Chapter 21 Dunning

Dunning is the process of notifying customers that an unpaid obligation has become past due. Chapter Objectives Understand the functionality and configuration of a Dunning Procedure and how it is executed in the Dunning Program. Understand the Organizational Structure of Dunning Levels within a given Dunning Program and how parameters can be set for each of them. Understand how to send dunning correspondence to customers and vendors through Dunning Letters. Run the Dunning Program.

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Dunning

Dunning
Organizational Structure related to Dunning: Client CLAA

Company Code CCAA

Company Code CCBB

Dunning Area DA01

Dunning Area DA01

Dunning Area DA02

The Dunning Area is an optional unit in the Organizational Structure used to group Customers / Vendors for dunning. Each Dunning Area can represent different dunning policies or Organizational Units responsible for dunning.

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Dunning

Dunning Procedure
The Dunning Procedure contains the configuration of a Dunning Program. The Dunning Procedures can be tied to Dunning Areas or to a Customer / Vendor master record.
Dunning Procedure Dunning Program

Configuration

Execution

Dunning Levels

Minimum Amounts

Dunning Charges

Dunning Texts

Basic Parameters of the Dunning Procedure

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Configuring the Dunning Procedure

Frequency for running

Days in arrears after which a Dunning Notice will be sent

Items that are overdue less or equal to the grace period will not be dunned (works like a bonus period) Grace Period Minimum Days in Arrears # Days in Arrears

0
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10

11

12
Dunning

Selecting Open Items to be Dunned

Grace Period: 4 Days Minimum Days in Arrears: 8 Days

Items:
Due 1) 2) 3) 4) -6 +3 +6 +10 Amt. 1,500 350 800 5,400 Status Not Overdue Within Grace Period Within Min. Days in Arrears Overdue 10 Days

Result:
Items 3 and 4 will be dunned. You will dun the account for Item 3 because there is another item that is overdue more than the minimum days in arrears.
If Item 4 did not exist, then item 3 would not be dunned.
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Dunning Levels

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Dunning

Selecting the Dunning Level

Overdue Item Old Level New Level = Old Level + 1

The Dunning Letter

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Dunning

Minimum Amounts
Minimum Amounts define an overdue threshold of the total Account Balance, which must be exceeded to reach a Dunning Level.

Dunning Level

Minimum Amount Minimum Percentage

Minimum Amount for Interest

Example: Total Account Balance: USD 25,000,00 Configuration of Dunning Level 1: Min. Amount = USD 15.00 and Min. Percentage = 5% Dunning Balance Level 1: USD 500.00

Will be dunned? No, because USD 500.00 >= Min. Amount but USD 500.00 < Min. %

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Dunning Charges
For each Dunning Level, it is possible to define an amount to be charged if the minimum amount for dunning is exceeded. A Dunning Charge is used to cover the postage and handling of Dunning Letters. Dunning Charge: Static amount to be charged Dunning Level

Dunning Charge %: Percentage to be applied to the total of all overdue items in the Account to determine the Dunning Charge

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Dunning Texts

Dunning Level

Dunning Form

A form is set up using SAPScript and can be shared by more than one Dunning Level.

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Dunning

Sending Correspondence to Customers / Vendors

Pre-Defined Action

Trigger

Correspondence

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Dunning

Assigning the Dunning Procedure in the Master Record

Master Record Company Code Data Correspondence Tab

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Dunning

Running the Dunning Program

Step 1: Set Parameters
The Dunning Program examines the open items of a Customer / Vendor and, if overdue items exist, produces the appropriate notice.

Dunning Date Documents Date Company Code, Range of Customer / Vendor Numbers

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Dunning

Running the Dunning Program

Step 2: Run the dunning program immediately or in batch mode
Dunning can be started at a specific date and time or it can be started immediately.

Dunning notices can be created immediately after the dunning run. If this parameter is set it is no longer possible to change the dunning proposal manually or to delete it.
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Running the Dunning Program

Step 3: Create and analyze Logs
Its possible to create an additional log to analyze the dunning run.

A range of customer and vendor accounts has to be specified

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Dunning

Cross Company Code Dunning

This feature enables users to create one dunning notice that covers business partners that exist in different company codes. Likewise, data that would normally be spread over several company codes (and hence several correspondence letters) can now be grouped into one correspondence letter.

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Dunning

Dunning Block Reasons/ Dunning Key

Dunning Block Reasons are used to block a Customer / Vendor or an item from being dunned. The user specifies the Dunning Block Identification and a Description.

Dunning Keys are used to mark items that should not trigger a higher Dunning Level. The user specifies the Dunning Key Identification and the Maximum Level that can be triggered.

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Incoming Payment
A payment coupon may be attached to a dunning letter or account statement. Payment coupons can also be printed in a separate spool on dedicated forms.

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Chapter 21 - Dunning Chapter Summary

Key Terms: Dunning Dunning Area Dunning Procedure Grace Period Dunning Level Minimum Amount Dunning Charge

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Dunning

Chapter 21 - Dunning Chapter Summary

Key Terms: Dunning Letter Dunning Program Dunning Block Reason Dunning Keys

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Dunning