Accounts Payable Reconciliation accounts: Reconciliation accounts are managed implicitly using Sub Ledger Open Item function.

Posting Keys Vendor Debit: 25 Vendor Credit: 31 Document Types KR Vendor Invoice KZ Vendor Payment KA Vendor Document (Transfers/Reversals) AP (Vendor Accounts) is a Subsidiary Ledger of Sundry Creditors & Sundry Creditors is a Reconciliation Account under Current Liabilities. Steps: Creation of Vendor Account Groups like FI Vendors (Services), MM Vendors (Materials) and One-time Vendors with Reconciliation Account Field mandatory. Creation of Number Range Groups and Numbers for Vendors. Assignment of Number Range Group to Vendor Account Group Define Tolerance Groups for Vendors. Creation of Vendor Master. Document Types and Number Ranges for KR, KZ and KA. The Vendor Account Group controls The number ranges of the accounts, the status of the fields in the master record and whether the account is a one time vendor One-time Vendor: Vendors who have a business transaction only once are called one-time vendors. We create collective master record for onetime vendors. The complete details of the Vendor will be given at the time of Invoice Posting. (While creating the group a One-time Vendor Group should be selected.) Tolerances: Rules that define acceptable differences during posting Tolerance Groups for Vendors: The tolerances are used for differences in payment and residual items which can occur during payment settlement. We can specify the tolerances under one or more tolerance groups. Allocate a

Tolerance Group to each Vendor via the master record. For each Tolerance Group we specify: 1. Tolerances up to which differences in payment are posted automatically to expense or revenue account when clearing open items. 2. The handling of the terms of payment for residual items, if they are to be posted during clearing. Employee Tolerances also can be specified. Employee Tolerance is used to control the Upper limits for posting procedures (Posting Authorizations) and Permitted Payment Differences. While clearing, the lower limit of the 2 will be taken. Vendor Master: The account group is entered on the initial create screen. In FI, once the vendor account is created, its account group cannot be changed. Give Reconciliation Account Number, Sort Key 012 Vendor Name, Payment Terms, Tolerance Group & Select Check Double Invoicing. Line item display and open item management are always preset to on for every vendor account. A complete Vendor Account consists of 3 segments 1. General Data at the client level 2. Company code segment and 3. Purchasing Organization segment General data consists Address, Control data, Payment transactions etc. The account number is assigned to the Vendor at the client level. This ensures that the account number for a Vendor is the same for all company codes and sales areas. Company data consists of Accounting information, Payment transactions, Correspondence, Insurance, Withholding tax etc. Note: If MM creates their segment of the master record and then FI creates their segments of the master record, there is the risk of creating incomplete or duplicate master records. To find and correct these incomplete accounts, we can run report RFKKAG00 and make the necessary corrections. Creation of duplicate accounts can be prevented by: Using the match code before creating a new account Switching on automatic duplication check Important Fields

Search Item: Should be filled with a short version of the vendor name according to company rules/desires. An additional search field also can be filled up. Group Key: Vendors who belong to one corporate group can be bundled together by a user-defined group key. This group key can be used for running reports, transaction processing or for match codes. Accounting clerk: The accounting clerks name has to be stored under an ID and this ID can be entered in the vendor master record of the account he or she is responsible for. The accounting clerks name is then printed on correspondence and this ID is used to sort dunning and payment proposal lists.

Down Payments to Vendors Create Special GL Account Advance to Vendors (Reconciliation Account) under Current Assets Create Link between S/Creditors and Advance to Vendors (Special GL Indicator: A) Down Payment Posting Purchase Invoice Posting Transfer of Down Payment from Special GL to Normal item by clearing Special GL Account Clearing of Normal Item Extended Withholding In Accounts Payable, and the company code pay this over to the behalf. Tax (TDS) the vendor is the person subject to tax, is obligated to deduct withholding tax and tax authorities on their (the vendors)

At the time of Invoice Posting Service Charges A/c. Dr. 100000 To Contractors A/c. 98000 To TDS A/c. 2000 At the time of Advance Payment Posting Contractors A/c. Dr. 100000 To Bank A/c. 98000 To TDS A/c. 2000 Terms of payment Terms of payment are conditions established between business partners to settle the payment of invoices. The conditions define the invoice payment, due date and the cash discount offered for early settlement of the invoice.

Accounts Receivable Posting Keys Customer Debit: 01 Customer Credit: 15 S/Debtors Bill of Exchange Debit: 09 S/Debtors Bill of Exchange Credit: 19 Document Types DR Customer Invoice DZ Customer Payment DA Customer Document (Transfers/Reversals) AR (Customer Accounts) is a Subsidiary Ledger & Sundry Debtors is a Reconciliation Account under Current Assets. Steps: Creation of Customer Account Groups like FI Customers and SD Customers with Reconciliation Account Field mandatory. Creation of Number Range Groups and Numbers for Customers. Assignment of Number Range Group to Customer Account Group. Creation of Customer Master. Document Types and Number Ranges for KR, KZ and KA. The Customer Account Group controls The number ranges of the accounts, the status of the fields in the master record and whether the account is a one time customer. Customer Master The account group is entered on the initial create screen. In FI, once the customer account is created, its account group cannot be changed. Select Company Code Data Button - Give Reconciliation Account Number, Sort Key 012 Vendor Name, Payment Terms, Tolerance Group & Select Check Double Invoicing. Line item display and open item management are always preset to on for every customer account. A complete Customer Account consists of 3 segments 1. General Data at the client level 2. Company code segment and 3. Sales Area segment

General data contains Address, Control data, Payment transactions etc. The account number is assigned to the Customer at the client level. This ensures that the account number for a customer is the same for all company codes and sales areas. Company data contains Accounting information, Payment transactions, Correspondence, Insurance, Withholding tax etc. Note: If SD creates their segment of the master record and then FI creates their segments of the master record, there is the risk of creating incomplete or duplicate master records. To find and correct these incomplete accounts, we can run report RFDKAG00 and make the necessary corrections. Creation of duplicate accounts can be prevented by: Using the match code before creating a new account Important Fields Search Item: Should be filled with a short version of the customer name according to company rules/desires. An additional search field also can be filled up. Group Key: Customers who belong to one corporate group can be bundled together by a user-defined group key. This group key can be used for running reports, transaction processing or for match codes. Accounting clerk: The accounting clerks name has to be stored under an ID and this ID can be entered in the customer master record of the account he or she is responsible for. The accounting clerks name is then printed on correspondence and this ID is used to sort dunning and payment proposal lists. Down Payments from Customers Create Special GL Account Advances from Customers (Reconciliation Account) under Current Liabilities Create Link between S/Debtors and Advances from Customers (Special GL Indicator: A) Down Payment Receipt Posting Sale Invoice Posting Transfer of Down Payment from Special GL to Normal item by clearing Special GL Account Clearing of Normal Item Bills of Exchange LC (Letter of Credit 30/60/90 days sight)

Contingent Liability Bills Discounted with Bank W is the Special GL Indicator (W stands for Bill of Exchange Bankable)

Bills of Exchange Transaction SAP Accounting Customer A/c. Dr. (S/Debtors Debit) To Sales A/c. Bill of Exchange Receipt Customer (W) A/c. Dr. (S/Drs. BExchnge A/c. Debit) To Customer A/c. (S/Drs. With clearing) Discounting Discounting Bank A/c. Dr. Bank A/c. Dr. Interest A/c. Dr. Interest A/c. Dr. To Bill To Bank Bill Discounting A/c. Discounting A/c. Reversal of Reversal of Contingent Liability Contingent Liability Bank Bill Discounting A/c. Dr. Bill Discounting A/c. To Customer (W) A/c. (S/Drs. Bill Dr. of Exchange with clearing) To Customer A/c. Reports Reports within the system Customer wise, Due Customer wise, Due Date wise, Bill Date wise, Bill wise wise within the system outside the system Normal Accounting Customer A/c. Dr. To Sales A/c. Bill of Exchange Receipt No Entry Dunning System defined reminder letters Dunning Area: South, North, East, West Dunning Levels: 4 (Maximum levels 9) Dunning Frequency: 10/20/30 days Grace Period: 3/4/5 days The Dunning Program settings are divided into the following categories: Dunning Procedure o Define the key for the dunning procedure to be used o Give a description for the dunning procedure o Define dunning interval in days o Specify minimum days in arrears after which a dunning notice will be sent o Grace period per line item

o Interest calculation indicator for calculation of dunning interest Dunning levels (Each item to be dunned gets a dunning level according to its days in arrears) o Define minimum number of days, referring to the due date of net payment, to reach a certain dunning level o Define whether interest is to be calculated o Define print parameters Charges o Define dunning charges, depending on the dunning level o Dunning charges can be either a fixed amount or a percentage of the dunned amount o A minimum amount for the dunning charges can be set Minimum amounts o Define minimum amount or percentage of the overdue items to reach a dunning level o Minimum amount to be reached in order to calculate interest per dunning level Dunning texts o Define the name of the form that will be used at each dunning level Environment o Company code data o Sort fields o Sender details o Dunning areas o Dunning keys (A dunning key determines that the line item can only be dunned with restrictions or is to be displayed separately on the dunning notice. By assigning dunning keys to certain items we can prevent these items from exceeding a certain dunning level.) o Dunning block reasons ( A dunning block prevents accounts and items to be dunned) o Interest o Dunning grouping

Steps in Dunning Run Maintain Parameters (specify the accounts and documents that are to be considered in the dunning run) Proposal Run Editing Proposal Printing Dunning Notices Sales Tax Input Tax or Purchase Tax Base 100

2 ---Inventory RM 102 ---Output Tax or Sales Tax Base Price 100 Sales Account 4% ST 4 ST Payable Account ---104 ----

2% Tax