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DUNNING

Invoices and statements sometimes do not get payments from difficult customers. This is where
dunning steps in. Simply stated, dunning is a reminder to the customer that payments from them
are overdue and they should remit the same to the vendor. The dunning process can also keep
track of a customers payment habits which can be used in reporting and decision making on
the credit policies a company should adopt to keep receivables in control. There may be
customers who buy a lot, pay slow but do pay and do not default. In those cases, the company
may want to retain the business, increase the prices marginally to cover for the lost interest and
give more than normal credit so their receivables do not affect overdue AR. Further, this process
can also be taken a step forward and this information sent to collection agencies. This is a
useful feature for high volume mass product selling companies like cell phone providers, utility
companies etc.

While the language on a dunning letter will be company specific like in statements, the
process of generating dunning letters in SAP is the same. It involves some configuration set
up and master data in the customers CC data view.

The standard dunning system in SAP covers 4 different customer transactions:

1. Open A/R invoices, including invoices that are partially credited or partially paid
2. Invoices that include installments
3. A/R credit memos
4. Incoming payments that are not based on invoices

Configurations needed:

I Setup dunning area:

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Dunning areas can be a sales area, a certain profit center, a business area, or set up a dunning
area for domestic customers/foreign customers etc., the idea really being as to who is
responsible for this dunning set up in SAP.

We will set up a generic dunning area for the co code:

II Dunning Key: A dunning key defines the levels of dunning that can take place.

There are pre-defined dunning keys given by SAP which usually are used. Check All and Save:

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With this, we triggered all the dunning levels possible in standard SAP i.e. multiple reminders if
necessary can go to the customers so set up to receive them.

Dunning Blocking reasons: Certain customers regardless of their payment schedules are too
important and are not sent dunning letters to avoid bad unpleasantness. We can define dunning
reasons in configuration and then in the customer master, in Correspondence tab, those customers
can be assigned some reason or the other for not dunning them. Those customers will then be
bypassed during the dunning run and will not be sent letters. They are put on a
dunning block.

Any of the above reasons, A, B, H or R (users can define their own also) can then be assigned
in the customer master in the field Dunning Block:

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III Dunning Procedure:

Dunning Procedure defines the process whereby which the customers will be dunned using
the dunning keys.

To understand the different drivers in a dunning procedure, let us make our own for our co code:

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Click on New Procedure to give it a name and Code:

(a) The field Dunning Interval in Days defines the # of days in between when the customer
receives the next dunning letter. When the dunning job runs, the system checks if this
many # of days have passed when the last dunning took place
(b) Dunning levels the max number of levels of dunning that can be done. 4 is currently
the max number in SAP. Normally, if 4 reminders dont lead to results, there is a good

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chance to write off the amount or pass to a collection agency. However, a company may
decide to set up more levels if it feels it will help.
(c) Days in arrears which at least one item in this account must have for a dunning notice to
be created. These minimum days in arrears have no influence on calculating the days
overdue
(d) Line item grace period if you want to give a grace period of any kind due to delays in
post etc. This would then add to the days set in (c) when SAP looks for customers who
need to be sent letters in the specific dunning run.
(e) Interest indicator - optional field, we would enter an interest calculation indicator here if
we want dunning interest to be calculated for this customer
(f) Check the field Standard Transaction dunning

Define Dunning Charges to Dunning Procedures Click on the tab

Enter the currency CAD and Hit Enter and enter data as below:

Dunning charges can be defined in 2 different ways:

(i) As an absolute amount as in the above case

(ii) As a % amount. This % amount is calculated by multiplying this % with the total of
all overdue items in the dunning notice. The result is the dunning charge in dunning
currency.

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Minimum Amounts -

The objective of defining Min Amounts is to cover administrative charges associated with
dunning the customers.

Dunning Texts: Next, we assign what text/letters we will send to the customers when we dun
them.

Click on

Choose Customer and Click OK

Click on to set our CC in the list

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Select the 2 options Dunning by dunning area and Separate Notice per dunning level:

Save the data:

The next step is to maintain the actual dunning levels in the dunning procedure. Click on

rd th
Lets assume we want to calculate interest only at the 3 and 4 level of dunning and give
st nd
grace of interest on the 1 and 2 duns:

Note the difference of 14 days this 14 is coming from the time period we defined earlier as the
gap between the different duns.

Go back and save the data. The dunning procedure is now ready to be used.

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DUNNING THE CUSTOMER

First we set up the appropriate master data. Go to transaction FD02 (change customers CC
data) and add the dunning procedure in the Correspondence tab:

Save.

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Once the customer is set up, we are ready to test the dunning process. The t code is F150 for
setting up dunning runs for customers collectively or dun individually, or follow the path:

Give the dunning run an ID and the date on which you want it to occur:

Enter the other necessary data:

The dunning date is the date of issue and also the date from which the arrears are calculated.
Documents posting date will include all the documents posted till that date.

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Account restrictions enable you to exclude or include accounts that should not be dunned or
should be dunned. This is different from the exclusions that come in due to data not set in the
customer or vendor masters. SAP checks for both those excluded in the customer master will
be excluded as well as those listed here for exclusion will also be excluded. If you want only a
few customers to be dunned, then set them up here and SAP will pick up only those for
dunning provided they have been set up appropriately in the customer master to be dunned. If
a customer is excluded in the customer master then inclusion here will not create dunning
letters for them.

Save the run.

Now, a background job will kick in on 15.06.2016 in this case and create dunning notices for all
the appropriately set up customers.

Individual Dunning Notices:

We can also see individual notices for any particular customer/s instead of all customers in one
run.

Enter the PDF printer in the window that comes up:

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Enter data as:

Click on

A very crude letter comes up:

This letter is not a finished product. Normally, companies will develop, align and appropriately
place the text in the forms and layouts which will be created in SAP for this purpose. Here, it is
only for demonstration purpose.

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 Dunning Process

Correspondence (T- Code FB12 & F-64)

Correspondence types differ with respect to the contents and structure of the letters we can
send to our business partners.
An account statement and open item list are two types of correspondence. They differ with
respect to the information they contain and the way it is displayed. Unlike an open item list, an
account statement displays all items in a specified period along with the balance carried
forward. The open item list merely displays the open items for a certain key date.

Account Statement and Open Items List

The account statement can be created for our customers or vendors is an extract from the
customer account which enables him to check the items there or is merely for information
purposes. The account statement displays the balance carried forward, all items in the chosen
period and the closing balance of the account.
The open items list is a special form of account statement. It is also sent to the customer for
verification or information purposes. Occasionally, the list is also used as a reminder letter. The
open items up to the chosen key date are displayed in this list.
Both letters contain the document number or reference document number, the document date,
the document type, the currency and the amount for every item as well as the balance of the
open items at the key date. The account statement may also contain the clearing document
number. If branches were included in the letter of a head office, their addresses are listed at the
end of the letter.
The layout of the letter is determined via a form. Depending on the form used, the letter may
also contain, for example, the days in arrears per item at the key date or other information. The
form must be defined and stored in the system.

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Request Correspondence : Fill with Company Code and Correspondence type

Once the correspondence is elected system will ask for the following option for which Account
Statement is to be printed. Dunning Notice can be printed based on the date which is related to
the corresponding due date of each customer / vendor invoice

Press Continue . System Display the following message :

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Maintain Correspondence request ( F.64)

Execute . The system will display overview of customer account status.

Chose
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