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SAP Standard Provision for bad debts and bad debts written off

Hi all,

I have presented the SAP standard solution for the provisioning of bad debts and bad debts written off to my client. However they are not happy with the solution and require it to run as per below scenario.

The current SAP solution we run transaction F103 which posts

CR Customer Recon Account

DR Special GL account

The run FAGL_104 which posts

Dr Bad Debts (Expense Account)

CR Bad Debts Written Off (Balance Sheet Account)

What the customer wants is not to move the balance in the customer account out to the special GL account. It should remain in the customer account and a provision should be made. only once the doubtful receivable is confirmed and required to be written off then it need to be posted out of the customer account to a Bad Debt account.

Requirement

Step 1 - Make Provision for the Bad Debt

Dr Bad Debts (Expense account)

Cr Bad Debt provision (Balance Sheet account)

Step 2 - Write the bad debt off

Cr Customer

Dr Bad Debt provision (Balance Sheet account)

Is this possible with the SAP standard solution or do we have to create a custom program or post manual journals?

regards

Andre

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4 Answers

  • Best Answer
    Apr 05, 2016 at 09:02 AM

    Hi Andre

    SAP solutions in some cases are based on German Accounting Principles. So it is designed that way

    1. If your only concern is that it posts into Special GL, you can thwart it off by assigning the same Customer Recon account against the Special GL Indicator. (Workaround)

    2. If you want the scheme of entries as you suggested, then Either post a manual journal or create a Z program

    Regards

    Ajay M

    PS -Please close once resolved. How to close a discussion and why

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  • Apr 05, 2016 at 09:16 AM

    Hi Andre

    I had a similar issue in one of my projects. So we followed the below process for Bad Debt provision:

    1, Created a reason code as Bad Debt and it was updated through FB02. So at any point, we could easily identify the items which were for tagged for bad debt provisioning.

    2. We developed an utility program, which essentially showed up all the open items for a customer account (s), which were tagged for bad debt provision. When the user selected the item and confirmed, it called up booking of journal entries as:

    Bad Debt A/c Dr

    To AR Account

    Regards


    Sanil Bhandari

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  • Apr 05, 2016 at 09:18 AM

    Hi Andre,

    You have to pass manual JV entry. However, if you know the customer balance is doubtful, in that case you can use SAP standard solution. The customer balance transfer to special GL. Otherwise you have to pass manual JV.

    Regards,

    Mukthar

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    Former Member
    Apr 07, 2016 at 08:13 AM

    How many bad debts they have, creating a program is a good solution or not ? you need to analyze that very carefully. If an invoice related to bad debts it has to be confirmed by the authorities in your scenario so I assume that there are not that much bad debts. In addition this can be done manually. One question is Bad Debt provision (Balance Sheet account) account works both debit or credit if not you need to define one more balance sheet account. This posting looks fine balance sheet seems ok.

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