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. Bank Draft Receiving Posting

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 account in SAP.
Draft No.: Bank draft number. (Copied from bank portal)
Issue Date: Date of issue 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, Tranferring, 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:
Header Data:
Document Date/Posting Date: Date of Receiving BD
Type: "DW"
Company code: 4 Digits represented a company
Reference: "REC. BD"
Doc. Header Text: BD's Issue Bank
Clearing text: "REC. BD" + Customer Name
First Line Item:
Posting Key: "09"
Customer Account: Customer code

Special G/L: "8" or "9"
Document Date/Posting Date: Insert the date of the accounting document.
Type: "DW" representing Customer Bill Exchange.
Company Code/ Currency/Rate: Insert information related to bank draft.
Reference/ Doc. Header Text/ Clearing Date: Insert a defined text that required to be displayed on these tables.
Transaction to be processed: "Incoming payment" is default display.
In the "First Line item", insert information in the required fields as below:
PstKy: "09" representing Special G/L debit, it is default display.
Account: Insert the customer account.
S GL Ind: Insert the special G/L indicator: "9" represents Bank Draft CN (< 3 months)
"8" represents Bank Draft CN (> 3 months)
Press "Enter" to go to the next screen.
On the screen: "Bill of Exchange Payment Customer item", insert information in the required fields as below:
Bill of exchange details:
Due on: Maturity Date of Bank Draft
Issue Date: Date of Issuing Bank Draft
Accepted: Select when Bank Draft gets special approval
Payment Method: "$"
(The other fields are default and liked to customer master data, if customer bank information was added)

Item details:
Amount: Bank Draft Amount
Assignment: Bank Draft Number
Bus. Area: 4 Digits represented Business Unit (PF1 only)
Text: "REC. BD" + Customer Name
Next line Item:
Posting Key: "19"
Customer Account: Customer code

Special G/L: "A"
Amount: The amount of bank draft.
Assignment: Bank Draft Number
Text: "REC. BD" + Customer Name, same as "Clearing Text", except Mortgage Bank Draft needed to put "For Deposit"
Due on: The Maturity date of the bank draft.
Issue date: Date of issuing Bank Draft
Accepted: Select when BD gets special approval
Payment Method: "$" (representing E-BD)
Then AR post it as advance payment to customer account by putting the information in next line item.
PstKy: "19" representing Special G/L credit.
Account: Insert the customer account.
Special G/L Ind.: Insert the special G/L indicator: "A" representing Down payment.
Press "Enter" go to the next screen.
On the screen: "Bill of Exchange Payment Add Customer item", insert information in the required fields as below:
Item details:-
Amount: Bank Draft Amount
Tax code: "5M" (WP1) or "B0" (PF1)
Profit Center: The defined texts represented Business Unit (WP1 only)
Assignment: "REC. BD"
Text: "REC. BD" + Customer Name

Press "simulate" to check if credit and debit entries are balance.

Press "Save" to post the document.
The document number will be shown on the bottom of the screen.
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. Bank Draft's Cash Collection Posting

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 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:

Press "Save" to post the payment and select open item or bank draft to be cleared.
Additional selections:
Select "Document Number"
Open item selection:
Company code: 4 Digits represented a company
Account: Customer code
Account Type: "D"
Special G/L Ind.: "8" or "9"

Company Code: Insert information related to bank draft
Account: Customer code
Account type: "D" representing Customer Account
Special G/L ind: "8" or "9"
Press "Process open items" and insert document number that recorded bank draft receiving earlier.
Document Number:
Insert document number that recorded bank draft receiving earlier.

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

Press "Save" to post the document.
The document number will be shown on the bottom of the screen.

Example of Posting Document for Bank Draft Collection

3. Bank Draft Discounting Posting

Bank Draft Discount is to early submit Bank Draft to the bank in order to get the payment before its maturity date with interest charged.

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

2. Prepare Bank Draft Discounted list in Shared file.

3. Record incoming payment, interest charges and clear Notes Receivable in SAP by using t-code F-30.
Header Part:-
Document Date/Posting Date: Date of payment received
Type: "DA" for WP1, "DZ" for PF1
Company code: 4 Digits represented a company
Reference/ Doc.Header Text: "BD DISCOUNT"
Clearing text: "BD DISCOUNT" + Customer Name
Line Item: - Bank Incoming
Posting Key: "40"
Account: G/L Bank Account

Document Date/ Posting Date: Enter the date of the accounting document.
Type: "DA" (WP1) or "DZ" (PF1) representing Customer document
Company Code/ Currency/Rate: Insert information related to bank draft
Reference/ Doc. Header Text/Clearing text: Enter a defined text that required to be displayed on these tables.
Transaction to be processed: "Transfer posting with clearing" is default display.
"First Line item Data", insert information in the required fields as below:
PstKy: "40" representing Debit entry G/L
Account: Enter the G/L bank account.
Press "Enter" go to the next screen.
Item Details:-
Amount: Incoming payment amount
Value Date: Posting date

Text: "BD DISCOUNT" + Customer name
Amount: Enter the amount of incoming payment.
Value Date: Payment receiving date.
Text: "BD DISCOUNT" + Customer name, same as "Doc. Header Text".
Presses "Choose open item" go to the next screen.
Open item selection:
Enter customer account that Bank Draft is recorded on,
Company code: 4 Digits represented a company
Account: Customer code
Account Type: "D"
Special G/L Ind.: "8" or "9"

Then process open item screen to select open item.(Choose discounted bank draft)
Bank would charge interest to company in case of Bank Draft dicount, AR needs to book interest to expense G/L account.
Other Line Item:
Posting Key: "40"
Account: G/L Other Financial Expense

"Other Line item Data", insert information in the required fields as below:
PstKy: "40" representing Debit entry G/L
Account: Enter the G/L other financial expense.
Item Details:-
Amount: Interest charged amount

Amount: Enter the amount of bank interest charged.
Cost center: Default.
Text: "BD DISCOUNT" + Customer name, same as "Doc. Header Text".
Press "save" to post the document and get the document number.

Example Document for Bank draft Discount

4. Bank Draft Transferred to Vendor Posting

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. Sometimes there would be a request to transfer Bank Draft to customer as well. After received a request, AR clear Notes Receivable recorded earlier in SAP and clear Account Payable (for vendor) or create Account Receivable (for customer).

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.
Line Item: - Trf. To Vendor account
Posting Key: "29"
Account: Vendor code
Special G/L Ind: 'A"
Header Part:-
Document Date/Posting Date: Date of receiving request to transfer bank draft
Type: "DW"
Company code: 4 Digits represented a company
Reference: "TRF. BD to AP"
Doc. Header Text/ Clearing text: "Transfer to Vendor" + Vendor Name

Document Date/Posting Date: Enter the date of the accounting document
Type: "DW" representing Customer Bill Exchange
Company Code/ Currency/Rate: Insert information related to bank draft
Reference/ Doc. Header Text/ Clearing text: Enter a defined text that required to be displayed on these tables.
Transaction to be processed: "Incoming Payment" which is default display.
"First Line item Data", insert information in the required fields as below:
PstKy: "29" representing Special G/L debit for Vendor
Account: Enter the Vendor account
Special G/L Ind.: Enter the special G/L indicator: "A"
Press "Enter" go to the next screen.
Item Details:-
Amount: Total Bank Draft Transferred to Vendor
Tax Code: "JP"
Assignment: "TRF. BD to AP"

Text: "Transfer to vendor" + Vendor name
Amount: Enter the total amount of Transferred Bank Draft.
Tax Code: "JP"
Text: Same as "Doc. Header Text".
Press "Choose open item" go to the next screen.
Open item selection:-
Enter customer account that Bank Draft is recorded on.
Company code: 4 Digits represented a company
Account: Customer code
Account Type: "D"
Special G/L Ind.: "8" or "9"

Press "Process open item" go to the next screen.
Select open item to clear.
Press "save" to post the document and get the document number

Example Document for Transferring Bank draft to Vendor

5. Bank Draft Return/Exchange Posting

Bank Draft is mostly returned when it is used as "Mortgage Bank Draft" and it would be requested to return back to customer at any curtain date.

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;

Both debit entry (Notes Receivable) and credit entry (Accounts Receivable) should have the same amount and be posted in the same document.
3. Open t-code F-32 to clear bank draft and AR;

Account/ Company Code: Customer code and Company code that the Bank Draft is recorded on.
Clearing date/ Period: The date of clearing bank draft.
Currency: "CNY", since Bank Draft is restricted to use among China domestic customers only.
Special G/L Ind: "A" and "8" or "9"
Press "Process open item" and go to the next screen.

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

Press "save" to post the document and get the document number.