning letter which contains the overdue payment information of the customer. Dunning run creates a dunning letter which is a legal document.

Dunning block reason – The reason why an open item of a business partner cannot be dunned. If you want to block an item during the dunning process, then you must specify a Dunning Block Reason.

Dunning fee – An additional charge added to the payment amount to cover the cost of an overdue payment.

Dunning Currency – It allows you to specify a dunning currency into which the values of the Open Items in different transaction currencies are converted. All amounts specified in the dunning strategy will refer to this currency.

Dunning Threshold – It allows you to specify an amount that must be reached before the Dunning notice or reminder will be issued to a Business Partner.

Dunning Interval – This is the minimum number of days that must elapse after a dunning run before an account can be dunned again.

Dunning Strategies – A plan that specifies what dunning activities should be directed towards a non-paying business partner, when those activities should be performed, and the form those activities should take.

You can create dunning strategies for which the dunning run will use to create a list of dunning proposals. You can then release these proposals to issue dunning notices or reminders to customers. In this activity, you can maintain country-specific default dunning strategy and based on an individual customer account.

 

List of available reports:

 

Prerequisites

 

1. Go to Business Configuration work center –> Fine tune activities –> Dunning Strategies:

  • Dunning Strategies: You can create dunning strategies for which the dunning run will use to create a list of dunning proposals. You can then release these proposals to issue dunning notices or reminders to customers. In this activity, you can maintain country-specific default dunning strategy and based on an individual customer account.

2. Go to Account Management work center –> Customer Account master data: Under the             Financial Data tab you can maintain:

    • Dunning Strategy
    • Dunning Block Reason
    • Dunning Expiration date

3. Go to Application and User Management work center à Output Channel Selection.

    • Output Channel Selection view: If you want to send a dunning letter through email or print the form and send the hard copy to your customer. This setting is with respect to the dunning strategy. System will decide whether to print or email the dunning letter as per the dunning strategy you maintain for the customer account.

4. Go to Application and User Management work center –> Form Template Selection.

    • Form Template Selection view: Here, you can maintain the settings if you want Dunning notice to be legally effective.

 

Dunning Run

 

Dunning Run – In SAP ByDesign system, this functionality is provided to generate the dunning letter which contains the overdue payment information of the customer. Dunning run creates a dunning letter which is a legal document.

A work center view that allows the scheduling of an automated run to list invoices, for which payment is overdue or due shortly.

Create/Execute Dunning Run:

  • Company: Select the company. This is a mandatory field.
  • Customer from/to ID: You can define a value range, which enables you to select several customers for one dunning run. If you do not make an entry here, the system includes all customers for the selected company.
  • Dunning Strategy: Select a dunning strategy. If you do not make a selection, the system uses the dunning strategy defined as standard in business configuration.
  • Execute the Dunning Run.
  • You can see the Dunning proposals with status – In preparation under Dunning view.
  • Here, you can preview the dunning letter or release the Dunning. Based on the output channel selection(Email/Fax/Print) system will take actions.

Note:

  1. If you want to cancel the dunning, then you have to choose Postpone option. This will change the status to Rejected.
  2. Once the Dunning is released then you cannot delete. However, you can Cancel it.

Questions related to Dunning

 

Q.1. Is there any difference between Execute Dunning in the background & normal Execute Dunning? Where do we use Execute Dunning in the background?

Ans. No difference. We use the background jobs to mass release Dunnings.

Q.2. Can we include Business Transactions like Credit memos, Down Payment requests, etc.?

Ans.  Yes, only Invoice is there as of now as shown in the above screenshot. If you want more, you can add.

Q.3. Legal Effect – What is the difference between a Reminder and a Dunning Letter?

Ans. A reminder is just to remind the Customer for the payment while Dunning Letter is a Legal Document.

  • Legally effective indicates which template to pick up, like Reminder letter or Dunning Letter in the form template.
  • A company can produce the letter in court as a legal document to show the court that the Customer has been warned for the payment.
  • You can check the legal effectiveness of dunning documents for dunning strategy and the applied Form Template Selection in the below steps:

          1. Go to the Application and User Management work center.
2. Select the Form Template Selection view.
3. Choose from list Show Rules For, select Dunning Letter.
4. Set the definitions and sequence for rules relating to Dunning Levels & Strategy.

Q.4. What do they mean by Dunning interval/payment deadline?

Ans. Dunning Interval: This is the minimum number of days that must elapse after a dunning run before an account can be dunned again.

In order to determine whether an account is included in a dunning run, the dunning program stores the date of the last dunning run in the master record. On the basis of this date and the dunning interval, the dunning program determines whether the account should be included in a dunning run.

If the required dunning interval has not elapsed, the account is not dunned – even if it contains overdue items.

Payment Deadline: Due date for Payment.

Q.5. Why dunning level is blank in the system? Is there any configuration issue?

Ans. No issue at all. 

When you do the Dunning Run first time, the level is 0 that is why it is blank. See in the below screenshot.

dunning proposal with dunning level 1 will be created when you execute a dunning run after Dunning Interval which has been maintained between dunning level 1 and dunning level 2.

 

Please comment if you have any further queries.

Regards,
Anant Patel,
SME, SAP Business ByDesign

 

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