Enhanced Functionality Facilitates Check Return Processing in FI-CA

  • by Roshan Agrawal, Consultant, Deloitte Consulting Pvt. Ltd.
  • Ravikanth Veda, Sr. Consultant, Deloitte Consulting Pvt. Ltd.
  • February 6, 2013
Learn about the enhanced functionality of the check returns process in Contract Accounts Receivable and Payable with respect to the process involved in posting the checks that are returned from a bank.
Key Concept

The cash desk is a functionality in which payments are accepted at a company counter or company-specified counters when customers walk in for payment of their outstanding dues.

The payment process is an integral part of Contract Accounts Receivable and Payable (SAP FI-CA). The payment can be processed either by using the cash desk or by creating a payment lot and executing a payment run. Most utility payments are made by check. Banks frequently dishonor checks owing to various reasons such as insufficient funds in a customer’s account or inadequate or incorrect information available on the check. The return lot is posted through standard transaction code FP09. However, the SAP system does not allow you to post a check return through the return lot, in which the payment has been received through the cash desk. To post the check return through the return lot, you need to apply two SAP Notes and complete some configuration.

Consider an example of a utility company processing a check return. Utility companies face a challenge in dealing with such cases as they already account for check returns as payment received. The payment documents need to be cancelled, the returns charges have to be posted, and the creditworthiness of the customer needs to be adjusted accordingly. In my example, a US-based water utility found it difficult to post the return of the check payment when the cash desk is closed. To post the return on time and be able to perform the reconciliation, the company had to reset the clearing manually and process the outgoing payment. This workaround to the return process caused dunning and billing issues. I explain the configuration and SAP Notes that the company followed to resolve these issues later.

It is even more challenging when the check payment is received through the cash desk. Because a cash desk is closed at the end of the day, you cannot make any adjustments to the payments received or paid after they are closed. For a US-based utility company an average of 6 percent of the total returns (value and count) results in check returns for which payment has already been accounted. Out of this amount 2 percent of the total check returns come from the cash desk functionality.

Companies aim to post these returns as soon as possible to reconcile their bank balances and nullify the effect of payment on consumer accounts (i.e., to reverse the posting of payments). Payment has to be reversed, so to remove the effect of payment posting, you need to reverse that through check return posting. Posting of returns within due time can help a company in several ways (e.g., possible interest loss, timely reconciliation, or further follow-up for payments). Returns in cases when payments are posted through the cash desk component can be posted using enhanced functionality of returns that simplifies the returns process.

 

Roshan Agrawal

Roshan Agrawal is a member of The Institute of Chartered Accountants of India (ICAI). He has around 11 years of overall experience including nine years of SAP-ISU consulting experience with deep expertise in FI-CA. His consulting experience spans utilities industries including electricity, water and gas. His project exposure includes three end-to-end implementations, rollouts, technical upgrades, and application support assignments.

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Ravikanth Veda

Ravikanth Veda has 14.5 years of overall experience, including 6.5 years of SAP FI-CO consulting experience with deep expertise in FI-CA, product costing, and Financial Supply Chain Management (FSCM). His consulting experience spans consumer, manufacturing, energy, and utility industry sectors. He has worked on one implementation, one upgrade, and four application support assignments.

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