Cash Allocation - LAM - Brazilian Companies - WP1

Table of contents 

1. Objective and Scope 

   The purpose of this document is to describe the flow to handle payments received from Brazilian customers and how to apply it.

   The payments are received on Rhodia Poliamida and Rhodia Brazil bank accounts and the Accounts Receivable (AR) team matches those payments that could not be matched automatically by the system. This procedure describes which steps should be followed to apply the payments and also describes how we should proceed with each specificity.

   
   

   
   

2. FEBA 

   FEBA is a SAP transaction that allows you to view the inputs and outputs of the bank statements and also the return file of 'boletos'. By FEBA it is possible to check the values that were applied automatically by the system and values that were pending for manual handling. Bank statements from Brazilian companies are imported into the system automatically. 

   For bank statement and 'boletos' file, the system is not able to apply the payments automatically when:
   
   ● It is not possible to identify the customer;
   ● It is not possible to identify the composition of invoices;
   ● There is any divergence between the amount received and the value of the invoice.
   
   These payments are available on FEBA to manual handling.

   
   

   1. Application 

      Bank accounts can receive amounts through check and cash deposits, self service deposit, bank transfers, among others. It is important to know each type of transaction. In addition, the bank accounts in WP1 are not exclusive for trade receivables. There are also values related to PtP, RtR and HR.
      Consult the G-file to check LAM specificities:  

      On FEBA transaction, fill the criterias for the application, company code and statement date) then click run (F8).

      
      

      

                     Items that require manual handling will be highlighted in red  . The items that were handled automatically by the system will appear highlighted in green . 

  In the example above,  the cash deposit was identified with customer's CNPJ ("Tax ID"). Click on  and a screen will open, select the double square:

Type customer's CNPJ (Tax ID) on field "Tax Number 1" and press enter or click on  :

Two clicks on customer's account and click enter. Click 'Process Open Items':

Double click the invoice's amount and this item will be selected.

Note that the difference between the amount entered in the bank and the invoice's value must be zero.

Click on "Document", then "Simulate" to validate the information that will be processed.

It is important to confirm the date of posting, document type, company code, posting key (PK) from the accounts involved in this application.

If all the information is correct, the posting can be saved. 

At the bottom of the system, it will be displayed the number of the document that was posted:

And the amount that was pending, will appear as done on FEBA ()

b. Advance Payment

For some businesses and depending on client's risk, the Credit department asks customer to pay in advance.

When an advance payment is received, the invoice won't be posted on system, because the order will only be released after the payment is done.

In this case, the amount received should be posted on customer's account with Posting Key (PK) 15 and wait for the invoice to be billed by Customer Service. After the invoice is posted on customer's account, we can apply it with the payment that's already posted on account.

Identify the amount paid on FEBA and click on Save :

Click "ESC".

Fill the information on "Other Line Item"

Posting Key: 15

Account: Customer's account

Press "Enter" to go to next screen,

On field "Amount", fill in with "*" and save 

To create a dispute for advance payment, we use the transaction Z3F_FA_PIA . To use this transaction, you should have the number of the order. The order's number will be available on Freshdesk. The Customer Service Team or the Credit Team sends an e-mail to solvay.ar@solvay.com with the number of the order asking AR Team to confirm the payment.

On the first screen, you should fill the company code and customer's account, after that, you should press the F8 key or the 

On next screen, locate the payment (DZ), double click on any field of the payment. The example below, two clicks were given on field 1400033346 : 

On the following screen, fill in with the company code (under Aff. CoCo) and the number of the order (under field Sales Doc.).

After this information is inserted, you should select the whole line by clicking on the square that's located on the left side of "7523" (for example). After selecting this line, click on the green arrow or the F8 key. By clicking on the green arrow, the amount, currency, landscape and flag will be updated. Select this line again and save . Then the image below will appear, click "Yes".

A message will appear confirming that the document was posted successfully. The credit will be available on customer's account. To consult it, access the transaction FBL5N.

c. Unmatched Payment

Many times it's possible to identify the customer that made the payment through the bank statement, but sometimes it's not possible to identify which invoices the customer paid. For example, there's no information on FBL5N of promises of payment and the amount paid doesn't match any invoice or the total amount of invoices.

In this case, the credit should be posted on customer's account and a Dispute of Detail Missing should be created so the collector responsible for the account can identify which invoices should be applied.

The amount paid should be identified on FEBA, double click on it and then click "Save". After that, press "Esc" or .

Fill in the information on "Other Line Item" with:

Posting Key: 15

Account : Customer's account

Press "Enter"

Fill in with the information:

Amount : Total amount paid

Text: Detail Missing (EN) or Faltam detalhes do pagamento (PT)

Click on "Menu", "Document" and select the option "Simulate".

Verify if all the information is correct and click "Save" 

The credit will be posted on customer's account, to consult and create the dispute, the transaction FBL5N should be used. Consult global documentation regarding creation of Detail Missing Dispute. 

d. Partial Payment

In some situations, whether by negotiation or by partial return, the customer doesn't pay the full amount of the invoice. This difference must be applied later against a credit note or a return credit. 

To leave open balance on customer's account, the same information from the original invoice should be maintained, like due date and reference.

Identify the amount on FEBA:

Click "Save".

Fill in with customer's account:

Click in "Process open items". The system will indicate the open invoices of customer's account.

Click on tab "Residual Items"

Double click the amount of the invoice that will be applied partially.

Double click the white field of "Residual Items", the system will calculate automatically the amount that will be left open on customer's account.

Click on "Menu", "Document" then "Simulate".

The highlighted blue line indicates that it's necessary to create a comment on field "Text"  to save the document. To do that, you must double click on the blue line to insert the text. 

Click "Save" .

The partial amount will be available on customer's account so this can be applied later.

Create a dispute of Partial Payment for the Collections Team to contact customer to identify what this difference is about. For the creation of disputes, you should consult the global documentation for disputes. 

2.1 Conciliation of Differences

2.1.1 Interests

For arrears, in Brazil, is common the incidence of interests.

On FEBA, select the payment and press "Save" 

Check customer's account on FBL5N for information. Usually Collections write down information regarding dates of payment.

Select the invoice indicated:

Note that part of the amount is not assigned.

Select the tab "Res. Items" and in the option RCd, select IR (Interests).

Double click the blank field "Residual Items".

Click "Document" and then "Simulate".

Note that the difference was attributed to the G/L Interests (985323000).

Press "Save" 

2.1.2 Financial Discount

To adjust the difference as "Financial Discount", you should first select the invoice by double clicking on the invoice's amount.

Click on "Residual Items" tab.

On "RCd", select the option "DF - Desconto Financeiro", which means Financial Discount in Portuguese.

Double click the blank field on Residual Items and the difference amount will be automatically filled by the system.

Click on "Document" and then "Simulate". Check if the amount is correct,

If everything is correct, save the document .

2.1.3 Tolerance Incoming

In LAM Cash Application, the threshold to be considered as "Tolerance Incoming" is BRL 30,00 (Thirty Reais), which can be extended to BRL 100,00 (One Hundred Reais), only if it doesn't exceed 1% of the invoice's amount.

For example:

For an invoice in the amount of BRL 10.000,000 (Ten Thousand Reais), AR can adjust to "Tolerance Incoming" , without requesting any approval , the maximum of BRL 100,00 (one hundred reais).

For an invoice in the amount of BRL 4.000,000 (Four Thousand Reais), AR can adjust to "Tolerance Incoming" , without requesting any approval , the maximum of BRL 40,00 (forty reais).

For amounts below BRL 30.000,00 (Thirty Reais), AR can adjust to "Tolerance Incoming" , without  requesting any approval, the maximum of BR 30,00 (thirty reais).

The reason code for "Tolerance Incoming" is Z02.

2.1.4 Anticipation of Receivables

In Brazil, we have "Antecipação de Recebíveis" or Anticipation of Receivables, which is a mean of financing that Rhodia Poliamida uses that enables them to receive immediate cash. Rhodia will receive the cash from a financial institution. The operation works this way: the financial institution anticipates the amount you would receive, discounting an interest rate added to the IOF (Financial Transaction Tax), and assumes responsibility for receiving that title in the future. That is, when your client pays the bill, invoices or cashes the check, the recipient is the institution that anticipated the value, not you.

This operation is managed by the AR Team from Curitiba. It's sent an e-mail to solvay.ar@solvay.com with the calculation memory so AR can apply the payment received. In this e-mail, you will find a spreadsheet attached with the calculation memory's number, the invoices paid, the invoice's total amount and the amount paid. The difference must be allocated in the Business's cost center. The cost center will be informed in this e-mail.

Example of e-mail:

Applying the payment:

In this example, the negotiation is identified in the statement by its amount:

Locate the amount on FEBA:

Customer's information regarding the invoices paid is available on the spreadsheet sent by AR Team.

The amount of "Not Assigned" should be the same amount of discount informed in the spreadsheet.

Press "ESC".

To allocate this difference, you should fill in the following information in the "Other Line item":

Posting Key: 40

Account: 98100129  

Press "Enter".

On the field "Amount", fill in with "*" and press "Enter" so the system will fill in the difference amount automatically.

Inform the Cost Center:

Press "Enter".

On the next screen, on the field "Assignment", fill in the number of the calculation memory and in the field "Text", inform:

“Recebíveis negociados com o banco XXX + número do ticket no Freshdesk" (PT)

(Inform the bank that paid the receivables + number of the ticket on Freshdesk)

Go to "Menu", "Document" and then "Simulate" to verify if the posting is correct and click "Save" 

2.1.5 Taxes

It is common in Brazil, the occurrence of withholding taxes, mainly for service invoices. The client collects the taxes directly to the state and makes the payment by discounting the amount of the taxes, which means we will receive the net value of the invoice. At the time of the application, we will post the withholding taxes.

After we identify the customer and the invoice paid, we need to download a copy of the invoice to check the taxes.

On FBL5N:

Select the item:

Go to "Services for Object" and select the option "Attachment List".

The invoice's PDF will be available, to open it, double click on the file.

The accounting of taxes must be done according to the description of the invoice.

On FEBA, select the invoice.

Press "ESC".

In "Other Line Item", inform:

Posting Key 40

Accounts:

• • IR -  44100100
  • PIS – 44700112
  • CSLL – 44100102
  • COFINS – 44700113

Example of PIS:

Press Enter

On fields "Assignment" and "Text", inform the period and the number of the invoice.

Usually, the IR is already deducted from the invoice's amount, so only the amount of PIS, COFINS and CSLL will be posted.

Exception: customer Petroleo Brasileiro (Petrobras), the IR must be accounted for.

After the entry of the taxes, click "Menu", "Document" and "Simulate":

Check the amounts posted and click "Save" .

Example of Service Invoice.

End of document.