Letter of Credit in Sales return process/

[Former Member]

Hi All,

This issue is related to Letter of Credit, I created a sales order and maintained Financial document in Billing Tab (Letter of Credit) & saved the sales order and the balance of LOC is updated, i created Delivery & Invoice also . Later stage the customer returned the materials and we Created the return sales order but the letter of Credit open value is not increasing or not Crediting.

Please let us know in case of return process weather the LOC or Financial document will credit or not?

Regards

[Former Member]

Hi,

While creating the LC in T.code: VX11n we need to select financial doc category from below options.

1. C= irrevocable Confirmed

2. O =others

3. R =Revocable

4. U = Irrevocable unconfirmed

My experience is that it is always " C= irrevocable Confirmed" which means the customer and his banker cannot revoke the letter of credit. funtionally speaking there will be no goods returns when it is a LC transaction.

Hence It will not credit.

Hope this clarifies.

Regards,

Sharan

[former_member217082]

Hi

Letter of Credit is used in credit management as one of the tool for Risk management. In case of return process LOC or financial document wont get credited as LOC is for intimation to the customer if the risk level has come to high.Also run the t.code VXDG.

Please check the below link which may help you

http://help.sap.com/printdocu/core/Print46c/en/data/pdf/SDFTLOC/SDFTLOC.pdf

Regards

Srinath

[Lakshmipathi]

To my knowledge, letter of credit is applicable to only for the value to the extent of which material is going outside from the delivering plant. Having said this, answer to your question is NO.

What you were talking about (value credit or debit) in returns is credit management.

G. Lakshmipathi

[Former Member]

Dear Lakshmipathi

I mean to say is that if the materials are sold against LOC. If the customer is returns the material for some reason Can I credit the same LOC from the return invoice.

i.e can I credit the open value of LOC against returns.

Regards

[Lakshmipathi]

I have already indicated the answer as "NO".

G. Lakshmipathi