Provisions for Doubtful Receivables

Use
You can create provisions for customer receivables that might not be paid. In such cases, you first need to
transfer such customer receivables as doubtful receivables to a special G/L account. You later use a
different program to make ledger group-specific postings for the relevant provisions.

Caution
You use this function to automatically transfer open customer receivables as doubtful receivables to the
special G/L account once a specified length of time has elapsed. Only use this function if this procedure is
compatible with the accounting principles that you are legally required to apply in your country.

Prerequisites
The following prerequisites must be met:
 In Customizing for Accounts Receivable and Accounts Payable under Business Transactions
Closing Valuate Define Methods (New) , you have defined at least one provision method that
the program can use to create the provisions.
 In Customizing for Accounts Receivable and Accounts Payable under Business Transactions
Closing Valuate Reserve for Bad Debt Specify Periods and Amount of Reserve for Bad Debt
(New) , you have assigned a valuation area to the provision method and specified sort levels with
percentages that the program uses to determine the provisions.
If you want the program for creating provisions to consider tax on sales and purchases or if you want
credit memos to be charged partially to the provision amount, you need to have set the appropriate
indicator here.
 In Customizing for General Ledger Accounting (New) under Periodic Processing Valuate
Assign Valuation Areas and Accounting Principles , you have assigned an accounting principle to
the valuation area.
 You have used transactions OBXY and OBXT to define a special G/L account (with the special G/L
indicator) to which the doubtful receivables first need to be transferred.
 In Customizing for Accounts Receivable and Accounts Payable under Business Transactions ->
Closing -> Valuate -> Reserve for Bad Debt -> Define Accounts for Reserve for Bad Debt (New) ,
you have specified the accounts to which the provisions are to be posted (account for allocation of
funds or the reserve account).

Features

Transferring Doubtful Receivables

The program reads all open items in a customer account. In the case of items for which the balance per
invoice reference number is greater than zero and for which the transfer posting deadline specified in the
provision method has been reached, the program clears the items with a posting to the specified special
G/L account. The program also makes transfer postings for any credit memos without an invoice
reference, provided their amount is not greater than the amount of the doubtful receivables already posted
and of those yet to be posted.
Each item is transferred in an individual transfer posting. You can specify that the program places the
postings in a batch input session.
The program outputs a list of all documents considered in the transfer posting, sorted by company code,
customer number, currency, and due date. It also prints a totals table for each company code.
 Caution
Ensure that the field control of the special G/L account allows the payment period baseline date to be
entered. This date is required to determine the provision amount.

Posting Provisions
For each customer, the program selects all items with the special G/L indicator selected and that
correspond to the criteria specified. From the combination of valuation area and provision method, the
program determines the following:
 Due date
 Percentage of the provision (for each sort level)
 Setting specifying whether credit memos are charged
 Setting specifying whether tax on sales/purchases is considered
 Account assignment for the posting
The system sorts the selected items on the basis of the due date. The amount that is actually posted is the
difference between the amount already on the account for the allocation of funds and the new provision
amount determined using the percentage of the provision. From the valuation area, the system derives the
ledger group to which the posting is made.

Caution
The program only creates provision postings when the Carry Out Postings indicator is set.

Note
With the standard settings, the program posts the provisions in the company code currency. If you want to
post the provisions in the transaction currency, set the In Transaction Currency indicator.

In the case of cleared items that contain a provision that is smaller than 100 percent, the system reverses
the provision. In such cases, it is assumed that the original item has already been paid.
The program returns a list of all items with the selected special G/L indicator, sorted by business area and
due date. For each item, the list also shows the local currency amount, the previous provision amount, and
the new amount to be posted, as well as the clearing date in the case of cleared items.

Activities

Transfer Postings for Doubtful Receivables

To make transfer postings for doubtful customer receivables to a special G/L account, use program
SAPF103. For this, start transaction F103, or, from the SAP Easy Access menu, choose Accounting
Financial Accounting Accounts Receivable Periodic Processing Closing Valuate Receivables
Transfer Posting (Gross) .
To be able to specify the date after which open customer items are transferred to the special G/L account,
you have to define a provision method. When you have made the other settings you need, run the
program.

Posting Provisions
To create provisions for the doubtful receivables transferred to the special G/L account, use program
FAGL_DR_PROVISION. For this, start transaction FAGL_104, or, from the SAP Easy Access menu,
choose Accounting Financial Accounting Accounts Receivable Periodic Processing Closing
Valuate Reserve for Bad Debt (Gross) (New) .
Specify a valuation area that has been assigned to a provision method in Customizing. You can use the
search help to restrict the selection of items for which you want to create provisions. When you have
made the other settings you need, run the program.

Note
You can reverse the last posting run. For this, set the Reverse Postings indicator and the Carry Out
Postings indicator, and then run the program.

Feedback