Dunning procedure

The dunning procedure defines how the dunning is carried out. More than one dunning procedure can be defined. There is no restriction to the number of procedures you can define. The account that you want to include in your dunning process must have a dunning procedure assigned to it.

A dunning procedure is applicable to both normal and special GL transactions in the SAP system.

Define Dunning Procedures

Problem: Spoxio Inc. wants to have four dunning levels as part of their credit control that will systematically generate reminder letters to customers for overdue invoices. The first letter is to be a courteous reminder, and thereafter subsequent reminders will be a little bit firmer, and so on.

Your task is to define four dunning levels for Spoxio Inc.

When maintaining the Dunning Procedure, you can defined the specifications for the following items:

To define the dunning procedure for your dunning program, follow this menu path: IMG: Financial Accounting ➤ Account Receivable and Accounts Payable ➤ Business Transaction ➤ Dunning ➤ Dunning Procedure ➤ Define Dunning Procedures.

The Maintain Dunning Procedure: List screen comes up displaying a list of existing dunning procedures in the system. Since in this activity we want to create a New Dunning Procedure, click the New Procedure at the top of the screen (this is the second item from the left). The Maintain Dunning Procedure: Overview screen is displayed (Figure 15-1).

The next step in this activity is to define the dunning levels for your dunning procedure.

Defining Dunning Levels

Dunning level allows you to determine the dunning letter to assign to your dunning notice. As a part of the credit control procedure, several letters are sent out systematically to remind business partners of open items in their account. These letters are categorized into various levels (SAP allows up to nine dunning levels that can be assigned to the dunning procedure). The first dunning level could be a very friendly reminder; the second obviously becomes a lot firmer, and so.

At the top left of the Maintain dunning Procedure: Overview screen click Dunning levels (Figure 15-2). This will allow you to apply the following the settings to your dunning levels:

• Days in arrears.

• Interest calculation applicable to your dunning level.

• Print parameter.

• Legal dunning procedure.

Update the screen by specifying the following items:

Days in Arrears: The number of days an invoice is in arrears determines the dunning notice level that is created for it. For example, if an overdue item is in arrears for two days, the payment program will create a dunning notice at dunning level 1. Likewise, if an overdue item is in arrears for 16 days, the payment program will create a dunning notice at level 2, and so on.

Calculate Interest: The system calculates interest on the set dunning levels. For example, interests should be calculated on dunning levels 3 and 4.

Always Dun: This allows the dunning program to always dun the overdue item at the last dunning level so that no item is skipped at this level.

Print All Items: This allows you to print an overview of the customer/vendor account balance at the specified level.

Payment Deadline: This determines the new payment deadline printed on the dunning notice. It is best to use a basic 12-month calendar to avoid the payment deadline falling on a weekend.

Always Dun in Legal Dunning Proc.: Selecting this option allows you to print dunning notices using a legal dunning procedure, regardless of whether any changes have taken place in the account or not.

Maintaining Charges

Sometimes a small amount of fee may be charged at certain dunning levels in the dunning procedure. Dunning charges are displayed only in the Dunning letter; no other entry will take place in the system. Dunning charges are entered in the customer account manually.

On the Maintain Dunning Procedure: Dunning levels screen, click Charges at the top left of the screen. The Dunning Charges dialog box pops up. Enter your company code currency – USD in the Currency field in the dialog box and click the Continue button at the bottom of the dialog box to go to the screen where you will maintain charges for the dunning program (Figure 15-3).

Specify the dunning levels and charges you want to apply to each dunning level.

The next step is to specify the minimum amount you want to apply to your dunning levels.

Maintaining Minimum Amounts

You set minimum dunning amounts per dunning level to stop the system from triggering high dunning levels for insignificant amounts. You can do this by specifying a minimum amount or minimum percentage rates for each dunning level. The dunning program will check the open item to see if it is to be dunned. If the amount due on the open item is less than the minimum amount, the dunning program will exclude it from the dunning. But if the open item exceeds the minimum amount or the minimum percentage rate, the system will dun the open item. The system will also check your specifications to determine the minimum amount on which interest is applied.

On the Maintain Dunning Procedure: Charges screen, click Minimum amounts on the top of the screen to go to the screen where you will maintain the minimum amount charged at each dunning level. The Minimum Amounts dialog box comes up. Enter your company code country currency key in the Currency field and click Continue at the bottom of the dialog box. The Maintain Dunning Procedure: Minimum amounts screen appears. This is the screen where you will specify the minimum amount that should attract charges.

When the minimum amount or percentage is reached or exceeded in respect of all open items, the system will trigger the next upper dunning level. If the specified minimum amount or minimum percentage is not reached, the system will automatically assign the items to the next level and carry out another check.

The next step is to specify the dunning texts you want to use for each dunning level.

Dunning texts

SAP comes with standard forms in SAPscript, which you can use for your dunning procedure. You can maintain the name of the form that you want to use per dunning level. SAPscript defines the layout of the form represented in the system. The dunning program generates payment advice notes, dunning notices, and payment terms.

Click Dunning texts at the top of the screen, the Company Code/Account Type dialog box pops up; enter your company code in the Company Code field (C100). In the Account type section of the screen, you are presented with two account types: Customer and Vendor. Select the account type for your dunning text. In this case, select Customer by activating the radio button in front of it. Then click Continue at the bottom right of the dialog box. The Maintain Dunning Procedure: Company code data screen is displayed. Click New company code at the top left of the screen, the New Company Code dialog box pops up, enter your company code (C100) in the Company Code field and click continue to confirm your entry. You will notice that your company code comes on top in the list of company codes list in the Maintain Dunning Procedure: Company code data screen, as in Figure 15-5.

At this level, save your dunning program customizing.

The next thing you need to do is to assign SAPscript forms to each dunning level. Click the Back Arrow bottom at the top left of the screen to return to the previous screen, the Maintain Dunning Procedure: Minimum Amounts screen. The Maintain company code screen pops up with the question “Do you want to save the data?” choose the yes button at the bottom left of the screen to save your configuration.

On the Maintain Dunning Procedure: Minimum amounts screen displayed, click Dunning texts at the top of the screen. The Company Code/Account Type dialog box pops up, defaulting your company code and customer account type. Click continue at the bottom right of the dialog box and Maintain Dunning Procedure: Dunning texts screen appears. This is the screen where you will specify the appropriate SAPscript form for each dunning level, as in Figure 15-6.

Now specify the appropriate form for each dunning level (Figure 15-7).

SAPscript forms contain the reminder letters you apply to each dunning level. SAP provided dunning forms that you can assign to each dunning level. For Example, F150_DUNN_01, F150_DUNN_02, and F150_DUNN_03. We recommend that you use the SAPscript form F150_DUNN_01 for dunning levels 1 & 2 and F150_DUNN_02 for levels 3 & 4. The SAPscript F150_DUNN_01 content is more cautious than the remaining SAPscript forms.

The final step in customizing the dunning procedure is to specify special G/L indicators for customers and vendors.

Special GL Indicator

This specification will allow special GL transactions to be dunned. You can also include special GL transactions to your dunning by setting the appropriate indicators. For example, if you want Down payment request to be dunned, you must set the special GL indicator in the dunning procedure. This will automatically allow the system to search for due down payment requests and include them in your dunning.

Click the Back arrow at the top right of Maintain Dunning Procedure: Dunning texts screen to return to the previous screen, the Maintain Dunning Procedure: Overview screen. Click Sp. G/L indicator at the top right of the screen to go to the screen where you will carry out the specification of special G/L indicator(s) for your dunning procedure. The Maintain Dunning Procedure: Special G/L indicator screen is displayed (Figure 15-8).

Click the Back arrow at the top left of the screen to return to the previous screen, the Maintain Dunning Procedure: Overview screen, and save your dunning procedure.

You have just completed the configuration for automatic dunning. The next activity in this chapter is to look at how to configure correspondence in SAP S4 HANA.