he items selected will now appear in green.

And confirmation of the posting done.

Table of contents

1. Objective and Scope

This OP describes how to manage all requests concerning doubtful customers. All the stages of a doubtful customer process have special procedures and specific postings are described in this procedure. Depending on the situation of each invoice, different actions are to be taken in the SAP system. 

This operating procedure (OP) applies to the Receivables of Solvay Companies Worldwide. 

2. Definitions

  • SBS: In the current document, "Solvay Business Services" will be replaced by its abbreviation "SBS".
  • CCT AR: Customer Credit & Trade Accounts Receivable team
  • CCT CM: Customer Credit & Trade Credit Management team
  • OP: Operating procedure
  • CAM: Country Account Manager
  • PI1: Factoring ERP SAP system
  • PF1: Local ERP SAP System
  • WP1: Local ERP SAP System
  • BA: Business area

Scope

ERP

References
  • Z3F_FA_Doubtful 
  • FB05
Attachments

REQUEST FORM (Doubtful-Provision-Write Off)

Point of Contact GBU Controller 

3. Doubtful procedure

If, for some reason, there is a risk of not collecting the payment regarding a receivable, the contract must be converted into doubtful status. The decision of putting a contract in a doubtful status belongs to Credit Management team, who should send their request to AR mailbox to proceed as described in this OP.


 

Mandatory Requirements:

AR team will need to assure that the all requests follow the next requirements: 

  • Template received
  • Exchange with business attached on the email content
  • Check if the customer is factored from more than one company (if yes, we need to assure that Credit Manager is considering the customer globally)

 

AR team is only authorized to perform any posting regarding doubtful procedure when Credit Manager sends the attached template with all the information filled in REQUEST FORM (Doubtful-Provision-Write Off) 

In PI1 system there are some Business Areas with no Cost Center associated. The usual format of the cost centers in PI1 is "XND + 3 initial digits of the Business Area" (e.g. BA 7360 = CO XND736).

If you receive an error message because it is not inserting the Cost center, try to use this rule. In case it doesn't work it might be that the Cost Center does not exist. Please request the creation to RtR-DMR_Data_Management@solvay.com.

In case of Business Area 3400 division which was Sold (Benvic) use Cost Center "XND5ZS" and Business Area "5ZS0"

 

 

3.1 Customers assigned to Factoring

3.1.1 Convert an invoice into doubtful status and post provision


In order to convert a receivable to doubtful for a customer to Factoring, we should use transaction Z3F_FA_Doubtful in PI1 and follow the steps below:

Select the option "Doubtful and Provision"  ,  add the customer account and execute .



Select the items to be converted to Doubtful and in case the items should be provisioned as well add the amount in column "Provision Amount".

In case there is no Provision to be booked leave the amount blank, or in case the provision is not for 100% add the amount to be provisioned provided by Credit Team.

Then press save .


It will ask you to attach the excel file with the instructions provided by Credit Management - it only accepts Excel format.

 

This will attach the justifications to all postings done.


The items selected will now appear in green.

And confirmation of the posting done.


On customer account there are now the Doubtful items (DO documents with special GL indicator D) and respective provisions created (E1 documents with special GL indicator E).

Special GL indicator D = GL account 2270000000

Special GL indicator E = GL account 2271000000


Note that there was one document (invoice 0270611109540) for which there was no Provision created as the amount was zero in the selection done.


You can also see the attachment in all the postings.



3.1.2 Receive a payment for a doubtful document

If a payment is received for a document which is settled with doubtful status, check the customer account to see if there is a provision created for it. If so the provision should be cancelled – follow the instruction in chapter 3.1.4. Cancel a provision. 

Always confirm with CM if the payment can be applied, to which invoice(s) and attach the instructions.

Select the payment normally in FEBA/ F-32 transactions and select the invoice to be cleared. In case the full amount is not paid use FB05 to apply the partial or leave the Residual amount with document type DO and Special GL D.


A doubtful contract does not appear on the reconciliation screen in FEBA/F-32 and FB05 transactions. Therefore, the special G/L indicator should be inserted with "O" or "D" in order to select the invoice (s).

See example (payment already on account)

Since there will be a residual that should remain in Doubtful use FB05 with payment dates (if not possible, use 1st day of the month)

Document type: DO              Cc:0231             Currency: of invoice

Reference: Invoice Reference 

Doc Header text: Ticket with the instructions of CM

Press Enter


Process open items with Special GL indicator D or O (some older items might have O - Check the customer account to confirm)




Select the item in Doubtful to be cleared and the partial payment


Use the Residual items tab to add the residual amount and reason code AR 

 

 


Simulate.


There will be 3 lines, for the payment, for the item cleared and for the residual Doubtful which will have the same data as the original Doubtful.


Save.


On the account there will be the new line for the residual.


In some situations it might be required to apply a partial (so that the payment is also visible on customer account) Using also FB05, the same selections and fields as explained for residual.


Select the two items (payment was already open on customer account) 

And use the "Partial Pmt" tab to associate the payment to the respective invoice.


Save .


Here the partial payment (with special GL indicator D) associated to the invoice.


3.1.3 Create a provision

  • The instructions to create and cancel a provision should be received by the responsible Credit Manager
  • We should perform one provision for each document
  • The instructions with the request should be attached to the posting (automatically done by the transaction Excel, word, PDF accepted).

Transaction Z3F_FA_DOUBTFUL.

There is the possibility to create the Provision in case it was not immediately created in step "Doubtful and Provision" or to increase the provision amount if not fully provisioned.

To do so select the option "Provision", add the customer account and process .


This will show only the items that are already in Doubtful.

Select the item you want to provision and press save .




Add the attachment.








The document was posted.


Remark: In case you select a document that is fully provisioned (or the amount you insert exceeds the total amount of the Doubtful) there will an warning message which will not allow to proceed.


3.1.4 Cancel a provision


  • The instructions to create and cancel a provision should be sent by the responsible Credit Manager.
  • We should perform one cancellation of provision for each document
  • The instructions with the request should be attached to the posting (automatically done by the transaction Excel, word, PDF accepted).

Transaction Z3F_FA_DOUBTFUL.

There are 3 options to cancel or reduce a provision, depending on the scenario.


  • Reduce Provision orig BFC flow - To be used when it is necessary a correction, usually in the same period or in case the other 2 options are not applicable (transaction flow F25);

  • Reduce Provision by Write Off - when the debt is considered unrecoverable and the account should be closed (Transaction flow F35), the full amount of provision must be cancelled:

  • Reduce Provision by Payment - When customer pays the full amount or partially (Transaction flow F36), reduction should be equal to what was paid.




In any of the cases processing mode is the same.

Select the option according to the scenario , add the customer account and process .

 

Select the provision that should be cancelled or reduced (check if the amount is correct and) and press save.





Add the attachment.


The document was posted.


Here the the Original provision and Cancellation on account (Special GL ind. "E").


To complete the action use F-32 to clear both items.

Special GL indicator "E" must be selected.


Select both items and save .


In case of Partial reduction by Payment the amount of provision must be adjusted.




Select the Provision related with the item that was paid and adjust the amount.

For the example, consider the customer paid 500,00 EUR for invoice 02706111009517 and 1.000,00 EUR for invoice 02706111010275.

Hit Save .


On customer account you can see the Partial Payments previously recorded (see chapter 3.1.2 Receive a payment for a doubtful document) and the reduction of the Provision. There will be always two lines, one for the Original Provision and another for the Reduction.

E.g

DO 6111000508 - Original Doubtful;

DO 6111000512 - Partial Payment;

E1 7700004371 - Original Provision;

E1 7700004376 - Provision Reduction;

  • In case there is a request to apply a Payment and write off the remaining amount, the provision reduction must be done in two steps.
  • First reduce the provision by Payment selecting the option and adjusting the reduction to the amount that was paid.


  • Then cancel the remaining Provision for the amount still provisioned by using the option , attention to select the original provision line and cancel only the remaining amount:

In the end the Provisions should match to zero and cleared in F-32:


3.1.5 Write-off

  • The posting of write-off can only be done after instructions from the Credit Manager concerned
  • The instructions with the request should be attached to the posting (automatically done by the transaction Excel, word, PDF accepted).
  • The write off should be done contract by contract, do not select lines which are not related with the same contract. After processing one contract go back and process the next one.
    Here the example of Doubtful "O" and compensation "I" of same contract selected.


  • If exceptionally it is e it is necessary to select several contracts and there is more than one Business Area on customer Account, run the transaction Z3F_FA_DOUBTFUL per Business Area, do not Mix two Different BA in the same posting. Here below only 7250 BA is selected.


Transaction Z3F_FA_DOUBTFUL in PI1 is customized to work only with a debit balance, however there might be the need to apply the doubtful procedure in a credit balance, therefore these two situations are described below: 

Only for Debit balance

Use Z3F_FA_DOUBTFUL transaction and select the option "Bad Debt - Write Off".

Press  to continue.

You can search by customer number or document or run the transaction with no info in the fields and it will show all open doubtful contracts.

Special GL Ind: D (or O for some older cases)


You can search by customer number or document or run the transaction with no info in the fields and it will show all open doubtful contracts.

Special GL Ind: D (or O for some older cases)


Example without selection options:

In this case all customers having doubtful contracts will be open and it is possible to select the items by selecting the line. However two validations are defined in the transaction:

  • All the documents selected must belong to same customer;
  • All the documents selected must have same currency;


Example with limit by customer number:

In this case, transaction will give us all the documents related with the customer selected. Thus, the user should select the ones which are to be posted as loss. 


Example with limit by   document number:

In this case, only that document number will be displayed.


 After selecting the lines concerned, choose 


Debit / Credit balance using FB05:  

Enter in FB05 in PI1 system transaction.

Fill the fields as below:

Document Date and Posting date: Request date

Document Type: DO


Insert customer number and Special G/L ind. "D" or "O". 


Select the item in Doubtful / Invoice or CN


Go back 

Use Posting Key 40 for Debit Balance and account 6420000000

Or

Use Posting Key 50 for Credit Balance and Account 7420000000

Enter.


Fill the amount, Business area and Cost Center fields and Save the posting. 




3.2 Customers not assigned to Factoring


The cost centers should always be provided by CM in accordance to the GBU controller. However in here follows some guidance in order to find cost centers for PF1 and WP1.

For the cost center in PF1, we should check transaction KS03 - Display cost center or press directly the search button .

Choose "CHEF" and  Cost Center: *d*850 (3 first digits of the business area); Cost Center category: "R" ; and the respective company code.

In case it doesn't work it might be that the Cost Center does not exist. Please request the creation to RtR-DMR_Data_Management@solvay.com.


For the cost center field for WP1, we can use the following file:

https://drive.google.com/file/d/16RzNz-8c59O4iE6wyOu6qVuHz9iV9tlVpvCkPcatFPs/view

In case of doubts or if you cannot find the cost center, please send an email to the IHB Accounting team in Lisbon (For example Adrienn Torok, Sonia Xavier, Sandra Barradas, Jose Carlos Nunes)

 

3.2.1 Convert an invoice into doubtful status

In order to convert a receivable to doubtful for a customer no assigned to Factoring, we should use transaction Z1F_DOUBTFUL in PF1 or WP1 and follow the steps below:

Select the  option "Doubtful and Provision"  ,  add the Customer account, the Company Code and execute .


Select the items to be converted to Doubtful and in case the items should be provisioned as well add the amount in column "Provision Amount".

In case there is no Provision to be booked leave the amount blank, or in case the provision is not for 100% add the amount to be provisioned provided by Credit Team.

Then press save .


It will ask you to attach the excel file with the instructions provided by Credit Management - it only accepts Excel format.

 

This will attach the justifications to all postings done.


The items selected will now appear in green.


And confirmation of the posting done.



On customer account there are now the Doubtful items (documents with special GL indicator D) and respective provisions created (documents with special GL indicator E).

Special GL indicator D = GL account 2270000000 PF1 /41100300 WP1

Special GL indicator E = GL account 2271000000 PF1 / 49100400 WP1

 

Note that there was one document (93552434) for which there was no Provision created as the amount was zero in the selection done.


You can also see the attachment in all the postings.


3.2.2 Receive a payment for a doubtful document

If a payment is received for a document with doubtful status, the customer account must be checked to confirm if there is a provision created (document with Special GL indicator E). If there is a provision it should be cancelled – follow the instruction in chapter 3.2.4. Cancel a provision.

Select the payment in F-32 transaction with the company code inserted and select the invoice to be cleared. In case of APAC companies the Doubtful posting must be reversed first using FBRA and afterwards the payment is applied with the original invoice as normal practice. 

A doubtful document does not appear on the reconciliation screen in FEBA or in F-32 transactions. Therefore, the special G/L indicator should be inserted with "d" in order to select the invoice (s).


See example below:


Select the invoice as below:


Save 


3.2.3 Create a provision 

  • The instructions to create and cancel a provision should be sent by the responsible Credit Manager.
  • We should perform one provision for each document
  • The instructions with the request should be attached to the posting
  • The business area should be provided by the Credit Manager or the cost center by the GBU controller. If you do not have the cost center, you can find the point of contact by GBU here to get the information.

Transaction Z1F_DOUBTFUL.

There is the possibility to create the Provision in case it was not immediately created in step "Doubtful and Provision" or to increase the provision amount if not fully provisioned.

To do so select the option "Provision", add the customer account, the company code and process .



This will show only the items that are already in Doubtful.

Select the item you want to provision and press save .

Remark: be careful with the amounts posted as provision to avoid having more amount provision than Doubtful.


Add the attachment.


The posting was done.



3.2.4 Cancel a provision

  • The instructions to create and cancel a provision should be sent by the Credit Manager responsible.
  • We should perform one cancellation of provision for each document
  • The instructions with the request should be attached to the posting
  • The business area should be provided by the Credit Manager or the cost center by the GBU controller. If you do not have the cost center, you can find the point of contact by GBU here to get the information.

Transaction Z1F_DOUBTFUL.

There are 3 options to cancel or reduce a provision, depending on the scenario.


  • Reduce Provision orig BFC flow - To be used when it is necessary a correction, usually in the same period or in case the other 2 options are not applicable (transaction flow F25);

  • Reduce Provision by Write Off - when the debt is considered unrecoverable and the account should be closed (Transaction flow F35), the full amount of provision must be cancelled:

  • Reduce Provision by Payment - When customer pays the full amount or partially (Transaction flow F36), reduction should be equal to what was paid.


In any of the cases processing mode is the same.

Select the option according to the scenario , add the customer account and process .

 

Select the provision that should be cancelled or reduced (check if the amount is correct and) and press save.


Add the attachment.


The document was posted.



Here the the Original provision and Cancellation on account (Special GL ind. "E").


To complete the action use F-32 to clear both items.

Special GL indicator "E" must be selected.


Select both items and save .


In case of Partial reduction by Payment the amount of provision must be adjusted.


Select the Provision related with the item that was paid and adjust the amount.


Select the documents and Save.


On customer account you can see the Partial Payments previously recorded (see chapter 3.2.2 Receive a payment for a doubtful document) and the reduction of the Provision. There will be always two lines, one for the Original Provision and another for the Reduction.

E.g

"D" 5010029871 - Original Doubtful;

"D" 5010029877 - Partial Payment;

"E" 5010029872 - Original Provision;

"E" 5010029878 - Provision Reduction;


  • In case there is a request to apply a Payment and write off the remaining amount, the provision reduction must be done in two steps.
  • First reduce the provision by Payment selecting the option and adjusting the reduction to the amount that was paid.


  • Then cancel the remaining Provision for the amount still provisioned by using the option , attention to select the original provision line and cancel only the remaining amount:

In the end the Provisions should match to zero and cleared in F-32:


  • For Rhodia Operations Cc ZFR3 The cancellation of the provision (Flow F-35) should always be equal to the amount written off.
    • So if not fully provision it as to be provisioned and then cancelled;
    • If the provision is higher then the write off the cancellation has to be done in two steps, F-36 for the difference F-35 for the amount = write off;


3.2.5 Write-off

  • The posting of write-off can only be done after instructions from the Credit Manager concerned
  • The instructions with the request should be attached to the posting
  • The write off should be done document by document (see the assignment) , do not select lines which are not related with the same document. After processing one document go back and process the next one.
  • If exceptionally it is e it is necessary to select several documents and there is more than one Business Area/cost center, run the transaction Z1F_DOUBTFUL per Business Area, do not Mix two Different BA/Cost centers in the same posting. Here below only 7250 BA is selected.

Transaction Z1F_DOUBTFUL in PF1 and WP1 is customized to work only with a debit balance, however there might be the need to apply the doubtful procedure in a credit balance, therefore these two situations are described below: 

Only for Debit balance

Use Z1F_DOUBTFUL transaction and select the option  "Bad Debt - Write Off".

Press  to continue.

Special GL Ind: D 

You can search by customer number or document or run the transaction with no info in the fields and it will show all open doubtful contracts.

Here in the example the selection is by customer.

Press  to continue.

             


Select the items to write off (see the assignment in FBL5N to see the lines related)


After selecting the lines concerned, choose .



Manually for Debit balance or credit balance

Open F-32 transaction in local system with special indicator "D" 


Enter.

Select the invoice

Go back 


Insert Posting Key 40 for debit 50 for credit and the g/l account for the loss / profit according to the SAP system:

PF1 - 6420000000 / 7420000000

WP1 -  98300800 / 98300812


Then click on Enter.


Insert * in the Amount field, the business area related (for PF1) and the cost center.

Save  .