LoB Finance Expert Series

Lockbox Overview
Kim Ciesla
Principal Financial Consultant
SAP America, 14 September 2018
INTERNAL
What We’ll Cover – The Vote is IN

Lockbox Process Overview

Lockbox Configuration

Critical Success Factors a.k.a. Things I Learned the Hard Way

Testing Tools

Resources

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Lockbox Process Overview
Process Flow
Customer SAP-User

Cash Payment
Advice AR
Open
Items

Data
File

Remit to

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Bank 4
SAP Lockbox Program Technical Steps
Data
File
Check for duplicate bank transmission
 100LOCKBOXDESLOCKBOXORI1809102304
 Date and time on the first line of the data file Payment
Bank Advice
Add bank file to the SAP bank buffer and payment advice Stmt
tables Table

Identify customer using the MICR number

Lockbox Program
Identify invoices with based on selection rules: invoice
number, reference number, etc.

Update payment advice tables Cash

AR
Call FI-AR program to post payment advice to customer’s Open
account Items

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Post Processing: Cheque Status

Additional
Customer Invoice(s) Invoice Residual
Status Identified? Cleared? Matching? Processing?
Depends on
Applied Yes Yes No
Tolerances
Depends on
Partially Applied Yes Yes & No Depends
Tolerances
On Account Yes No Yes No
Unprocessed No No Yes No

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Lockbox Posting Entries

Bank posting entry:

AR clearing entry:

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Common Enhancements

• User exit for intercompany postings

• 999 line limit calculation

• Sum duplicate reference numbers

• Realign deductions with same invoice number

• Extending search beyond BELNR/XBLNR

▫ ZUNOR,XREF1/2/3, etc.

• If there is no match, remove the * on the remit number

• Move the reference number to XREF 1 and 2

• Reason code assignment

• IDOCs: reassociation program when customer sends payment file separately from remit file

• Creating a test data program for generating invoices and data files for testing (RFEBLBT2/3 as the base)

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Lockbox File Formats
BAI BAI2 / 820 / 823
Customer MICR Yes Yes
Cheque Amount Yes Yes
Invoice numbers Yes Yes
Payment Amount per Invoice Yes
Deduction Amount per Invoice Yes
Customer Reason Codes Yes
Ease of Use
Lockbox BAI files are not typically used.

Lockbox BAI2 files are commonly used. Note, banks charge per keystroke, so these files will cost more
to produce than BAI files. With more data, the hit rate on these files is higher than BAI files.

820/832 files can be converted to BAI2 files or to FINSTA01 IDOC file structures for processing. The
IDOCs are the easiest on the eyes, however EDI infrastructure needs to be maintained to support the
file format.
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The Good, the Bad, the Ugly…

IDOC: FINSTA01 BAI/BAI2

 Pros:  Pros:
– Improved technology for monitoring status – Simple to implement
– Format is expandable to accommodate more – Most commonly used
data – Handles most basic scenarios
– Easy transition for EDI customers
– User-friendly testing tools
– No “counting zeros”

 Cons:  Cons:
– Uses EDI infrastructure – more complexity – No technology for monitoring
– More costly to implement – Difficult format to work with in a testing
– More technical resources needed to implement environment
and maintain

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What Format is Best?

Standard consulting answer: it depends!

Depends on…
 Lockbox volume
 Complexity of remittances
 Technological infrastructure
 Customer requirements

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Lockbox Configuration
The Big Picture

System Issues

Reason Codes

Master Data:
Posting Keys
Hardware GL, Bank, AR Software
Lockbox
Issues Settings Issues
Field Status Tolerances

House Banks

Network Issues User/Admin

Issues
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Basic Format Configuration: OBAY

Specify the lockbox format

 BAI
 BAI2
 IDOC

Specify the types of postings you want

generated
 General ledger
 Subledger

Specify if you want partial payments or residual

items created for payment differences.
Specify if you want to create a batch input
session to insert new/missing bank details into
the customer master record

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Basic Posting Configuration: OBAX

Destination and origin values are the bank’s

account and routing numbers

Specify the company code and house bank

information for the lockbox account

Specify the general ledger account numbers for

the cash account and the cash clearing account

Specify the document types and posting keys

used by the lockbox for creating payment
documents and residual items.

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If the Demo Doesn’t Work
Edit the Data File

Cheque #1: Short pay invoices $100

• Change the cheque total and invoice payment amounts

Cheque #2: Payment on account

• Change the invoice numbers so they can’t be found, but the

payment will be identified by MICR

Cheque #3: Unprocessed

• Change the invoice numbers and the MICR number and the
payment can’t be identified

Key things to remember:

• Change the cheque number – it can be alpha and numeric but

the alphas must be capital letters!

• User Courier New font for accurate line up of the data file

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Lockbox Totals Report

Cheque statuses are as expected on

the lockbox report

Cheque numbers listed and are part

of the payment advice number

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Log of Imported Cheques

This log tells you the

disposition of the cheques:

• How/if they were

identified

• What was remitted

• Do the individual
payment amounts equal
the cheque total?

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Customer Line Item Display

Note: if you are paying

close attention, the cheque
numbers on this screen
have an “A” suffix because
I had to re-run the file and
added an A to the end so
that the cheque number
would be unique

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Critical Success Factors
aka
Things I Learned the Hard Way
Non-Lockbox Considerations

Before the cash even comes in the door, you can use tools to populate your FI documents to
improve your hit rate.

 FI Substitution Rules can be used to:

– Retrieve additional reference numbers (SD documents)
– Remove illegal characters (ex. DM-12345)
– Split unusually long reference numbers

 SD Copy Control Configuration

– The standard way to copy certain reference numbers from SD documents to the FI documents
▫ P.O. number, sales order number

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Master Data Implications

Business Partner:
 Start collecting, updating, validating MICR number information

Bank Master:
 Set up cash and clearing accounts for lockbox
 Create general ledger accounts for zero balance clearing accounts

General Ledger Master

 Validate that cash management and field status definitions are set correctly
▫ Relevant for Cash Flow
▫ Mandatory text field
 Validate that field status definitions on posting keys are set correctly
▫ Mandatory text field on the residual posting keys
 Ensure account determination is set correctly
▫ Document splitting rules, cost object assignments, etc.

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Key Success Factors

Engage internal and external non-project Exploit SAP standard user exits for custom
resources as quickly as possible code
 Bank(s), IT organization, treasury, cash
management, credit Leverage tolerance settings:
 Double the lead time when working with the banks  Customer tolerances (OBA3)
 Employee tolerances (OBA4)
Analyze what customers are currently
remitting to see what behaviors you will have to  General ledger tolerances (OBA0)
impact and tolerances to set – Remember, the tighter tolerance always rules!

Standardize before configuring and testing:

 invoice formats Test all scenarios no matter how improbable
 internal policies and procedures and then test some more!
 write off policies
 grace days
 payment terms on residual items
 cash discount policies

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Most Importantly!

Test, test and test some more!

No surprises at “go live”!
There are very few configuration screens for lockbox and a lot
of little settings along the way.
One inadvertent check mark in a check box can impact cash
application, disputes, credit, collections, and treasury.

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Testing Success Factors

Create a list of ALL payment scenarios:

 overpay, short pay, non-invoice related deductions, and various combinations thereof
 check with your cash appliers and credit analysts to make sure all payment scenarios are covered
 Identify people who are “problem finders” and have them help with testing

Give your bank a go-live date 2 months earlier

Set up process to regularly send bank cheques & remittances to test

Test large cheques

Take a snapshot in time — using real converted data, take a real cheque for that day and submit
info to the bank to test.

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Testing Success Factors (2)

…then test some more!

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Testing Tools
SAP Testing Tools - RFEBLBTx
This test tool generates invoices and
then an associated file for testing.
 RFEBLBT1 creates BAI files
 RFEBLBT2 creates BAI2 files
 RFEBELT3 creates IDOCs.

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Modified Version of RFEBLBT3

Your favorite ABAPer can modify

the test program to
accommodate your testing
needs.
In this case, creating short
payments, reason codes,
specifying the number of
invoices desired, at what
increment, etc.

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BAI2 File Editing

Using Word Pad or Microsoft Word, you can manually edit the flat file.
Refer to SAP structures FLB1, 5, 6, 8 and 24 for detailed descriptions of
the data.
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IDOC Test Tool – WE19

WE19 is the testing tool that is used to create IDOCs for EDI testing. The format is easy to work with
– no counting zeros and spaces!
Very easy to copy one IDOC to the next.
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Deletion Program: RFEBKA96

This program should only be used in extremely rare circumstances in production.

This program can be used to clean up certain errors if there are problems during the execution of the lockbox file.

For example, the posting period was closed and the lockbox was run for the closed period. There will be an entry in
the FLB1 transaction listing all of the items as unprocessed. Since the period will be closed, there will be journal
entries posted.

You could use this program to delete the lockbox line item in the overview screen, put in the corrections and re-run
the lockbox file.

This program can be run for archiving purposes; i.e. If you want to delete check deposit lists from the bank data
memory. This is a permanent deletion however no documents are posted or reversed with this program.

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Online Resources
SAP Resources

Links for New Hires  Old SAP Notes:

Search Jam for “Links for New Hires” and you will – 538300: Lockbox: too many line items per
find all sorts of documentation posting document
 Kim’s Documentation Hub – 681901: Lockbox: Automatic Payment Advice
– Lockbox related white papers Split
 RFEBLBT2 – how to use it effectively
 How to dissect a BAI2 File – 620757: Lockbox, payment advice note display:
 This presentation incorrect
 Link to Nicole Scheumacher’s presentation on Lockbox
and Machine Learning
– 720271: Lockbox: Same Reference within one
(SAP_Cash_Application_INTERNAL) Check
– 551035: IDOC overview in FI
 How to create a CAL instance – 716407: EDI Lockbox: Automatic Payment
 WIKI for all sorts of links you have been looking for Advice Split
and can’t find – 501966: Advice user-exit for FINSTA IDOCs
 Link to Nicole Scheumacher’s presentation on
Lockbox and Machine Learning
(SAP_Cash_Application_INTERNAL)

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On Line Resources

Financials Expert
 Download section for supplements to articles in the journal
 https://sapexperts.wispubs.com/Financials

ASUG: www.asug.com
 Discussion forums and document database

Credit Resource Foundation: www.crfonline.org

 Independent member run organization with a vested interest in improving and fostering the
field of business credit
 Timely publications, surveys and discussion forums

If all else fails… www.google.com

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Thank you!
Just dive in!

Kim Ciesla
Principal Financial Consultant
+1.312.841.1881
Kim.Ciesla@sap.com

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