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refund best practices

Former Member
0 Kudos

Hi all,

we have a situation where if a payment is incorrectly posted to an account FP40 is being used to move the incorrectly posted item to the correct account after resetting the clearing on the incorrect account (the payment having cleared items on the incorrect account).  However, if we have to refund an item we are having issues doing this as it won't let us do a reversal of a refund document.

I wanted to know what is the best practice regarding refunds. My understanding is that FP40 should not be used to transfer incorrectly posted payment items and that if a payment is posted incorrectly it should be reversed out and reposted using a payment lot to the correct account. please provide feedback.

thanks,
K

5 REPLIES 5

AmlanBanerjee
Active Contributor
0 Kudos

Hi,

For transferring any incorrect payment to the target account, the best way is to route the incorrect payment to payment clarification worklist first and then from there you can allocate the same to the target account.

By this approach, you don't have to perform any other transactions, and the original payment item can also be easily identified.

Now, if you want to refund the payment item, you can easily mark it for refund, by putting in the payment method at the document level and then run a FPY1 which will post a refund document and can be send to the customer.

Hope it helps.

Thanks,

Amlan

0 Kudos

Thanks. We have already been doing the second part regarding payment method for processing outgoing payments.

What is your suggestion on best practice when the payment is posted incorrectly to an account and the payment run has refunded the item to the wrong business partner?

0 Kudos

Hi,

If the refund process has already been performed against the wrong business partner and the money has been physically transferred to the customer,through Bank Transfer\cheque, then the best approach would be to post a debit entry of the refunded amount against the wrong BP and a credit entry of the equivalent amount against the correct BP.

So, by doing this, the wrong BP account is offset with the refund amount, where as the credit entry can be marked for refund and send to the correct BP.

A debt letter can be sent to the customer as well stating the reason for the same.

However, if the refund run has only been performed and the error has been detected before the running of the payment medium, then you can reverse the refund doc and then transfer the payment back to Payment CWL and then allocate it to the correct account.

Hope it helps.

Thanks,

Amlan

0 Kudos

Thanks Amlan, please clarify one thing - which tranasaction to use to make the posting of the debit and credit entries to the respective business partners' contract accounts? FPE1, FP05...

The payment run would have already generated the payment medium. However if it hadn't you are suggesting to send it to Payment CWL and use FPCPL to make the adjustment.

regards,
K

0 Kudos

You can post the debit and credit entries through FPE1.

Now to answer your second query.

If the payment medium job has not been triggerred, then you have to first reverse the refund document.

Performing this open up the payment document that you were supposed to refund.

Then you can route that payment item to Payment CWL and then allocate it to the correct account.

So in this scenario, you dont have to post any extra entries to offset the refund amount.

Thanks,

Amlan