Write off bad debts in sap
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This leads to doubtful receivables and ultimately, if not payeda bad debt. Lets understand this with the below example. A company has done a credit sale to a customer.
I prefer creating the accrual posting to the Bad Debt Accrual; create a new BD document type. July 21, at Given below are the detailed steps. With the Individual Value Adjustments IVA in SAP, the transaction allows the user to change the ddbts account to a Uncollectible Reconciliation Account until it is settled or a credit is issued and matched to the unpaid item. Should be easy, but….
Suppose the customer has gone bankrupt or has been liquidated. In that case,first of all the Company would classify the receivable amount as doubtful receivable. Then after a particular time frame, it will create a provision for a certain percentage of the receivable or the entire receivable.
After this, there are 2 possibilities. Customer will pay the money back 2. Customer wont pay the money back. In each of the cases, the receivable amount needs to be cleared. SAP provides specific functionality to map and handle this entire scenario.
Given below are the detailed steps. FBKP Maintain a Special GL indicator say Dwhich is to be maintained as the special gl account for BAD Debt write off bad debts in sap. Then maintain special GL Account against the recon account. Define Provision method, timeline for reclassification and also the timing and percentage for the reserve creation t code: Define the Receivable Provision Methods. In Per, maintain the month. If 3 is maintained there, it would mean after 3 months of the item is due, this item is due for being reclassified to a Special GL Account In Months,maintain a value and in Perc 1, maintain a percentage.
Same would apply for Perc2 and Perc3 3.
Define the Debit and Credit accounts for Provision for Doubtful Receivables t code: OBXD maintain the Bad Debt expense account in debit section and a Provision Account in Credit section 3. It will create transfer postingwith the above provision method entered on selection screen. Lets see the accounting entries created for the same.
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Initially, during the credit sale Customer Dr Now if this has crossed the time line and is due for reclassification F will run and this will post as below Special GL Account Dr Customer Cr it will clear the customer item of step aap 4. Now run F If number of days in arear ,has crossed the time line and is due for provision posting F will writr and this will post as below Expense Account Dr 5. Customer may pay the money back Cash Account Dr Customer Account Cr it will clear the Special GL account item of step 2 Then run F again.
It will reverse and clear the entry of step 4. Provision Account Dr b. Expense Debit Customer Credit In the above entry, we have to knock off the customer spl gl entry and debit an expense account. Then run F again. Provision Account Dr Expense Account Cr F and F, can set up as monthly batch jobs to handle the monthly doubtful receivables and bad debts, if any.
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