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Author's profile photo Cheng-Hua Huang

Introduction of Bad Debt Relief solution

What is Bad Debt Relief (BDR)? 

The taxpayer, who is liable to pay tax on supplied goods and services, is authorized to reduce the tax base after the tax becomes chargeable if the customer does not fully or partly pay for the goods or services and the receivable result becomes uncollectible. Bad Debt is the uncollectible payment; Bad debt relief is the reduced part calculated by tax rules from the payment. 

After identifying the Bad Debt, the process of correction documents can be initiated. The Bad Debt Relief correction documents are reported in the VAT ledger. 

Description of business process

Please note that this blog post only covers details of the Finance Contract Accounting (FI-CA) component. 

  1. Posting invoices: The service/product provider first posts the invoice and pays the VAT amount to the Tax authority. 
    After the invoice is identified as a Bad Debt, the Correction documents should be issued, and the process will continue with the Correction processing.
  2. Correction processing: Beforehand you have to complete the basic customizing which is described in the Prerequisites. This process is the first part of the two functionalities in the Tax Correction Framework marked in yellow in the flow chart. It marks any receivable as relevant for tax correction processing. 
    The marked receivables are saved in DB table DFKKIDTCT, and can be marked/ unmarked in the way as below:

    • Transaction FKKID_TC. 
    • Choose “Items for Processing” in Scope; “Add/Change/Del. Mark of Items” in Action; “In dialog” in Control. 
    • Choose one item and click “Set marks” and put your customized value in the Correction reason. (The example in the below image is “X”.) You can also delete it by clicking the “Delete marks”.
    • After executing the items marking, you will find your assigned value in the Correction reason column. It indicates the items of the Corrected Documents are marked (or unmarked) and saved in the DB table DFKKIDTCT.
  3. Correction evaluation and posting: This is the second part of the Tax Correction Framework. If Correction Documents are posted then the information about Corrected Document items is stored in DB Table DFKKIDTC, such as corrected amounts of every Corrected Document item. There are four types of correction document:
    • Credit Memo: It happens most frequently compared to other correction documents. If an invoice is not fully paid, a Credit Memo will be created to return the VAT amount from the Tax authority.
    • Debit Memo: It happens when the arrival of full/partial payment of invoice items, which are marked identified as Bad Debt, after the Credit Memo was issued and Tax authority already returned the VAT amount.
    • Credit Memo Correction: It is used for correcting mistakes in Credit Memo, or a correction document of Credit Memo.
    • Debit Memo Correction: It is used for a correction document of Debit Memo, when the invoice clearing with payment was reset

You can check processed item status or execute Correcting posting in transaction FKKID_TC for Credit Memo, Debit Memo, and Debit Memo Correction.

    • Scope: Posting of Marked Items
    • Action: Update Posting
    • Mode: Real Run

As for Credit Memo Correction, you can check in transaction FKKID_TC1. 

    • Action: Display Correction documents
    • Selection: Fill in the Credit Memo Document number.

    4. Display Corrected Documents:

You can Display the Corrected Documents in transaction FKKID_TC1 to examine the inconsistency of post documents.

    • Action: Display Corrected Documents
    • Selections: Enter the invoice number in the Corrected Document Number

5. Mark items with File Upload: When there are multiple files to post, you can use the file uploading function to mark items in transaction FKKID_TC1 within a shorter time.

    • Action: Mark Items with File Upload
    • Upload the file
    • Unclick the Simulation and execute


  1. Basic Customizing: You can enter the View Cluster FKKID_TC_VC in transaction SM34.
    • Define Correction Reasons: In the Dialog Structure you can add up New Entries for your own Correction Reason.

    • Define Correction Types: You can define your own correction type with code and description.
    • Define Correction Categories: A Correction Category stands for a Tax Correction implementation, if there is a correspondent output relevant to the Correction Category then the Correspondence Type must be stated.Correction Profile: Since different Company Codes can have different settings. The basic idea is to customize the Correction Profile and assign them to Company Codes. If there are many Company Codes with the same setting, just one Correction Profile can be prepared and assigned to multiple Company Codes.
    • Assign Reasons to Profiles: You can assign the value as a mark, in our example is “X.”
    • Assign Types to Profiles: The profile depends on the Correction Types and its settings. Document Type, main transaction and sub transaction are for correction postings.

    • Source of Corr. Actions: It defines which Correction Action are to be used in different situations.
      • Correction of marked items: First posting after the receivable was marked for processing.
      • Reversal of marked item corrections: It is used for taking the correction of marked items back.
      • Correction of cleared items: It is an action to receivable clearing.
      • Reversal of cleared item corrections: It is used for clearing reversal.

    • Settings for Clearing: The tax correction processing depends on the receivable clearing type.
    • Assign Company Codes to Profiles: Each Company Code can be assigned with a Correction Profile.
  1. Basic Posting Customizing:
    • In transaction FQC0, enter 3200 in the Posting Area.
    • You can choose the appointed Chart of Accounts.
    • You can press create to add new entries.

How to display correction information in FPE3/FPE2

By implementing the customizing procedure below, you can display the correction data in the FICA Document Display/Change (FPE3/FPE2)

  1. Go to tr. SPRO FICA customizing
  2. Navigate to Financial Accounting –> Contract Accounts receivable and payable –> Basic Functions –>Posting and Documents –> Document –> Screen preparation –> Include own fields and detail screens (You can also refer to the blog post Adding custom screen to FPE1, FPE2 and FPE3 transactions and prepare own business partner item detail screen)
  3. To add the correction fields into your new screen, You can:
    • Add some individual fields or
    • Use table controls if there are more records related to one business partner’s document item.
    • Fields which can be added and referred from the screen, are in DB tables DFKKIDTCT (Tax Corrections – Items for processing) or DFKKIDTC (Tax Corrections – Correction Records). The relation to the business partner item is saved in the fields TCRPD, TCRPR and TCRPI (Corrected Document item key fields) or they can be referred by the RPKEY_S group name.
      • Please note that the relation to the correction data is at the document item (OPUPK) level instead of subitem level; that is the correction data is one for all subitems of a particular item.
      • Correction data can be either read directly from DFKKIDTCT and DFKKIDTC tables or by methods READ_TCT_FOR_TCRPI or READ_TC_FOR_TCRPI from the class FKKID_CL_TC_DB.
      • Correction data can only be read and displayed but cannot be changed directly from the screen in tr. FPE2). Any changes to the correction data can only be accomplished by transactions FKKID_TC or FKKID_TC1, which can be executed from the screen after implementing a button.

SAP Notes

SAP Help Portal

The updated documentation will be available on the SAP Help Portal as soon as the Support Packages listed in the SAP Notes are available.


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