How to make entries for Bounced Cheques / Insufficient Funds / Returned Cheques in SAP Business One?

[pressfit]

Firstly, I need to clarify that I have gone through 10+ questions on the same topic in the forums but

1. Neither has the problem been explained completely

2. Nor have the answers provided a suitable solution.

So, please do not give links to other questions. I would really appreciate it if you can offer the solution(s) instead.

Bounced/Returned Cheques are a very common scenario in some industries/regions. But we are not able to make accurate entries in the system. Here is the problem:

Incoming Payment of $1000 is made on date:

Date: 20-12-2018

Customer XYZ - Credit: $1000

Bank Account Opening: $5000

Bank Account - Debit: $1000

Bank Account Closing: $6000

1-2 days later, the cheque bounces and the amount is deducted from our account. So, the true scenario is:

Date: 22-12-2018

Customer XYZ - Debit: $1000

Bank Account Opening: $6000

Bank Account Credit: $1000

Bank Account Closing: $5000

We are not able to replicate this in SAP.

If we cancel the Incoming Payment, the entry is reversed on the Original Document Date i.e. 28-12-2018 or the Current System Date which is not reliable since entries are sometimes delayed for various reasons.

In that case, the Bank Account Closing on 20-12-2018 shows $5000, even though it is in fact: $6000.

This way, Bank Account GL Balance goes wrong on every single day in the past. This is unacceptable.

The second workaround is Outgoing Payment to the Customer or a Reverse Journal Entry on the Return Date i.e. 22-12-2018. In this, the GL balances are correct but there is another problem:

The invoices against the Incoming Payment become closed. These do not show in Customers Receivables Aging either. This is also not acceptable.

We are facing this very serious problem and our Bank Balances on all previous days are not accurate.

If there is any true solution, we would really appreciate your help.

P.S. Deposits are also not usable because Deposits are also cancelled on the Original Document Date and balances are wrong again.

P.S. This problem would not have caused had there been a separate Cancellation entry or the option for a Cancellation/Reversal Date.

[zal_parchem2]

Hello Aakash,

Maybe I am misunderstanding your requirements, but I did this in a Test Company and the Aging, Cash Account, and BP Balance were correct (from what I understand with other Customers). I did several three JEs with varying dates different Aging buckets:

Hmmm - you are correct - you have a perplexing situation there. Hope others can come up with a good solution for you...

Regards, Zal

[pressfit]

Thank you so much for the effort you put into providing a solution.

Unfortunately, every solution that we've come across till now gives incorrect results in some way or the other. Right now, we are doing something very similar to what you suggested: Multiple JEs with good comments for understanding. But it is definitely not a long-term solution as it relies heavily on the user's presence of mind. It also takes much more time.

I created an Improvement Request for the same. Just by providing the option of "Cancellation Date" on Incoming Payments, the entire problem will be solved: https://influence.sap.com/sap/ino/#/idea/224092

[zal_parchem2]

Absolutely correct Aakash - you get the "Like" on that!!!

[zal_parchem2]

Hello Akash - if you run AR Aging by Document Date, you can change the Document Date (and Due Date) on the Journal Entry. However, the Posting Date cannot change.

You are correct - an Incoming Payment Document is not created, mainly since this is a Journal Entry. Is that piece of information required by your Company???

Regards, Zal

[pressfit]

Hello Zal,

If we change the Document Date to the date of the invoice, it would rectify the Aging Report but it would change the Account Balance of the Customer on the Document Date (which is the primary date that we use).

[zal_parchem2]

Hello Akash,

I definitely understand you might get various answers, because how to handle returned, bounced checks is 1) dependent upon what your company policy is [for collection purposes later on], and 2) how deposits are handled [multiple checks are in one deposit or each check has its own deposit].

The easiest way to handle this is with a journal entry where you 1) Credit your Cash Account for Checks, and 2) Debit the Customer for the amount. This way you can select the posting date, add good comments, and it appears in your Bank Reconciliation and AR Aging (as a "JE"). I have found good comments are the key here. You can reference the AR Invoice Number in the Line Remarks.

One mystery (and maybe you know this already) is that you must use "Ctrl+Tab" to get a list of Business Partners for your Journal Entry for the "GL Acct/BP Code".

Again, this is just one alternative dependent upon your Company's situation. Here is what some Customers have done:

Regards, Zal

[pressfit]

Hello,

I understand this workaround but even though the JE shows up in the Aging Report, it doesn't show in Incoming Payments.

Also, there is a complicated issue with the Dates. E.g.:

Document/Posting Date: 28-10-18

Payment Terms: 60 Days

=> Payment Due Date: 28-12-18

Cheque Deposited: 28-12-18

Cheque Returned: 30-12-18

If I create a Journal Entry on 30-12-18, for the JE to represent the closed Invoice in the Aging report,

we have to put the Document, Posting, and Due Date same as the Invoice. That negates the purpose as the balances will not tally.

If we choose the correct dates to tally the balances, the Aging Report will be done incorrectly.

We Age by Document Date, which is 30-12-18, effectively increasing/lengthening the allowed payment days by 60 more days.