Riba - Italy Incoming Bill of Exchange

[TMufft]

Hello Experts,

I would need your light to help me understanding Riba accounting entries.

I have found an interesting wiki page giving a good exemaple of those : Bill of Exchange and examples for customer - ERP Financials - SCN Wiki

Nonetheless there is some points I do not understand clearly.

When we run FBWE to generate the file to be presented to the bank

Bank sub account (Bill of exchange collection) Dr

                          Bill of exchange contingent liability Cr

After bill due date, we would need to reverse contingent liability

Bill of exchange contingent liability Dr

                      Customer Bill of Exchange Cr

In that way, we reverse receivable entry entered when we have run F110 ( Customer receivable Cr - Customer Bill of Exchange Dr), but I thought that we would have reverse this entry only from the moment we receive the payment (stated on the Bank statement).

Why this entry ?

When do we have to run this transaction ? before or after receiving bank statement ?

Furthermore, the presentation to the bank should not generate (in my view) any accounting entry...

When payment ok

Bank account Dr 

     Bank sub account (Bill of exchange collection) Cr

What would be the accounting entry when bank informed us that BOE has not been honored by the customer in between ? (failed payment)

Thank you for your precious help.

[thomas_vanaken2 · Accepted solution]

Hello Tanguy,

I have no experience in implementing Riba but I implemented LCR years ago and all type of types of bills of exchange share the same process logic:

1. Bill of exchange creation via transaction F110:
2. Bill of exchange presentation via transaction FBWE, this also create the liability posting as you mention
3. Bill of exchange collection (actual inflow of cash) via either FF67 or FF.5 depending if you use manual or electronic bank statements
4. Cancellation of bill of exchange liability via transaction F_72: This required the customizing of the bill of exchange liability period per country ( Accounts Receivable and Accounts Payable -> Business Transactions -> Bills of Exchange Receivable -> Define Bill of Exchange Payment Period)

Hope it help.

Best regards

Th.