1. Table of contents
2. Objective and Scope
This OP describes how to handle the cash allocation exceptions, meaning all payments discrepancies that occur when processing the allocation of third-party incoming payments. These differences can be caused by different reasons and the treatments of those issues are described in the following chapters.
This operating procedure (OP) applies to All EMEA companies and customer payments for invoices factored to Solvay SA
3. Definitions
- SBS: In the current document, "Solvay Business Services" will be replaced by its abbreviation "SBS".
- CCT AR: Customer Credit & Trade Accounts Receivable
- CCT CM: Customer Credit & Trade Credit Management
- OP: Operating procedure
- 0231: Company code for Solvay S.A. Treasury
- DZ: Customer payment
- AB: Customer clearing
- WHT: Withholding tax
4. Payment discrepancies
The objective of this procedure is to clarify the accounting treatment for each payment difference that results in residual postings on customer accounts.
Clearing rules
- For clearings on F-32 or FB05 transaction we should ALWAYS use payment date (see value date of DZ document) on the "Clearing date" field. In case the period is already closed, we should use first day of the current month.
- Based on a Remittance advise or bank statement, AR team is authorized to clear the invoices for which there is no doubt or discrepancy and leave a residual and afterwards create a dispute explaining the situation to Cash Collections team.
- Concerning the scenarios to handle each payment discrepancy please refer to the OP "OTC Disputes scenarios" in which is described how to proceed for each discrepancy
4.1 Partial payment
This chapter describes how to proceed when a customer does not pay the total amount of an invoice. The reason of a partial payment can be, a credit note expected, VAT that is missing, payment plan, a price dispute, a problem with the goods or non-commercial reasons.
Warning
If there is no doubt regarding the invoice number paid, we can post the partial payment and create a dispute "To be collected" for Collections if balance is below 50k. Whenever balance is above 50k status should be "call by collector". However, in case of doubts or when the partial payment is for several invoices and we don't know the amount for each invoice, we should request to customer further details.
Example: Payment of 1.993,34 EUR from a customer named "BUSCH IBERICA SA.", number 21405 for invoice 58356111007558.
Select the payment and click on 
.
If not done automatically by the system, insert customer number or search by the name and select Enter
Then select the correct invoice, select "Partial Pmt" tab and double-click on "Payment Amount" field so that the amount of the payment is taken as partial of the invoice. This amount is the one effectively paid by the customer. See below:
Warning
The « double-click » operation used to modify an amount only works if the customer is paying a single invoice. If there are several invoices involved by partial payments, the amount actually paid by the customer must be indicated in the "payment amount" column for each of the documents (having first deleted the amount shown by the system).
There is no longer any amount indicated in the "Not assigned" field. We should then validate the transaction by clicking on the floppy disk 
.
Posting result on customer account in 0231:
The DZ document will have the same assignment and reference key 1 than the invoice. This means that the document is related with that item. The balance of 806,66EUR is the remaining amount customer owes.
- The reminder notice will be sent to the customer for the unpaid remaining amount of the invoice (the invoice reference will appear in the reminder notice, which will avoid questions from the customer).
- When Credit Manager gives us instructions to perform a partial payment and to accept an amount as banking fees, we should process the partial payment and indicate banking fees amount on the text. The banking fees posting can only be done when all the payments (the last part of the payment) are received.
4.2 Banking fees
Sometimes there is a difference between the payment's amount and the invoice's amount, which is relatively small. Different explanations are possible and one of them is that this difference can be banking fees.
This section describes how to record banking fees during cash allocation process.
Warning
If there is no doubt regarding the invoice(s) number paid and the difference relates with banking fees is above the tolerance, we should clear the invoices and leave only the residual open and create a dispute for banking fees. However, in case of doubts, the details should be requested to customer.
The SAP system will automatically consider and accept a discrepancy as banking fee if under limit displayed on customer master data.
If the system cannot match the amounts due to a missing reference on the bank statement, AR is allowed to settle the invoice and post manually the difference as banking fee following below steps:
1. Check payment method of the invoices paid by the customer
- If payment method K – (Cash against document) > Customer has to pay full amount of invoice to get the document and the goods. Therefore the difference can be allocated as banking fees without requesting confirmation.
- If payment method J – In this case it is related with Letter of credit payment method. linda.vanhoorn@solvay.com, Laurence.BOULLOT@solvay.com or the Bank will send to AR mailbox the documents with the information's in advance. The information should be updated in FBL5N (text field) so that when payment arrives, it can be accepted as banking fees.
If no email is received, send email to Linda Vanhoorn (Solvay Chemical) or to Laurence Boullot (Rhodia Operations) asking information's regarding the payment
Letter of credit - A commercial letter of credit is a contractual agreement between a bank, known as the issuing bank, on behalf of one of its customers, authorizing another bank, known as the advising or confirming bank, to make payment to the beneficiary. The issuing bank, on the request of its customer, opens the letter of credit. The issuing bank makes a commitment to honor drawings made under the credit. The beneficiary is normally the provider of goods and/or services.
2. If payment method different from K and J - check customer history:
- If recurrent > AR to accept as banking fees and request to Team Leader the change of masterdata accordingly. If not, the bank statement should be analyzed to check if the amount is mentioned. If it is mentioned, it can be accepted as banking fees.
- If not recurrent > AR to request Collections to contact the customer. We would need to understand if customer paid the total amount of the invoice. If yes, we would need to request the payment proof to be sure we can accept that amount as banking fees.
The disputes should stay with WJ-3SAR as processor with status "Parked".
To check tolerance for banking fees on customer masterdata:
- Go to customer masterdata by selecting
- Choose
- Check the tolerance group as below:
4.2.1 Recording banking fees
This section describes how to proceed with the allocation of a difference that should be posted as banking fees.
There are two different types of banking fees:
- FB – Banking fees below the tolerance
In this case, the amounts are defined according customer masterdata. See below the possible amounts defined for banking fees in SAP:
Remark
AUT corresponds to 50EUR and EURO to 10EUR. For other currencies, you would need to convert. For this, you can use the following link: http://pi1sapr3.ibm.be.solvay.com:8050/sap/bc/gui/sap/its/z3fi_curr?sap-client=020&sap-language=EN&~theme=50
- FA – Banking fees above the tolerance
In this case, the amounts are higher than the ones defined on masterdata. Thus, they should be previously justified by Letter of credit documents (if pmt method is J) or upon confirmation of Collections with the customer that customer paid the total amount of the invoice.
4.2.2 Banking fees below
On FEBA, FB05 or F-32 transaction (payment's currency should be inserted in the currency field), select the involved invoice and the payment and go to "Res. Items" tab, as follows:
After double clicking on the invoice, indicate in the "Residual items" column the amount of difference (in this case = 20). Afterwards, choose "FB" code in the "RCd" (the same code is used for the "positive" banking fees and for the banking fees with a "–"sign in front of the amount in case of overpayment).
Validate the transaction by clicking on the floppy disk 
(at the top of the screen).
RCd = Reason for difference column
Posting result on customer account in 0231:
On FEBA, FB05 or F-32 transaction (payment's currency should be inserted in the currency field), select the involved invoice and the payment and go to "Res. Items" tab, as follows:
After double clicking on the invoice, indicate in the "Residual items" column the amount of difference (in this case = 500). Afterwards, choose "FA" code in the "RCd" RCd = Reason for difference column (the same code is used for the "positive" banking fees and for the banking fees with a "–"sign in front of the amount in case of overpayment).
Validate the transaction by clicking on the floppy disk (at the top of the screen).
Posting result on customer account in 0231:
4.3 Overpayment
This chapter describes how to proceed with an overpayment from the customer (amount of the payment higher than the amount of the invoice due to a payment mistake from the customer).
The SAP system will automatically consider and accept a positive discrepancy as banking fees until 10 Euros.
If the system cannot match the amounts due to a missing reference, AR is allowed to settle the invoice and post manually the overpayment as banking fee until the agreed value.
If the overpayment is above the agreed value, we should first request confirmation from Collections that it is really an overpayment. In this case, three possibilities can occur:
- Use overpayment to compensate partially next invoice due
- The remaining amount stays on customer account to be deducted on next payment
- Customer requests a refund. In this case transfer the dispute to Collection with status "Call by collector"
On FEBA, FB05 or F-32 transaction (payment's currency should be inserted in the currency field), select the involved invoice and the payment and go to "Res. Items" tab, as follows:
As soon as you insert the amount on Residual Items the following message appears:
Click on Enter
After double clicking on the invoice which was overpaid, indicate in the "Residual items" column the amount of difference (in this case = 1.500,00). Afterwards, choose "OP" code in the "RCd" column.
Validate the transaction by clicking on the floppy disk (at the top of the screen).
Just click on Enter and the posting will be done.
RCd = Reason for difference
Posting result on customer account in 0231:
Items cleared in which the invoice was totally paid and cleared:
The amount of overpayment which is open on customer account:
If you access doc. 7000000500 and go to 
, you can see the posting as below:
4.4 Write off
This chapter describes the situation in which we receive instructions from Credit Managers/Business to post a difference as profit or loss (credit note or credit residual as profit or invoice or debit residual as loss)
Warning
- The threshold limit agreed in which AR can accept without further analysis as profit or loss is 500 EUR, as long as the document date is greater than 12 months
- Above 500 euros, the posting can only be executed under Credit Manager/Business instructions, and the case should be analysed according the guidelines below, (except if there is an explicit approval from the business, in which case the threshold does not apply):
- If it is an invoice, the CCS should be contacted to create a credit note
- If it is a credit amount and the document date is lower than 5 years (except if there is an explicit approval from the business, in which case the time elapsed does not matter), Collections team should be contacted to create a refund request. If above, it can be posted as profit (10 years for Italian customers)
- For intercompany amounts that are above 500 Euros and have more than 365 days in order to proceed with their write-off (no need of provision), AR team has to request approval to edmundo.fernandes@solvay.com and sara.ramos@solvay.com (in copy).
After selecting the invoice, double-click in the "Residual items" blank field so that the amount of difference is displayed. Afterwards, choose "WO" code in the "RCd"column (the same code is used for profit with a "–"sign in front of the amount).
RCd = Reason for difference
On customer account in 0231, invoice will be cleared against the payment and the difference will be posted on g/l account for profit or loss).
For customers not assigned to 0231, a cost center will be requested. See below:
For the cost center field for WP1, we can use the following file:
https://docs.google.com/spreadsheets/d/1TD7tjzABrAuybKEwR4UVOwiA0fqZ1Xcu8xPwEdhwvA0/edit#gid=0
In case of doubts or if you cannot find the cost center, please send an email to CAM according to the list below:
For the cost center in PF1, we should check transaction KS03 - Display cost center
Choose "CHEF" and 
Cost Center: *d*850 (3 first digits of the business area)
Cost Center category: r
Then choose the one for the company code you are posting and the one with fewer digits.
Example:
4.5 Discount
Some customer invoices have cash discount in their payment terms. This is defined on the invoice by a % of reduction on the amount to pay if the customer pays within a corresponding period of time (before due date) or according an agreement with the business. In case of such early payment the customer can deduct cash discount.
This section describes how to process it.
Possible Matching Scenarios:
- SAP will automatically match the invoice and the payment if the reference of the document could be identified on the bank statement and the discount conditions have been respected by the customer (percentage of deduction and discount taken before the due date A discrepancy of 4 days is accepted by the system.).
- In case the payment terms defined on the invoice are not respected or if the reference of the invoice is not found by the system, it will not be automatically posted.
- If the payment terms defined on the invoice are respected but the reference of the document cannot be found, AR is allowed to settle the invoice manually and accept the discount.
- If the percentage of deduction is respected but the discount is taken after the due date + agreed margin, post the discount with an "AR" code and create an undue discount for all items that had undue discount.
- If the amount received from the customer is different from the discount conditions defined, we should accept the amount of discount defined in the payment terms and create a residual and an undue dispute for the remaining amount of the payment asking Sales Manager the confirmation if we can accept it.
There are 2 different codes used to record a difference as a discount:
- AD - This reason code is used when discount is defined on customer payment terms or when we have instructions to accept a difference as discount
- AR - Discount deducted by the customer with a different amount than the one granted or discount taken after the due date. With this entry, the invoice is settled but a residual is created on the customer account for the unpaid amount (represented in the form of a positive DZ). Therefore, AR should create a dispute for undue discount which will send automatically an e-mail to Sales that have to decide whether discount can be accepted or not.
Warnings
- AR is authorized to accept until 10€ as discount for each item in DACH without confirmation.
- Concerning the discounts on the credit notes, AR is authorized to accept them without confirmation.
- If a discount is related to several invoices and we don't know the amount related to each invoice, its posting can be made on the invoice with the highest amount on the condition that all invoices involved were assigned by the same affiliate. If a discount relates to several invoices assigned by different affiliates, the amount of the discount to be posted is to be shared in proportion of the amount of the invoices assigned by each affiliate involved.
- In case we receive a payment from customer paying a discount already accepted, instead of reversing the re-invoiced discount, we can clear the DZ directly as accepted discount (negative).
- If the customer deducts a higher percentage of discount than the one that was agreed and if we are sure about the invoice(s), we should clear the invoice accepting the agreed percentage of the discount and proceed with the undue discount procedure for the remaining amount
4.5.1 Checking Discount payment terms
To check if discount payment terms were respected by the customer, double-click on each invoice and check "Days/Percent" field.
To confirm if a discount is accepted, sum the calendar days (mentioned on Days/Percent field) to the Baseline date plus the 4 days tolerance (in this case 02.10.2013+15+4 = 21.10.2013). Until this date the discount can be accepted with reason code AD. After this limit, an undue discount (AR Rcd.) entry should be executed.
4.5.2 Discount accepted
Normally, the system will match the invoice and the payment if the payment terms have been respected and if there are details on the bank statement regarding the invoice numbers. Nevertheless, it may happen that SAP cannot recognize the payment terms automatically, there are no invoice details that could enable an automatic matching or AR receives instructions to accept a difference as discount which was not defined on the payment terms.
Accept a discount defined on payment terms:
Open FEBA or F-32 transactions, as follows:
In this case, all the invoices selected have a discount of 2% on the payment terms. When selecting the invoices, the amounts of the discounts will become red automatically, meaning that they are under the payment terms.
Just click on the floppy disk 
to validate.
In cases of accepted discounts, all documents are cleared on the customer account.
Posting result on customer account in 0231:
Accept a discount not defined on payment terms:
There are cases for which the payment terms are not filled due to legal reasons but for which Solvay agree with the discount. Therefore, we should accept the difference also using reason code AD as below:
Open FEBA or F-32 transactions, as follows:
Select the invoices and insert the amount of the discount or the percentage on "CashDiscount" and "CDPer" respectively.
Afterwards, select and copy those amounts to "Residual Items" tab and insert reason code AD as below:
Click on 
Posting result on customer account in 0231:
4.5.3 Discount not accepted
An undue discount should be created when customer is deducting a discount when the payment terms are not respected.
In the "CDPerc." column, we can see the discount percentage that was granted to this customer for each document.
Check whether the invoice was paid on time or not (depending on the payment terms). The system does a check by itself and in this case, if the customer pays on time, the amount corresponding to the discount will be displayed in the "Cash discount" column in red when the invoice will be selected. If the column is blank or if amount in "Cash discount" column doesn't become red after selecting invoice that means that the due date has passed and thus the customer can no longer deduct the discount.
Example of Undue discount:
When selecting the invoice(s) mentioned, the discount is not accepted automatically by the system ("Cash discnt" column is blank). Therefore, if we click twice on the invoice we can see that its Baseline date is 01.09.2013 with 15days as payment terms, as we can see in the invoice payment terms print screen:
That means that summing 4 days as tolerance, the latest date for the discount to be accepted was 20/09/2013, what leads to an undue discount. Therefore, we should select the invoice and put the discount amount on the "CashDiscount" column to see if the percentage is correct (if there are several invoices, the amount should be divided for all the invoices).
Then we should copy the discount amount, go to the Residual items tab and put it in Res. Items column, as shown below:
Afterwards, the code AR should be inserted in the "RCd" column.
The line "38, 85 EUR" corresponds to the discount shown with "AR" and is presented as a debit on the customer account. The contract involved by the discount is found in the "Ref. key 1" column.
Validate the transaction by clicking on the floppy disk 
(at the top of the screen).
When the last message appears (warning), just do "Enter".
Posting result on customer account in 0231:
The line item 2 is related to the undue discount which will stay open on customer account waiting an answer from Sales.
We should then create a dispute (Case Type "Z00C", Reason "C011") on the open DZ item that will send automatically to the Sales Manager an email who should confirm us if we should or not accept the discount. If yes, open F-32" transaction, go to the "Res. items" tab, select the line with the discount. Put the same amount in the "Residual items" column (double click) and indicate the code "AD" as the reason.
If not, change the status of the dispute to "Call by collector" so that Collections team requests the payment to the customer.
4.6 Confirming differences
All differences related with anticipated Confirmings should be accepted as discount. Therefore we should use reason code AD in the residual items column in order to charge this difference to the affiliate.
4.7 Exchange
This section describes how to proceed when the difference between the amount of the invoice and the amount of the payment is generated by a foreign exchange difference because the customer paid in another currency different from the one mentioned on the invoice.
Warning
If you are sure of the invoices that were paid by the cyustomer, the payment must be converted to the invoice currency, then all should be cleared and the residual open on account for the moment
Please use transaction 
to convert the payment into the invoice currency.
Complete the fields with the company code, document number and customer, very important that the clearing is done on the day we receive the payment (so that the exchange rate is close to the customer payment value date)
press on execute 
Complete the field 
with the invoice currency, select the line and press 
to convert the payment into the invoice currency.
Afterwards, use F-32 with the date on which you performed the conversion and in the invoice currency to clear the customer account and leave the residual either as under or overpayment.
It is mandatory to create a dispute type C012 for follow-up on the resulting difference, except if following exceptions are met:
- Non Deliverable Currencies
Please note that whenever you accept a difference using EX it is mandatory to add the company code in assignment field
Warning
For those cases in which the customers pay in the correct currency but we are informed by the Bank that the payment was converted by customer intermediary bank and we will have an exchange difference, two options can occur:
- the customer didn't give the correct instruction to its bank, therefore the customer has to pay the difference or ask its bank to correct the payment
- the customer's bank didn't proceed the payment correctly; in this case, the customer has to contact its bank to correct the payment (our Bank should return the payment and the intermediary bank should proceed with a payment with the correct currency)
4.8 Withholding tax
This section describes how to proceed whenever the discrepancy between the payment and the invoice is related to withholding tax A withholding tax, also called a retention tax, is a government requirement for the payer of an item of income to withhold or deduct tax from the payment, and pay that tax to the government..
This difference should be handled according the following principles:
- AR to clear the invoices
- Create a residual with reason code AR
- AR to create a dispute "Tax issue" which is to be transferred to Collections to contact customer to request proof of payment of WHT tax to authority local service (Status: Call by collector). In case of interco, AR should send manually an email to local contact to request payment proof and change dispute status to "Parked".
- Having the payment proof received, the difference should be cleared using reason code WT
- Add payment proof of payment of WHT to local authorities to the posting in PI1
Warning
When accepting WHT for several different contracts, proceed as below each amount per contract:
Example: g/l account for Withholding tax
Open account in FBL3N
Double click on the item, select 
and choose "Create" and "Create attachement" as below:
Then open the document and save it. This action should be done for all differences we have posted in 0231 as WT
In the file below, it is listed the customers with WHT and the contacts in case of intercompanies.
https://docs.google.com/spreadsheets/d/1qAhvvX8-MnlnE5Fee0pz3Ju3f0AxJwRlZzBAPboj-00/edit#gid=1
4.10 Payment in advance discrepancies
As soon as the invoice is released and available on customer's account, we should clear it with the E5 document. This chapter explains how to perform this clearing. The discrepancy should be analysed and in case of doubt, contact the Credit Manager to ask details.
Remark: A daily job is automatically executed to clear the payments in advance with the correspondent invoices (s) when the balance is zero (through assignment field). When the balance is not zero, a manual clearing should be done by AR team.
The "F-32" transaction must be used:
This screen must be filled in as follows:
- Account field: customer number
- Currency: currency of advanced payment (Warning!: the default currency is EUR)
- Special G/L ind: A (E5´s have special indicator A)
Click on "Process open items" and do the reconciliation by clicking on the advanced payment and on the corresponding invoice (they have the same assignment). If there is a difference between those two amounts check if it is due to banking fees or to discounts analyzing last customer clearings and customer behavior. If there are doubts regarding the difference allocation, a dispute should be created to the correspondent Credit Manager.
Warning
For under or overpayments regarding payments in advance, the invoice should always be cleared so that customer don't receive reminders. If partial, we should proceed with a partial payment. After, a dispute should be created to Credit Manager requesting details (if customer will pay/deduct the amount on the next order).
For follow-up on the residuals resulting from this clearing we have 2 distinct dispute reason codes:
C003 - in some specific documented cases (plese see for reference "Customer & Region specificites)
C037 - which will automatically send an e-mail to the CSR with some information, but you should still provide some details on the dispute text.
This section explains what to do in cases where the difference includes more than one type of discrepancy. It can be for example a mix between banking fees and discount.
Warning
If under the tolerance master data/payment terms, AR is allowed to post the discrepancies without confirmation. Above those limits, more details needs to be requested to the customer.
Use transaction FEBA or F-32 (in case the payment is already allocated).
Select your payment and the invoice as below.
As we can see in the "Not assigned" field, there is a difference of 115,12 EUR that should be posted as 25 EUR as banking fees and 90,12 EUR as discount.
Double click on the Residual items column so that the amount is displayed:
Insert a * symbol in the "Rcd" column.
Then go to 
and post 25 EUR as banking fees (FB) and 90,12 EUR as accepted discount (AD).
Save the posting by clicking on Save button 
.
Posting result on customer account in 0231:
