In some parts of the globe, post-dated checks and bills of exchange are the most common mode of payment from customers for the goods and services sold to them. Post-dated checks are the payments received from customers in the form of a check with a future due date for the realization of the cash proceeds. From the business side, the process steps involved from sale to realization of payment with post-dated checks are:

1. A sales invoice is raised on the customer for the value of goods and services sold to them
2. The customer makes the payment for the invoice value in the form of a check with a future date for the realization
3. Company maintains the record of all the received checks. On the specified date, the check is presented in the bank for clearance.
4. Banks collect the proceeds and send the information. Upon receiving the information, the accounting entries passed in the books of account and customer dues are cleared. 

In the whole business process from receiving the check to present and then realization, different activities are involved. In the SAP system, you can use the portfolio functionality available for the countries Greece, Turkey, and Thailand for effective tracking, control, and management of these post-dated checks. In this article, I’ll explain the step-by-step business process and the relevant configuration activities supported by screenprints for the processing of post-dated checks. For the transaction entry and processing, I am using Thailand as the example country and the transaction codes available as part of the area menu SAP_ICC_THAILAND.

A portfolio is a collection or group of checks. Storing checks in portfolios makes it easier to manage. In the SAP system, you enter the details for checks when received and process them when they become due. Portfolios are defined for a company code in the customization based on the requirement. (Refer to the IMG step 4 in the configuration section of this article.) For this example, I have defined two portfolios, one for posting the receipt of post-dated checks (ZBKC_PDC_R) and the other to capture the details for bounced or returned checks (ZBKC_PDC-B). Based on your requirements and reporting, you can configure different portfolios. You need to define the special general ledger indicators separately for each portfolio and assign the alternative reconciliation accounts. 

The functionality I’m using, the Bank Accounting submodule of FI, applies to both SAP R/3 and SAP ERP Central Component (SAP ECC) 5.0 and 6.0 systems.

SAP Process Flow

Now let’s see the procedural steps followed in the SAP system for accounting and processing of post-dated checks.

Step 1. Upon selling the goods or services, you post the sales invoice either in transaction FB70 or in the integrated scenario, then the bill is released to accounting from sales and distribution (SD) or SAP Customer Relationship Management. An accounting document is created in the system debiting the customer and crediting the sales revenue account with the billed amount.

Step 2. The customer sends the payment for invoice in the form of a post-dated check. You can enter the details in the system by following menu path SAP_ICC_THAILAND > Transactions Posting > Check Received Entry (transaction F-36).

On the Bill of Exchange Payment: Header Data screen that follows, enter the data as required, such as Document Date, Posting Date, Company Code, Currency, Reference, and Header Text. Select the Incoming Payment option as the transaction to be processed.

For the line item, check the Posting Key (09) defaulted by the system, for the account select the required customer account (e.g., BKCC1), and select the special GL indicator defined in the IMG (Figure 1). For this example, I used the special GL indicator S (refer to the IMG step 3 in the configuration section of this article).

Figure 1

Post-dated check header data entries

After you enter the data and confirm, the system prompts you to select the relevant portfolio (e.g., ZBKC_PDC-R) from a drop-down menu in a dialog box (Figure 2).

Figure 2

Portfolio selection

After selecting the portfolio, click the continue (green check mark) icon and the system takes you to the line item detail screen (Figure 3). Here you enter the details such as Amount, Text, Due on (due date of check), Ext. No. (PDC number), and Bank/Acct No (bank or account number). The system automatically fills the Drawer and Drawee.

Figure 3

Line item details

Click the Process open items button to process the open items and post the document. At this stage, a print dialog box pops up for printing the transaction records. If required, you can print the transaction records by entering the printer name. You can print later by choosing cancel and proceeding to post the document. The accounting document is posted, clearing the normal open item and creating a special GL open item in the customer account (Figure 4). 

Figure 4

Document display for processing the open item

Step 3. Present the check on due date (e.g., February 10, 2010) to the bank for collection. Enter the details in the system by using transaction FTR03 or by following menu path SAP_ICC_THAILAND > Transactions Posting > Check Processing (Figure 5). Enter the details for Company code, Document Date, and Posting Date, and select the Presented to Bank option from the Transactions tab.

Figure 5

Transactions tab

On the Selection Criteria tab, enter the data for portfolio ZBKC_PDC_R and the currency the check is using (Figure 6). You can select other fields to narrow down the selection criteria.

Figure 6

Selection Criteria tab

After entering the required data, click the execute icon or choose Program > Execute (Figure 7). The system shows the list of post-dated checks previously entered in the system. Pick up the relevant post-dated checks by clicking the check box next to the item and then click the execute icon. The system prompts you to enter the Interim (Collection) account.

Figure 7

Dialog box for the collection account

At this point, a print dialog box pops up for selecting the printer to print the transaction records. To print the records at a later point, choose cancel and proceed to post the document. An accounting document is posted, debiting the check to the bank’s collection account and crediting the corresponding bank subaccount for creating the contingent liability (Figure 8).

Figure 8

Document display

Step 4. The customer clears the check and the bank gets the information. Usually banks take a few days depending on the bank and country to give the status of the check clearing. In this example, after two days (i.e., on February 12, 2010) the bank gets the information and passes it on to the company. After getting the information, proceed to enter it in the system using transaction code FTR03 or by following menu path SAP_ICC_THAILAND > Transactions Posting > Check Processing (Figure 9). Enter the data for Company code, Document Date, and Posting Date, and select the Cleared at Bank option from the Transactions tab.

Figure 9

Enter information in the Transactions tab

On the Selection Criteria tab, enter the collection account in Interim Account field (e.g., 120200), the portfolio ZBKC_PDC_R, the Currency, and any other data necessary (Figure 10). Click the execute icon to select the checks to be processed and confirm the value date and continue.

Figure 10

Selection Criteria tab

Figure 11

List of cleared checks

The system creates two accounting documents. The first document (no. 100000001) debits the check amount to the main bank account and clears the collection account (Figure 12). The second accounting document (no. 1600000006) reverses the contingent liability from the bank subaccount and clears the special general ledger open item from the customer account (Figure 13). You can also view the job log in Figure 14 by going to List > System Messages in Figure 11.

Figure 12

Clearing the open item from the collection account and posting to the main bank account

Figure 14

Job log

If the check is returned unpaid (i.e., bounced), the check moves to the bounced portfolio. This enables the process owner to track and follow up with the customer for payment. After the customer confirms he or she has sufficient funds, the check can be processed and the open items are cleared. This way the checks can be effectively tracked and managed.

At each stage of the process, transaction records can be printed. The SAP system contains various transactions for different functions such as check reversal (transaction FTR04) for the bounced checks, printing of transaction lists (transaction FTR02), and reprinting transaction records (transaction FTR05).

Prerequisites and Configuration Steps

Having described the process steps, in this section I briefly explain the configuration steps. As a prerequisite, you need to create certain general ledger accounts that are used in different IMG activities. The following general ledger accounts are required:

• Bank subaccounts: A general ledger account that the system uses to record contingent liabilities for post-dated checks that you present to a bank until the bank clears them. It denotes that the check has not been cleared. The best practice is to create separate subaccounts for each bank. In this example, general ledger account 121000 was created.
• Collection account: A general ledger account that the system uses to record checks receivable that you have presented to banks for collection. It acts as a clearing account and denotes that a check has been sent to a bank and is awaiting clearing. When you present a check to a bank, you specify in which collection account the check is to be recorded. When the bank clears the check or the check bounces, the system clears the check from the collection account. This example uses general ledger account 120200.
• Special general ledger accounts: A special general ledger account (alternate reconciliation account) that the system uses to record post-dated checks receivable and includes special general ledger indicators for receivable, bounced, sold-to vendor, and so on as required by the business. When defining the check portfolio in the IMG activity, these accounts are assigned to them. This example includes general ledger accounts 160100 and 160110 in IMG activity 2).

Other required general ledger accounts created are main bank accounts including 120000 and 160000.

Customization Steps

Now I’ll go over the customization steps involved in the solution. These are mostly intuitive and general.

Step 1. Define house banks and accounts by using transaction SPRO and following menu path Financial Accounting (New) > Bank Accounting > Bank Accounts > Define House Banks.

Step 2. Create the special general ledger indicators and map the alternate general ledger accounts. Use transaction SPRO and follow menu path Financial Accounting (New) > Bank Accounting > Business Transactions > Bill of Exchange Transactions > Bill of Exchange Receivable > Post Bill of Exchange Receivable > Define Alternative Reconcil.Acct for Bills/Exch.Receivable, or use transaction OBYN.

In this IMG activity, you create the required special general ledger indicators and map the alternate reconciliation accounts to each defined indicator. For this example, I used the standard special general ledger indicator S for post-dated checks received and the newly defined indicator 1 to track the bounced post-dated checks. I have created and assigned the alternate reconciliation accounts 160100 and 160110, as shown respectively in Figures 15 and 16.

Figure 15

Mapping of an alternate reconciliation account to special general ledger indicator S for received post-dated checks

Figure 16

Mapping of alternate reconciliation account to special general ledger indicator 1 for bounced post-dated checks

Step 3. Define bill of exchange portfolios using transaction SPRO and by following menu path Financial Accounting (New) > Bank Accounting > Business Transactions > Bill of Exchange Transactions > Bill of Exchange Receivable > Post Bill of Exchange Receivable > Bill of Exchange Portfolios > Define Bill of Exchange Portfolios (Figure 17).

Figure 17

Define the bill of exchange portfolios

Step 4. Define number ranges for transaction records by using transaction SPRO and by following menu path Financial Accounting (New) > Bank Accounting > Business Transactions > Bill of Exchange Transactions > Bill of Exchange Receivable > Post Bill of Exchange Receivable > Bill or Exchange Portfolios > Transaction Records > Define Number Ranges or by using transaction FTR01 directly (Figure 18).

Figure 18

Define the number ranges

In this IMG activity, you maintain the required number ranges for transaction records. Depending on the requirement, number ranges are maintained for the transactions shown in Table 1.

Table 1

Maintained number ranges

Step 5. Define the form to print transaction records using transaction SPRO and by following menu path Financial Accounting (New) > Bank Accounting > Business Transactions > Bill of Exchange Transactions > Bill of Exchange Receivable > Post Bill of Exchange Receivable > Bill of Exchange Portfolios > Transaction Records > Specify SAPscript Form (Figure 19). Note that you need to create the SAPscript form that you want to use before performing this step.

Figure 19

Define the SAPscript form

Step 6. Define bank subaccounts for showing liabilities using transaction SPRO and by following menu path Financial Accounting (New) > Bank Accounting > Business Transactions > Bill of Exchange Transactions > Bill of Exchange Receivable > Present Bill of Exchange Receivable at Bank > Define Bank Subaccounts or by using transaction OBYK (Figure 20).

Figure 20

Define the subaccounts you’re using

Step 7. Define collection accounts by using transaction SPRO and by following menu path Financial Accounting (New) > Bank Accounting > Business Transactions > Bill of Exchange Transactions > Bill of Exchange Receivable > Present Bill of Exchange Receivable at Bank > Maintain House Bank Details or by using transaction F.92 (Figure 21).

Figure 21

Define the collection accounts

Step 8. Define the business place by using transaction SPRO and by following menu path Cross-Application Components > General Application Functions > Cross-Application Document Numbering > Thailand > Business Places > Define Business Places (Figure 22).

Figure 22

Define the business place

Step 9. Maintain table T043S (tolerances for groups of G/L accounts) for clearing the open items (Figure 23). You can configure tolerance groups by using transaction SPRO and following menu path Financial Accounting (New) > General Ledger Accounting (New) > Business Transactions > Open Item Clearing > Clearing Differences > Define Tolerance Groups for G/L Accounts. Tolerance groups are specific to your company and you can configure them at the company code level.

Figure 23

Maintain tolerance for groups