ACH/ WIRE RETURN Process in S/4 Hana

[AbhishekArupSar]

ACH/ WIRE RETURN Process in S/4 Hana

Problem Statement:

ACH or wire returns are received in Electronic Bank Statement for the paid invoices. The return process needs to be applied to the invoices and reset the payments.

Since returns are usually not received soon, the actual payments are already cleared/reconciled with bank statements.

To reissue the correct payments, the reversal original payment would not possible unless bank reconciliation postings are reverted which if done can open all payments received in that bank statement. To avoid such hassles, Account Payables team posts duplicate invoice.

Adverse Impact of the existing process:

• Duplicate postings for one invoice
• Account Payables & Bank Reconciliation issues.
• Delays in Audit Reporting
• Issues with 1099 reporting due to over tax exposure for supplier due duplicate invoice postings & payments.

The following document suggests the best way to manage ACH/Wire returns:

Instructions for the Treasury Team

Step1: Apply the ACH/Wire return received in Bank Statement using “Reprocess Bank Statement Items” Fiori App”

Step2: Select “Post to G/L Account” and then select “Add.”  Enter and Post ACH/wire return amount to Accounts Payable adjustment GL account viz. 2100XXX.

Step3: Select “Simulate” to ensure the accounting and posting date are correct and post.

Step4: Now, we need to find the original ACH/wire payment which cleared in SAP. Get the bank reconciliation clearing document from there and reverse the entire batch. The posting period should be the date of the ACH/wire return. This is needed to allow reversal of the payments.

Step5: Reprocess all the payments under the ACH payment batch except for the returned payment (note: this step is not necessary for wire payments). Select “Post to G/L Account” and debit same AP adjustment GL account 2100XXX for the returned ACH/wire payment amount.

Step6: Select “Simulate” to ensure the accounting and posting date are correct and post.

Step7: The Treasury Team will send an email to the Accounts Payable Team to show a payment was returned and provide the supporting information from the Bank.

Instructions for the AP Team

Step8: Confirm A/P invoice is open- Reset and Reverse the payment document.

• Please note if the ACH/wire return occurred during A/P close, the A/P team will need to book the following reversing journal in GL SAP, until A/P opens in the following period. This Journal entry will auto reverse in first working day of the following month.

Dr ACH/Wire Clearing Account                               XXXX
Cr AP adjustment Account                                                                                        XXXX

• AP team will reset and reverse in the first working day of the following month.

If ACH/WIRE return received on 28th of Feb-2024, AP will book a JE in SAP GL with posting date of 28th Feb-2024. This JE will be reversed on 1st March -2024. (First working day of the month). AP will reset and reverse the payment document with the with the posting date of 01st March-2024.

Original Payment for Returns

 Step9: Go to the “Reset cleared items” App window displaying the payment document to be reversed.

Step10: Select the “Reset and Reverse” option (use the date of the return for the posting date) in case in same month.

Step11: Now you can see payment reversal document.

 

Step12: Confirm reversed document. The original invoice is open to repayment and no duplicate invoice needs to be posted.

Once, reason of payment failure is resolved you can repay the supplier.

Please find below the accounting entries for the ACH /Wire return process

                                                            Debit                      Credit

1) Initial Invoice processed in AP
Expense			2,216.12
	A/P			-2,216.12
2) Initial Invoice paid in AP
A/P			2,216.12
	Bank Clearing Account			- 2,216.12
3) Initial Payment Cleared (EBS File)
Bank Clearing Account			2,216.12
	Cash Account			-2,216.12
4) ACH Return (EBS File)
Cash Account			2,216.12
	AP Adjustment Account			-2,216.12
5) Reverse Initial Payment Cleared (EBS File)
Cash Account			2,216.12
	Bank Clearing Account			-2,216.12
AP Adjustment Account			2,216.12
	Cash Account			- 2,216.12
7) AP Team Reverse Initial Payment
Bank Clearing Account			2,216.12
	A/P			- 2,216.12
8.AP Team Reissues Payment
A/P			2,216.12
	Bank Clearing Account			- 2,216.12
9) Reissued Payment Cleared (EBS File)
Bank Clearing Account			2,216.12
	Cash Account			- 2,216.12

The ACH/Wire return process explained above is simple and easily adoptable. It helps us resolves all the adverse impacts of faulty process and ensures accurate reporting. Hope, this document equips you well to tackle his problem in future.