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Author's profile photo Bohdan Petrushchak

Direct Debit Returns in Bank Statement

Hello SAPers!

Here is my latest post, where I’d like to share some details about SAP’s functionality. It took me some time to prepare this post and it will take some time to read it through. I hope you will not regret this time. Please also check out my other posts.

Introduction

Direct debit is a financial transaction, where the company sends the instruction to the bank to collect the payment directly from the debtor’s bank account. Properly implemented direct debit simplifies the debt collection for the company. This process is well described / documented. But as a rule, the documentation covers the regular process i.e., when the bank managed to collect the payment. Direct debit returns (cancellations / rejections) are not described properly. This post aims to fill this knowledge gap.

Process Overview

Screenshot below provides high-level overview of the process around direct debit:

Direct debit is initiated in SAP via automated payment program (i.e., F110). The program generates the payment document that credits the customer account. This payment document automatically clears open items on customer’s account and generates an open item on clearing GL account for incoming bank payments. If everything goes fine, the bank will collect the payment from the customer and show the associated receipt in a bank statement. This is a simplified explanation, but I hope it provides a good explanation. Screenshot below provides an overview of the typical accounting postings.

Let’s now consider the case of direct debit return. The return might happen due to a variety of reasons e.g., insufficient funds, incomplete / erroneous direct debit mandate etc. The bank charges a return fee for each operation. What is even more complicated, your bank might provide the information in bank statement in aggregated format i.e., operation amount (1005,00 EUR) will include the original payment amount (1000,00 EUR) + return fee (5,00 EUR). Screenshot below shows a sample bank statement with such aggregated operation.

The screenshot below shows the expected postings in the bank statement with regards to direct debit return. Though we have only one line in bank statement, the system should be able to generate two separate postings:

  • Direct debit return payment with 2 posting areas.
  • Bank fee associated with direct debit return.

Let’s see how this process can be implemented in the system.

Process Flow in the System

Automatic payment program generated a payment document 2000000006 for total amount of 1000,00 EUR. This payment document number will be provided in the note to payee for the returned direct debit in the bank statement. See the example above, where this value is highlighted.

Screenshot of the payment document is provided below:

This payment run automatically cleared open item associated with the customer invoice 1800000007:

The interval of accounting document numbers should include the number range for payment documents. Screenshot below shows the appropriate selection screen block in the transaction FF_5.
If you work with S4 HANA system and use Fiori App F1680Manage Incoming Payment Files”, you’ll need to configure the parameter set, which stores the number ranges associated with bank statement. Please refer to my earlier post, that describes this configuration.

Screenshot below shows the import log associated with upload of this bank statement. As you can see, the program split one item into two different items, assigned different posting rules and automatically posted the documents in both posting areas.

As you can see, the log for the second posting area shows that the program identified original payment document 2000000006/2023. The clearing was reset automatically. Besides, as you can see, the report shows the open item for customer invoice 1800000007. This invoice was cleared during the payment run, but is re-opened now.

The screenshot below shows the posting associated with return of the direct debit:

The screenshot below shows both line items in bank statement (transaction FEBAN/FEB_BSPROC):

What is interesting, the upload program generates a binary relationship between the original line item and the new line for bank charges. You can review this relationship by double clicking on the line in bank statement and navigating to the menu “Relationships”:

The program will display the related line in the dialog window:

If you’re using S4 HANA and Fiori App F1520Reprocess Bank Statement Items” for post-processing of bank statement items, you will not be able to see this relationship. This functionality was not implemented in Fiori. At least it is available as of version 9.0.21 of this app.

System Configuration

Use the following menu path or maintenance view VC_FIEB_RETURNS (via SM34) to configure the processing of returned direct debits:

SPRO → Financial Accounting → Bank Accounting → Business Transactions → Payment Transactions → Electronic Bank Statement → Configure Returns Processing.

Returns of direct debits, as a rule, are displayed with dedicated business transaction codes (BTC-codes) in bank statement. You need to identify these BTC-codes and assign them to internal return reasons (e.g. ZR1). In my case, BTC code is 108 and I use only one internal reason code.
External bank statement reason is provided in the note to payee in subfield 34. Return reason code in my example is 909. External reason code is stored in the field FEBEP-KKREF.

Assign two posting rules for each internal return reason: one rule for posting of returned direct debit, another for return fees. Also, activate the checkbox to reset the clearing of the payment document.

Screenshot below shows the settings for posting rules (in OT83) that were used for this example:

External transaction code 108 was mapped against the posting rule. Interpretation mechanism 60 “Document number search” is used.

You can define additional automatic changes of the re-opened customer invoices. You can set the dunning / payment block, change payment method, or delete the payment terms. If these options are not enough, you can use BADI FIEB_RET_CHANGE_DOC to change other attributes of the open item.

Additionally, you can change direct debit mandate for the customer e.g., by setting its status to cancelled or obsolete.

The last component of the solution is to implement the BADI FIEB_RETURNS_ADDIN (available as of release 4.70). The purpose of this BADI is to fetch / calculate the amount of the return charges associated with the returned direct debit.

This BADI receives header of bank statement (I_FEBKO), line details (I_FEBEP) as well as a table with note to payee (T_FEBRE). Essentially, the enhancement should parse the lines associated with the note to payee to fetch the amount of the return charges. In my enhancement, I’ve prepared a utility method (i.e., GET_NOTE_TO_PAYEE_AS_STRING) within the BADI implementing class that transforms this table into a string. Once it is a string, you can define a regular expression to search for the charge amount.

Important! The BADI should return to the calling program the amount of return charges as a negative amount. Sample source code for the BADI is provided below:

class zcl_im_fieb_dd_returns definition
  public
  final
  create public .

  public section.

    interfaces if_ex_fieb_returns_addin .

  protected section.
  private section.

    class-methods get_note_to_payee_as_string
      importing
        !it_febre type any table
      returning
        value(rv_note_to_payee) type string .

endclass.

class zcl_im_fieb_dd_returns implementation.


* <SIGNATURE>---------------------------------------------------------------------------------------+
* | Static Private Method ZCL_IM_FIEB_DD_RETURNS=>GET_NOTE_TO_PAYEE_AS_STRING
* +-------------------------------------------------------------------------------------------------+
* | [--->] IT_FEBRE                       TYPE        ANY TABLE
* | [<-()] RV_NOTE_TO_PAYEE               TYPE        STRING
* +--------------------------------------------------------------------------------------</SIGNATURE>
  method get_note_to_payee_as_string.

    " Note to payee should not be empty
    if lines( it_febre ) = 0.
      return.
    endif.

    " Prepare string representation of note to payee
    field-symbols: <line> type febre.
    loop at it_febre assigning <line>.
      if <line> is not assigned.
        return.
      endif.
      concatenate rv_note_to_payee <line>-vwezw into rv_note_to_payee.
    endloop.

    condense rv_note_to_payee.

  endmethod.


* <SIGNATURE>---------------------------------------------------------------------------------------+
* | Instance Public Method ZCL_IM_FIEB_DD_RETURNS->IF_EX_FIEB_RETURNS_ADDIN~CHANGE_RETURN_CHARGES
* +-------------------------------------------------------------------------------------------------+
* | [--->] I_FEBKO                        TYPE        FEBKO
* | [--->] I_FEBEP                        TYPE        FEBEP
* | [--->] T_FEBRE                        TYPE        STANDARD TABLE
* | [<---] E_SUBRC                        TYPE        SY-SUBRC
* | [<---] E_MSGID                        TYPE        SY-MSGID
* | [<---] E_MSGTY                        TYPE        SY-MSGTY
* | [<---] E_MSGNO                        TYPE        SY-MSGNO
* | [<---] E_MSGV1                        TYPE        SY-MSGV1
* | [<---] E_MSGV2                        TYPE        SY-MSGV2
* | [<---] E_MSGV3                        TYPE        SY-MSGV3
* | [<---] E_MSGV4                        TYPE        SY-MSGV4
* | [<-->] C_RETURN_CHARGES               TYPE        FIEB_RET_CHARGES
* +--------------------------------------------------------------------------------------</SIGNATURE>
  method if_ex_fieb_returns_addin~change_return_charges.

    " Get string representation of note to payee
    data: lv_note_to_payee type string.
    lv_note_to_payee = get_note_to_payee_as_string( t_febre ).
    if lv_note_to_payee = ''.
      return.
    endif.

    " Use regular expression to fetch the amount of return fees
    constants lc_fee_pattern type string value 'DRF\+(\d{5,15}.\d{2})'.
    data lv_return_fee_amt type string.
    find regex lc_fee_pattern in lv_note_to_payee
      ignoring case
      submatches lv_return_fee_amt.

    " Format the resulting value
    if sy-subrc = 0 and lv_return_fee_amt <> ''.
      shift lv_return_fee_amt left deleting leading '0'.
      replace first occurrence of ',' in lv_return_fee_amt with '.'.
    else.
      return.
    endif.

    " Return fee should be passed to calling program with a minus sign
    c_return_charges-kwbtr = lv_return_fee_amt.
    c_return_charges-kwbtr = c_return_charges-kwbtr * -1.

    " Return reason code
    c_return_charges-rrext = i_febep-kkref.

  endmethod.
endclass.

Concluding notes

I hope this post provided useful information and you learned something new. I’ve tried to cover the process end-to-end, but there are still areas where you can dig and look for additional improvements. Once this functionality is implemented, you might face another important question: if the returns are processed fully automatically in bank statement, how will the user know that there was some issue with the failed direct debit ? Of course, you can configure automatic change of the open items. But even if this open item will have a payment block, the user might wonder who put the payment block & why. One potential solution to address this requirement is by implementing e-mail notifications to the users responsible for the bank statement processing. Bank statement in SAP offers a variety of enhancement options and e-mail notification is not very complicated solution. Maybe I’ll cover it in another blog in the future.

 

Regards,

Bohdan Petrushchak

P.S. Disclaimer. All sensitive information (bank accounts, company names etc.) used in this example was invented. If there is some coincidence with real-life companies, it is a purely accidental one.

 

 

 

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      8 Comments
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      Author's profile photo Herbert Hofbauer
      Herbert Hofbauer

      Hello Bohdan,

      how does the direct debit return works in a S/4HANA public cloud system?

      Kind regards

      Herbert

      Author's profile photo Bohdan Petrushchak
      Bohdan Petrushchak
      Blog Post Author

      Hi Herbert Hofbauer,

      That's a good question, but I do not have any answer for that. My experience with direct debit returns is based on SAP ECC system as well as SAP S/4HANA on-premises edition. I do not have any experience with S/4HANA public cloud system. If you have any insights now or later on, I'll be glad to hear back from you!

      Regards,

      Bohdan

      Author's profile photo Herbert Hofbauer
      Herbert Hofbauer

      Hi Bohdan,

      although the scope item 19M (direct debit) is activated, I'm missing the customizing activities as mentioned in your blog. For now I think we can handle it only manually = without assistance from the system.
      Maybe you can bring this topic to your (cloud) colleagues and they can give an answer.

      Regards

      Herbert

      Author's profile photo Bohdan Petrushchak
      Bohdan Petrushchak
      Blog Post Author

      Hi Herbert Hofbauer,,

      I'm working as freelancer and am not associated with SAP. But if I were associated, I'd have raised internally a lot of issues.

      Actually, I've just concluded a long OSS-investigation with regards to DD returns with regards to handling of cash discounts. There is a big problem: if you post the payment via F110 with cash discounts, you'll have additional postings of output VAT. If you have document splitting activated, the postings of cash discounts / VAT will inherit all profit centers (and maybe other attributes). But the program posts the returns, it can reset the cash discounts (sometimes automatically, sometimes not), but it cannot adjust the VAT accounts. SAP acknowledges that, but say that it is a know limitation and any VAT related adjustments should be handled via customer enhancements. I'm checking how it can be addressed and maybe will post additional posts later on.

      Regards,

      Bohdan

      Author's profile photo Anissa Zitouni
      Anissa Zitouni

      Hello, i have the same Question, if you already worked on it Herbert, i would like to know if you know how to schedule recurrent payment jobs for SEPA Direct debit without having to do the proposal each time. in the manage automatic payment  application, there is no option to schedule monthly weekly ... ?

      thank you in advance,

      Anissa

      Author's profile photo Johannes Bacher
      Johannes Bacher

      HI Bohdan,

      I have a similar issue, like Herbert has asked above - related to S/4HANA Public Cloud.

      Since we do not have the BADI options like you describe, how can we separate the transaction amount from the bank charge? This is a big issue, as my customer is not allowed to charge customers with bank fees, so I must seperate them.

      One idea, but I am not an expert: May using the CAMT format help here? I read that CAMT transports much more details and structure than MT940. Can you confirm this, and do you know if a direct debit returns with bank charge would be 2 lines in a CAMT statement?

       

      Thank you

      Johannes

      Author's profile photo Bohdan Petrushchak
      Bohdan Petrushchak
      Blog Post Author

      Hi Johannes Bacher,

      If the BADI for handling of direct debit returns is not available in S/4HANA Public Cloud, I'm not sure it will help you much if you will switch to CAMT format (unless DD-charges are provided in a separate line from the beginning). Here we have two separate tasks:

      • Upload of the bank statement information / details.
      • Parsing of these details to find about if the operation is direct debit return and extracting the amount of charges associated with it.

      If you change the format from MT940 to CAMT - it will have the impact for the first task - how to upload the details. But if there is no option to separate the charges from the return amount, than the change in format i.e. second task will not be addressed at all.

      I guess the only option would be to reach out to SAP and ask, when they will not only catch up in terms of the functionality in S/4 HANA Public Cloud, but start delivering those innovations that will be available in the public cloud only.

      Sorry that I cannot provide more help on this topic. I do not have any exposure to S/4HANA Public Cloud and I'm not even sure I want to move into that direction. But probably sooner or later I'll have to.

      Regards,

      Bohdan

      Author's profile photo Johannes Bacher
      Johannes Bacher

      Thank you for your reply!