FICA question- Incoming payment posted to wrong account & processed as refund

[former_member257418]

Need validation if the process recommended in following scenario is appropriate & any advise would be appreciated:

We have a few contract accounts where the incoming payment was posted to worng contract account. Then instead of reversing the doc & moving it to clarification & posting to correct account , the cashier assuming the customer has made payment in error , initiated a refund  & an outgoing payment doc was generated after payment run. In some cases the check was issued to the customer.

What we think the right process would be as under:

1. Reset clearing on outgoing payment doc. The incoming payment doc will now be open. There will be additional debit entry of equivalent amount for the reset clearing.

2. Reverse the incoming payment doc & post it to clarification. From Clarification , post it to correct contract account.

3. For the debit entry on the contract account, there are 2 possible scenarios for clearing:

         sceanrio 1: In case the check was sent to customer , get the customer to make the payment. This incoming payment will clear the debit entry.

         Scenario 2: If the check was stopped in time , a credit posting of equivalent amount should be posted to bring account back in balance. For standard incoming payments we use doc type IC. In this case as this is credit entered to balance account (not truly an incoming payment) can the same doc type be used or a different doc type is recommended.

I am not a FICA consultant & this might be a very basic question

Thanks in advance for any recommendations.

Satish

[Former Member · Accepted solution]

Hi Satish

   step 1, 2 is fine.

   for step 3, GL posting have to be observed.

       It can exist as a reversal or a separate adjustment posting thru some means e.g. payment lot

Tom

[former_member257418 · Accepted solution]

Can you elaborate on Step 3.

If I understand correctly if the check was received by the customer , than when the customer pays back the money (incorrectly issued) , it can be posted as incoming payment.

But if the check was not issued , than how do you address the outstanding debit on contract account due to reset clearing. I tried reversing  the document but system does not allow it.

Appreciate if you can provide insight on GL postings.

[Former Member · Accepted solution]

Hi Satish,

For reset clearing, option 'retain distribution to accounts' should be used. If you create a new open item. you cannot reverse it.

For GL posting, it depended on your finance posting requirement in related to bank reconciliation. A reversal may be OK. In case you need a CR posting to offset, you need to set it up by any means.

Regards,

Tom

[former_member257418 · Accepted solution]

Thanks Tom. That answers a lot of questions.

Appreciate your help.

[former_member257418 · Accepted solution]

Hi Tom

Appreciate if you can look at the attached document. I have attached screenshots so that you can guide me if i am missing something.

I selected the option 'retain distribution to account' in reset clearing. But it generated a new reset clearing document 17000153211 which i am unable to reverse.

My thinking was that the original incoming payment doc & the outgoing doc would be open.

We have implemented an enhancement preventing reversals of outgoing payment doc. This is as per governance rules set in the organization.

In such a scenario what is the best way to tackle this issue.

[former_member257418 · Accepted solution]

Hi Tom

Could this be the answer to my problem

http://help.sap.com/saphelp_erp60_sp/helpdata/en/84/4d9837af31f822e10000009b38f8cf/content.htm

Define a reason for adjustment of receivable & process the adjustment to a separate revenue account for doubtful  receivables.

Appreciate your input.

[william_eastman · Accepted solution]

Satish:

receivable adjustment is used for identifying and managing receivables which are not likely to be paid and probably written off.

regards,

bill.

[former_member257418 · Accepted solution]

Hi Will

In our scenario , we have to balance out the receivable & no payment is expected from the customer as the debit entry is result of clearing reset of incorrectlt processed refund. Would write off be the correct approach ?

Regards

Satish

[Former Member · Accepted solution]

Dear Satish,

    You can implement the adjustment for this offset purpose. My installation does not use this but it is relevant for your purpose.

    All you need is only an adjustment posting for your offset.

Regards,

   Tom

[william_eastman · Accepted solution]

Receivable adjustment works like this:

Current situation:

Customer                        Revenue                               Receivable

-----------------                    ---------------                            ------------------

100  |                                  | 100                                100|

After receivable adjustment, it looks like this:

Customer                        Revenue                               Receivable                  Bad Debt Expense

-----------------                    ---------------                            ------------------                ----------------------------

100  |                                  | 100                                100|                                        |

                                                                                        100                        100

Receivable adjustment does not adjust the customer balance/open items.  It only takes $ from the receivables and moves them to a separate g/l account.