Letter of Credit

[Former Member]

Hi All,

We are implementing ECC 6.0 Version.

The client requirement is create Letter of Credit for Vendors and to capture data relating issue of Letter of Credit, Terms of Payment and Expirition Date. Against a Single Letter of Credit issued to a vendor client may receive more than one Invoice till the Expiry of the Letter of Credit and Value.

I know that we can create letter of credit through Special GL indicator 'L'. But it is one Letter of Credit to One invoice for clearing. How to map one letter of credit to multiple invoices and how we can capture expiritin date of LC.

Further same vendor can have multiple LC opened against them for different projects.

Best Regards,

Bhargav.

[Former Member · Accepted solution]

Bhargav,

In Financial Supply Chain Management -> Treasury and Risk Management -> Transaction Manager -> Money Market, you can manage all your letters of credit.

But this is a different module altogether and should be implemented. In this you can create a Vendor and post all purchase orders/Invoices against this vendor.

Create the same vendor as a Business Partner in Treasury and Risk Management and link both the vendor and Business Partner.

Create Letter of credit in Treasury and Risk Management and manage all payments related to LC in T & R Mgmt.

With the LC what do you want to do? I mean you can pay the LC fees, view reports which will show you due dates etc. If you need any other functionality please let me know and I can advise how to go about it.

[Former Member · Accepted solution]

Dear Kalyan,

Thank you very much for your valuable answer. But still i require some more information as below.

The Client is implementing ECC 6.0 for Construction Business. The requirement is with respect of Letter of Credit. If SAP supports the below scenarios through which module it supports and How (Now i know the moudle though which LC can be created). It will be helpful if you have any documentation and step by step configuration please forward the same.

Details:

1) Letter of Credit : (will be issued to Vendors)

AS-IS Process: in Oracle C Soft.

1. LC Master data will be opened which captures LC Opening Date, Payment terms (interim terms) and Expiry Date.

2. Vendor can send more than one Invoice against the LC with in the expiry date. Say LC 1234 is opened on 24/9/08 with expiry date 24/2/2009 and payment terms 60 day for value of AED 250,000/- The Vendor can send more than one invoice against the same LC.

3. Client is having more than one LC Types.

4. Amendment of LC will also be tracked seperately like renewal of Same LC etc..etc.,,

5. On receipt of Material at the site site co-ordinator will send a memo for payment on the basis of memo multiple invoices needs to be paid against the same LC.

6. Client is also having report functionality like LC by Bank Wise, LC by type wise (Recovable LC, Irrevocable and confirmed LC, Irrevocable and Unconfirmed LC etc.,), LC by Project wise, LC by Expiry Date wise, LC status as on Date. LC by status like Auto Renewal, Not Auto Renewal, Released or closed etc..,

[Former Member · Accepted solution]

1. You have to use SAP Treasury and risk management module to manage your requirement. I don't think you can do this in FI.

2. IN Treasury you create the L/C as a Interest rate instrument for the total L/C amount with the start date 24/9/08 and end date 24/2/09.

3. Each payment made to the vendor, as and when they submit their invoices, would reduce the amount available under the L/C and will also update the Vendor(You should link the Business Partner and the Vendor) to clear the open invoices.

4. You can take any type of reports you want like L/C's by due date, L/C utilization, L/C by type of L/C, L/C by bank etc. etc. There are standard reports available. You can also create your own drilldown reports using t-code TRM0

[Former Member · Accepted solution]

Hi Bhargav,

Kalyan has described elaborately about the workaround in FSCM for letter of credit. Have you tried it? What is the status of your requirement? If you have managed it intelligently, let us know.

Regards,

[Former Member · Accepted solution]

Hi Kalyan, It looks nice to know that LC requirement can be configured in TRM of FCSM with the equal footing to what is available in GTS(comments on limitations pl). We can have seperate Product type for revocable and irrevocable LC and under irrevocable LC, we can have confirmed and unconfirmed(is it ok?). Now, I could able to proceed with about the transaction types, flow types and condition types which are to be configured to some extent and then little bit hazy, how I can go about through application menu. Hence, I require your expert quidance elaborately. If required,I shall open a new thread for this. Let me know. Appreciate your valuable inputs!

[Former Member]

Hi Ashok,

Sorry for delayed reply. Though Kalyan has given an idea to me where to configure LC and LG but i have not worked elaborately on Treasury.

Best Regards,

Bhargav.

[Former Member]

Hi All,

I am working in CFM (corporate financial managment) module of Accounting. I was told that a Business Partner in CFM can only be a customer not vendor. I dont know the reason. But from the above messages I am in a dilemma. Please let me know. If it is true what are the limitaions ?

Regards,

Harika

[Former Member]

Given idea where to configure my requirements.