APAC - China Bank Draft Posting

Objective and Scope

Objective

This Local operational procedure (LOP) demonstrates processes and procedures to execute Accounts Receivable activities in Bank Draft posting for legal entities in CHINA. This LOP provides instruction for users to perform recurring activities and reacting expected scenarios.

Scope

This LOP applies for Accounts Receivable-Bank Draft posting of all CHINA entities:

Reference Documents

Process Flow (shown in the process)

Definitions

• SBS: In the current document, "Solvay Business Services" will be replaced by its abbreviation "SBS"
• OP: Operations Procedures
• BD: Bank Draft
• AR: Accounts Receivable
• AP: Accounts Payable
• CSR: Customer Service Representative
• T-Code: Transaction Code (SAP)
• G/L: General Ledger

Process Flows

1. Posting for Bank Draft Receiving

After Bank Draft has been accepted through bank portal, AR record Bank Draft information in defined shared point, then clear Account Receivable and create Notes Receivable under the same customer account in SAP.

Step:
1. After received Bank Draft information, AR record it in defined shared point.

Definitions of each column:
Customer name:    Name of customer who pay by bank draft
RCS code:              Customer code in SAP
Draft No.:               Bank draft number (Copied from bank portal)
Issue Date:             Date of issuing bank draft (Copied from bank portal)
Maturity Date:       Date of cash collection (Copied from bank portal)
Maturity:               Year and month of maturity date (Formulated by Excel)
Month:                  Actual age of bank draft (Counted from issue date to maturity date)
BD drawer:            Bank draft issue bank (Copied from bank portal)
BD amount:           Amount of bank draft (Copied from bank portal)
Comment:             Status of cleared bank draft
Received date:      Date of receiving bank draft
Period:                   Accounting period of receivable
Posting Date:         Date of receiving and posting bank draft in SAP
Age:                       Age of bank draft on our hand (Counted from received date to maturity date)
Voucher number:  Document posting number (Record receiving bank draft)
Clearing number:  Document posting number (Record Bank draft collection, Transferring, Discount, Return)
GBU:                      Business unit that bank draft paid to (For defining profit center to be used)

2. Record bank draft receiving in SAP by using t-code F-36.
On the screen "Bill of Exchange Payment: Header Data", insert information in the required fields as below:

Document Date/Posting Date:  The date of receiving bank draft
Type:                                         "DW" representing Customer Bill Exchange
Company code:                         4 Digits representing the company
Currency:                                   "CNY"
Reference:                                 "REC. BD"
Doc. Header Text:                      BD's Issue Bank
Clearing text:                            "REC. BD" + Customer Name
Transaction to be processed:   "Incoming payment" is default selected.

In the "First Line item", insert information in the required fields as below:
PstKy:         "09" representing Special G/L debit (it is default displayed)
Account:    Customer code
S GL Ind:    The special G/L indicator "9" representing Bank Draft CN (< 3 months) or
                                                           "8" representing Bank Draft CN (> 3 months)

Press "Enter" to go to the next screen.
On the screen "Bill of Exchange Payment Add Customer item", insert information in the required fields as below:

Amount:         The amount of bank draft
Assignment:   Bank draft number
Bus. Area:       The defined digits representing Business Unit (PF1 only)
Text:               "REC. BD" + Customer Name, except Mortgage Bank Draft needs to insert "For Deposit"
Due on:          The maturity date of the bank draft
Issue date:     The date of issuing bank draft
Accepted:      Select it when bank draft is unqualified and gets special approval
Payment Method:   "$" (representing E-BD)
(The other fields are default and liked to customer master data, if customer bank information was added)

Credit entry requires to post as advance payment to customer account by putting the information in next line item as below,
PstKy:             "19" representing Special G/L credit on Customer account
Account:        Customer code
Special G/L Ind.:   The special G/L indicator "A" representing Down payment

Press "Enter" to go to the next screen.

On the screen "Bill of Exchange Payment Add Customer item", insert information in the required fields as below:

Amount:         Bank draft receiving amount
Tax code:        "5M" (WP1) or "B0" (PF1)
Profit Center:  The defined digits representing Business Unit (WP1 only)
Assignment:   "REC. BD"
Text:                "REC. BD" + Customer Name

Click "Document" and "Simulate" to check if credit and debit entries are balance.

Click "Post"  and get the document number.

Remark: When document is posted as advance payment, it is required to clear the item against corresponding invoice in another step by using t-code F-32, please refer to Advance Payment Clearing Procedures.

2. Posting for Bank Draft's Cash Collection

When Bank draft is presented to the bank, there will be payment released to Solvay's bank account based on Bank Draft's maturity date and actual settlement amount. AR monitor the payment through bank statement, then record incoming payment in Bank G/L Account and clear Notes Receivable recorded earlier in SAP.

Step:
1. AR download and monitor bank statement on a daily basis, then check if there is incoming payment received from bank draft collection.
Bank Draft collection would present Bank Draft number in bank statement as a reference.

Example of Bank Statement with Bank Draft Collection:

2. Check and find corresponding document that recorded bank draft receiving earlier via t-code FBL5N.

Corresponding document can refer to bank draft number inserted in "Assignment" field, it is supposed to be the same bank draft number shown in bank statement.

3. Record bank draft collection in SAP by using t-code FEBA.
On the screen "Edit Bank Statement", double click on payment transaction in the left-hand side to display payment details in the right-hand side:

Click "Post"  to record the payment and select open item or bank draft to be cleared.

In the "Open item selection":

Company Code:   4 Digits representing the company
Account:              Customer code
Account type:     "D" representing Customer Account
Special G/L ind:  "8" or "9"

Then select "Document Number" in the "Additional selections".

Click "Process open items" and insert document number that posted as received bank draft earlier.

Click "Process open items" to clear cash-collected bank draft.

Click "Post"  and get the document number.

3. Posting for Bank Draft Discounting

Bank Draft Discounting is to early submit Bank Draft to the bank, in order to get the payment before its maturity date, but company needs to pay interest charges to the bank. It is basically managed by Treasury Cooperate team.

Step:
1. AR download and monitor bank statement on a daily basis, then check if there is incoming payment received from bank draft discounting. Sometimes Treasury Cooperate team would provide information in advance.
Bank Draft Discounting would have large amount of incoming payment with specific wording in bank statement.

Example of Bank Statement with Bank Draft Discounting:

2. Prepare Discounted Bank Draft list in Shared file.

3. Record incoming payment, interest charges and clear Notes Receivable in SAP by using t-code F-30.

Document Date/ Posting Date:                         The date of receiving payment
Type:                                                                  "DA" (WP1) or "DZ" (PF1) representing Customer document
Company code:                                                 4 Digits representing the company
Currency:                                                           "CNY"
Reference/ Doc.Header Text/ Clearing text:      "BD DISCOUNTING"
Transaction to be processed:                            "Transfer posting with clearing" is default selected.

In the "First Line item Data", insert information in the required fields as below:

PstKy:        "40" representing Debit entry G/L
Account:    G/L account of the bank account that receive payment

Press "Enter" to go to the next screen.

Amount:        The amount of incoming payment
Value Date:   The date of receiving payment
Text:              "BD DISCOUNTING"

Click "Choose open item" to go to the next screen.

In the "Open item selection", enter account information that Bank Draft is recorded on,
Company code:    4 Digits representing the company
Account:               Customer code
Account Type:      "D"
Special G/L Ind.:   "8" or "9"

Then click "Process open items" to select open item. (Clear discounted bank draft)

Generally bank would charge company discounting interest, AR needs to book the interest charged amount into the defined G/L account.

In the "Other Line item Data", insert information in the required fields as below:
PstKy:        "40" representing Debit entry G/L
Account:    Enter 98536240 (WP1) or 6599000000 (PF1) which is G/L account for other financial expenses

Press "Enter" to go to the next screen.

Amount:         The amount of charged interest
Cost center:    The defined digits representing CBNR Cost Center
Text:                "BD DISCOUNTING"

Click "Post"  and get the document number.

4. Posting for Bank Draft Transferred to Vendor

Transferring Bank Draft to Vendor is requested when AP and Site Controller agreed to use Bank Draft as a payment to vendor on a regular basis. After received a request, AR clear Notes Receivable recorded earlier in SAP and clear or post on Account Payable.

Step:
1. When Site Controller and AP agree to make payment to vendor by using Bank Draft, AP is accountable to prepare and send all information to AR. Then AR review and record Bank Draft list in the inventory file.

2. Record and clear Notes Receivable in SAP by using t-code F-36.

Document Date/Posting Date:   The date of receiving request to transfer bank draft
Type:                                           "DW" representing Customer Bill Exchange
Company code:                           4 Digits representing the company
Currency:                                     "CNY"
Reference:                                   "TRF. BD to AP"
Doc. Header Text/ Clearing text: "Transfer to Vendor" + Vendor Name
Transaction to be processed:      "Incoming Payment" is default selected.

In the "First Line item Data", insert information in the required fields as below:

PstKy:                    "29" representing Special G/L debit for Vendor account
Account:               Vendor code
Special G/L Ind.:   The special G/L indicator "A"

Press "Enter" to go to the next screen.

Amount:           The total amount of transferred bank draft
Tax Code:         "JP"
Assignment:     "TRF. BD to AP"
Text:                 "Transfer to Vendor" + Vendor Name

Click "Choose open item" to go to the next screen.

In the "Open item selection", enter account information that Bank Draft is recorded on,
Company code:   4 Digits representing the company
Account:              Customer code
Account Type:      "D"
Special G/L Ind.:   "8" or "9"

Click "Process open item" to go to the next screen. And select open item to clear. (Clear transferred bank draft)

Click "Post"  and get the document number.

3. If vendor reject or return bank draft back to our company, there are 2 options to post the document

Option 1 : AR reverse the document that posted for transferring bank draft earlier by t-code FB08.

Insert information in "Document Details" and "Specifications for Reverse Posting", then click "Post"  and get document number.

Option 2 : AR repost Note Receivables (refer to Posting for Bank Draft Receiving) and create debit entry on vendor account by using t-code F-36.

After repost Notes Receivable, insert information in the required fields of "Next Line Item" as below:

PstKy:                    "31" representing Debit entry on Vendor account
Account:               Vendor code

Press "Enter" go to the next screen.

Amount:           The total amount of returned Bank Draft
Payt Terms:       Please remove it 
Assignment:     "BD Return"
Text:                 "BD Returned from Vendor" + Vendor Name

Click "Post"  and get the document number.

Remark: WP1 document requires to update "Profit Center" via t-code "ZWFA111".

5. Posting for Bank Draft Returned/Exchanged to Customer

Bank Draft is mostly returned when it is used as "Mortgage Bank Draft" and be requested to return back to customer. And sometimes when we receive huge amount of Bank Draft, customer would request us to give the change in smaller amount of Bank Draft, it is usually called "Exchange Bank Draft" or transfer Bank Draft to customer.

Step:
After received request and approval, AR or Cashier transfer Bank draft through bank portal, then AR follow below procedures to perform the posting.
1. Open t-code FBL5N to check bank draft and AR balance;

For "Mortgage Bank Draft", both debit entry (Notes Receivable) and credit entry (Accounts Receivable) should have the same amount and be posted in the same document.

2. Clear bank draft and Account Receivable in SAP;

    2.1. Use t-code F-32 for clearing returned bank draft.

Account/ Company Code:   Customer code and Company code that the Bank Draft is recorded on
Clearing date/ Period:         The date of returning bank draft
Currency:                             "CNY"
Special G/L Ind:                   "A" and "8" or "9"

Click "Process open items" to go to the next screen.

Select open item to be cleared by clicking on the item amount.

Click "Post"  and get the document number.

2.2.  Use t-code f-36 for clearing exchanged bank draft.

Document Date/Posting Date:   The date of transferring bank draft
Type:                                           "DW" representing Customer Bill Exchange
Company code:                           4 Digits representing the company
Currency:                                     "CNY"
Reference:                                   "TRF. BD to CUST."
Doc. Header Text/ Clearing text: "Transfer to Customer" + Customer Name
Transaction to be processed:      "Incoming Payment" is default selected

Click "Choose open item" to go to the next screen.

In the "Open item selection", insert account information that Bank Draft is recorded on,
Company code:   4 Digits representing the company
Account:              Customer code
Account Type:      "D"
Special G/L Ind.:   "8" or "9" and "A" or any credit entry on Account Receivable

Click "Process open item" to go to the next screen. And select open item to clear. (Clear transferred bank draft and Account Receivable)

Click "Post"  and get the document number.