Accounts Receivable (FI-AR)

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Features 

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  • Monitoring of receivables: overdue receivables and customer balances
  • Posting business transactions
  • Clearing of open invoices: post incoming payments and clear customer open items either manually or automatically
  • Evaluation of days receivable outstanding (DSO): identify customers with the highest or the lowest days receivable outstanding
  • Correspondence: sending correspondence (such as payment notices, open item lists, balance confirmation or account statements) to your customers
  • Periodic activities and closing operations: automatic payment, interest calculation or dunning
  • Analytics

Master data: manage and store your customer data as business partner data

A customer can be a person (individual), an organization or a group. A typical customer master data is made up of 3 areas (segments):
  1. General Data 
  2. Company Code Data (FI area): account management, payment transactions, insurance, correspondence
  3. Sales and Distribution Data (SD area)

Customizing

Financial Accounting > Accounts Receivable and Accounts Payable > Customer Accounts > Master Data 
  1. Define Number Ranges
    • Assign Number Ranges to Customer Account Groups 
  2. Create Account Groups: You are already aware that an account group is used to control the creation of master records as it determines which fields have to be filled
  3. Screen layouts 
  4. Define Accounting Clerks: ‘Customer: Correspondence’ tab - that the accounting clerk supervises
  5. Define Industries
  6. Define Sensitive Fields for Dual Control (Customers) 
    • If you define a field (say, payment terms) in the customer (or vendor) master record as ‘sensitive’, then, the system blocks corresponding customer (or vendor) account for the payment run if there is a change to the entry.
    • use Transaction FD08 (for single records) and FD09 (for multiple customer master records) to view and confirm/reject the changes. 
Report RFDABL00 to display changes to the customer master record data, across accounts.

Line Items

Financial Accounting > Accounts Receivable and Accounts Payable > Customer Accounts > Line Items  

Define Period Types for Customers

Create account statements automatically by entering a key (say, 1 for monthly statements, 2 for quarterly statements, 3 for half-yearly statements and so on) specifying with which frequency the account statements are to be created in the ‘Bank Statement’ field in the customer master and ’Account Statement’ field in the vendor master records.


Balances 

  1. Maintain Worklist for Displaying Balances 
  2. Maintain Users and Accounts for Internet Services

Incoming Invoices/Credit Memos 

  • Define Document Types 
    • Differentiate between business transactions
    • Control the posting to the appropriate account types: the document type controls as to what type of account namely vendor, customer, or G/L, you can post to
    • Assign document numbers
    • Apply the vendor net procedure: the applicable discount and the net amount are calculated (and posted) when the vendor invoice is posted.
    •  Financial Accounting > Accounts Receivable and Accounts Payable > Business Transactions > Incoming invoice 
  • Define Posting Keys
    • Indicator, account type ( Customer/ Vendor/ G&L/ Assets/ Material ), Reversal, Payment transaction (?), Field status
  • Validation in Accounting Documents
    • Define ‘additional checks for accounting documents’ in the form of validations, for each of your company codes. 
  • Define Default Values
    • Define the default document type and posting key for a Transaction
  • Define Field Status Variants
    • A ‘field status group’ (FSG) is a collection of field statuses, defined in the company code data of G/L account, and is used to determine which fields are ready for data entry input (required/mandatory or optional), and which needs to be hidden.
  • Assign Company Code to Field Status Variants 
  • Define Subscreens for Coding Blocks 
  • Screen Variants for Document Entry 
  • Substitution in Accounting Documents: to replace of the field contents/ Transaction OBBH
  • Define Text IDs for Documents and Line Items: define text IDs for both document header and line items, to store additional or detailed information
  • Define Line Layout for Document Posting Overview: Transaction O7Z2
  • Define Line Layout for Document Change/Display: Transaction O7Z1
  • Select Standard Line Layout for Document Change/Display: Transaction O7V1
  • Document Change Rules, Document Header 
  • Maintain Fast Entry Screens for G/L Account Items: Transaction O7V1

Open Item Clearing

An ‘open item’ is an uncleared transaction ( an unpaid invoice from a vendor) that can be cleared and closed, only when you post (a payment towards settling the vendor invoice) an offsetting amount to that account: when the offsetting amount is equal to the open item, then it is cleared in full; else, it is cleared partially as there is still a residual amount that is ‘open’.

For the open item, enter a due date for net payment, due date for cash discount, or deferral date; the system does not process (by dunning or payment program) that open item until that date is passed. 

The account balance is always the total of the open items, as the sum of the items involved in any clearing transaction is zero. 

Clear the open items either in the local currency (of the open item) or using a foreign currency. When cleared in a foreign currency, the system translates the transaction using the average rate between the two currencies: first translates the document currency into the local currency, and then translates the local currency using the clearing currency. The system posts those differences (beyond the tolerance limits) to the predefined G/L accounts.

  • If the payment differences are well within the tolerance limits, the system automatically adjusts the cash discount or posts the difference to a separate gain or loss G/L account. 
  • If the payment difference exceeds the tolerance limits, you can, then, process the payment as a partial payment or enter a residual item for the difference: 
    • When you enter a partial payment, the system does not clear the original receivable but posts the payment with an invoice reference. 
    • When you create a residual item, the system clears the original receivable and posts the outstanding difference as a residual item to the customer account.
You can clear open item either manually or automatically using the clearing program. 
  • Incoming payment: Financial Accounting > General Ledger > Document Entry > Incoming Payments
  • Outgoing payment:  Financial Accounting > General Ledger > Document Entry > Outgoing Payments
  • Post with clearing: Financial Accounting > General Ledger > Document Entry > Post with clearing
To configure the system for open item clearing you need to complete the following tasks: 
  1. Define Accounts for Exchange Rate Differences 
  2. Define Account for Rounding Differences
  3. Define Posting Key for Clearing Open Items
  4. Make Settings for Processing Open Items 
  5. Prepare Automatic Clearing
  6. Clearing Differences

Dunning

Make a (persistent) demand for a payment of an outstanding debt. The process of reminding your business partners (who are falling behind the payments) to pay the outstanding payment.

The program selects the overdue open items of an account, ascertains the ‘dunning level’ of the account and creates a dunning notice using the pre-defined dunning notice format and text, and finally saves the dunning data so determined for the line items / account which will be looked upon during the next dunning. 

It is possible that you can dun a ‘one-time’ account as well, like any other account. While dunning the one-time accounts, the system groups all the items of a one-time account having the same address into a single dunning notice.
  • Dunning Procedure: You use the dunning procedure to control how the system carries out dunning. FBMP
  • Dunning Level: The system calculates the dunning level based on the number of days an open item is in arrears.
  • Dunning Area: A ‘dunning area’ is an organizational unit (for example, a division or sales organization etc) within a company code that you can use, as the responsibility area, for dunning.
Process
  1. Creating Dunning Proposal
  2. Editing Dunning Proposal: While editing a dunning proposal, you essentially carry out activities like setting / resetting the dunning blocks, and changing the dunning levels. You can manually increase or decrease the dunning level of an item or account in the proposal.
  3. Printing Dunning Notices
Customizing
  1. Define Dunning Areas: if there are different organizational units (distribution channel or business area or sales organization, for example) that are responsible for carrying out dunning within the company code
  2. Define Dunning Keys: limit the dunning level for an item
  3. Define Dunning Block Reasons: prevent an account or an item from being dunned
  4. Define Dunning Forms 

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