Bank guarantee for customers

[Former Member]

Hello Experts,

can anyone please share me the complete process of bank guarantee?

I have configuration in fbkp C - G (Customer - guarantee) selected Noted item check box, rel to credit limit check box and posting key comes by default & GL accounts maintained.

In GL master, OIM is maintained.

Created statistical posting in f-38. But unable to clear the noted item in f-28.

Please let me know how to convert the noted item to normal account.

[sanilbhandari · Accepted solution]

Hi mangaimeenas2

Bank Gurantee is a letter from the Bank, given by the purchaser to Seller. In this case, you have correctly configured it as a noted item. However, you must also have a process in place, in case you need to encash the Bank gurantee. The accounting flow would be as under:

1. Recording a bank gurantee. You should use F-37 or F-38 to record it. When you do that, a single line item will be created and it will show as an open item in FBL5N. While booking the bank gurantee, make sure you also specify the target downpayment special GL Indicator. This would help you to book encashment of bank gurantee. You must also specify the target special GL Indicator in FBKP

2. Now the customer would make a normal payment and you will not encash the bank gurantee. The customer incoming payment would be booked through F-28 or F110 or lockbox. The accounting entry would be:

Bank Incoming Payment Dr

To Customer A/c

3. If however, the customer fails to pay up, you will encash the bank gurantee. You would use F-29 or F110 to do that. In such a case, you should do that with reference to the downpayment request booked in step 1 above. This would create an incoming payment entry as below:

Bank Gurantee Encashed A/c Dr

To Customer Special GL (Bank guarantee Encashed)

This will also reverse the noted item created in step 1 above and you will see that as a cleared item with a single line in FBL5N

4. If after negotiations, the customer pays up, you will record the incoming payment for customer as below

Bank Incoming payment A/c Dr

To Customer

In such a case you will also reverse the Bank gurantee encashed and pay it back to Customer

Customer Special GL (Bank Gurantee Encashed) Dr

To Bank Outgoing payment

I am hoping that I have been able to clarify your query.

regards

Sanil Bhandari

[Former Member · Accepted solution]

Hello Sir,

As per your reply, i created a bank guarantee statistical posting in F-38.

Entry: customer Debit

to guarantee for customer credit.

At the time of payment: Customer debit

to bank credit.

Customer has been cleared. but how to clear the guarantee for customer?

[sanilbhandari · Accepted solution]

Hi mangaimeenas2

In point 1, i did mention that it has to be a noted item, whereas you have created an entry as:

Customer Dr

To Customer Gurantee

It should just be a noted item with a single line and not the accounting entry listed above. This noted item will be like a down payment request. You would convert it into a payment document (like a down payment posting), if your customer fails to pay up and you will encash the bank guarantee. If you follow the steps 1 to 4, than you should not have any open item on customer account, whatsoever

regards

Sanil Bhandari

[Former Member · Accepted solution]

Hello Sir,

Thank you so much for your valuable reply..its very useful for me.

Can u please share the bank guarantee process for vendor?

Is there any configuration required other than fbkp- vendor - guarantee?

[sanilbhandari · Accepted solution]

Hi mangaimeenas2

These are some of the queries you need to ask your business on their expectation. The way I see it is:

1. Your supplier would request for a bank gurantee. In such a case, your bank may ask you for a deposit with them to issue a bank gurantee or may issue a credit facility to issue a bank guarantee on your behalf. If the Bank is asking you for a deposit, you should use F-47 to create a Bank Guarantee request. It would be a noted item on vendor account. Now convert this to an outgoing payment with accounting entry as below:

Vendor Bank Gurantee Special GL Dr

To Bank Outgoing Payment

2. Now when the vendor raises an invoice, it should be the below accounting entry booked through MIRO or FB60

Expense A/c Dr

To Vendor A/c

3. The vendor will normally not encash the bank gurantee, if you make the payment on time. For payment, the accounting entry would be as under:

Vendor A/c Dr

To Out going Payment A/c

After a fixed time interval, you will get your money back from Bank and Bank Gurantee given to vendor will be nullified. In such a case, below would be the accounting entry

Bank Incoming Payment A/c Dr

To Vendor Bank Gurantee Special GL

If however, you fail to pay up and vendor encash the bank gurantee, than you will not have the vendor payment done and you will have two open items on vendor a/c. You need to set them off as below.

Vendor A/c Dr

To Vendor Bank Gurantee Special GL

I hope I am able to answer your question.

Thanks and Regards

Sanil Bhandari

P.S: Please respect the rules of engagement and raise a new query, if you do not find a response in your search for the same.

https://www.sap.com/india/community/about/rules-of-engagement.html

[Former Member · Accepted solution]

Hello Sir,

Thank u so much for your reply..its very easy to understand and I have one more query on this. for performance bank guarantee, where do we maintain the period?

[Former Member · Accepted solution]

Dear Sir,

Please find the below screenshot.

[sanilbhandari · Accepted solution]

Hi mangaimeenas2

In my earlier response, i had requested you to adhere to rule of engagement. You should be searching a question first and if you do not find a response, please post a new question.You should not keep on posting multiple queries to the same question over and over again.

Thanks for your understanding.

Regards

Sanil Bhandari

[former_member709788 · Accepted solution]

Hi Sanil,

How we can clear the value in Bank Guarantee Encashment A/c Dr which you explained in the Point 3, Credit (

Customer Special GL (Bank guarantee Encashed)) will clear when we encashed or pay to customer.

Kindly assist for this question.

Thanks in advance for your support.

Best Regards,

Srinivas

6301194954

[sanilbhandari · Accepted solution]

Hi nekkantivikram

I would request to open a new question defining your issue rather than posting to an old thread please.

Thanks & Regards

Sanil Bhandari

[narasimhulu_konnipati]

Are you talking about Down payments (Advance) from the Customer?

If yes, the noted items to be converted into Down Payment using F-29. This will be done when we receive the down payment from the Customer.

After posting down payment, you need to clear that down payment using F-39

Have a check.

Thanks,

NSK

[Former Member]

Sir,

My question regarding bank guarantee. Customer guarantee D G configuration made in fbkp. Please let me know where i have missed.