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Lockbox Functionality in SAP
Overview
SAP Lockbox
A company can create ‘lockbox’ accounts at a bank that are used as payment collection accounts
for customer receivables. The company informs its customers that all payments should be
submitted to one of its established bank lockbox accounts at a designated remittance address. A
lockbox account is usually a designated post office box which has the company name but the
customer payments are actually received by the bank.
SAP lockbox utilization results in two primary business benefits: funds collection and remittance
information delivery. The major benefits are that the company is able to recognize the funds more
quickly, and the customer’s check is cashed in a more timely manner. The bank collects the
payments along with the customers’ remittance information which indicates the open items the
customer is paying. Data entry clerks at the bank manually enter the information into an
electronic file for transmission to the company in groups of checks called batches.
These electronic files are typically transferred nightly to the company which owns the lockbox.
The files can be in one of two standard banking industry formats: BAI or BAI2. They can also be
transmitted via EDI using the ANSI X.12 823 for lockbox remittances. A combination of the two is
not uncommon where a BAI format is delivered within an EDI message.
Customer identification is the primary task of the initial (SAP) data processing of each lockbox
payment. Finding the corresponding document clearing information is the second task. Lockbox
programs RFEBLB00 for BAI and BAI2 formats and RFEBLB30 for EDI format attempt to identify
the customer first by MICR number (ABA/bank account number combination) and then by invoice
number. It is strongly recommended that companies maintain the bank details on their customer
master records. The MICR numbers must be unique across banks configured within SAP.
Additionally, the MICR and customer account number also need to uniquely identify a single
customer within the system. If a customer is identified by the document number but the bank
details do not correspond to the MICR number, they can be added via the optional batch input
session. This allows the SAP system to ‘learn’ customer bank accounts via repeated use of the
lockbox service. Processing statistics in future lockbox remittances will greatly improve with
repeated use of this option.
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1. an “On Account” posting – the payment and invoice totals do not match or
2. an “Unprocessed” posting – no customer account or document could be identified
from the transmission via MICR or invoice identification
The accounts receivable department will have to perform manual application to clear items which
have received either of the statuses above. This is accomplished in the lockbox post-processing
described below.
BAI2 splits the check total into separate invoice references and corresponding payment amounts
per invoice. Each record type 4 contains only one invoice. It can also contain deduction amounts
as well as the external reason code for the deduction. Within a payment targeted for multiple
invoices, BAI2 format files can achieve a processing status of “Partially Applied” which means
that some of the items within a check have been matched and cleared, and other invoices were
not identified so their payment portion will be placed “On Account”. As a result, the hit rate or
application rate percentage is higher when using BAI2 format than when using BAI format.
The decision of which format to use (given that your bank is able to supply BAI), is dictated by a
cost-benefit analysis. The BAI2 format is more detailed so it costs more for the lockbox bank to
enter and deliver the data. The BAI format is cheaper, but may not offer a suitable hit rate. The
BAI2 format is recommended for large volume, multiple invoice payments and scenarios where
deductions and short payments are taken. The BAI format is probably adequate if only a small
portion of customer payments are received via lockbox transmission. In general, a high
percentage of checks achieving a status of at least ‘on-account’ is targeted to reduce the
intervention by post-processing analysts and achieve an acceptable ‘cash application’ rate.
Benefits
» Better control of customer check float time and customer credit management.
» Accelerated collection and deposit of checks benefits the payee and allows for better
and more efficient cash management.
» The automated lockbox system can reduce your own internal processing costs by
automatically updating your cash postings and cash application to the subledger.
Additionally your customer requirement to maintain data entry staff should be reduced.
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Components of the SAP Lockbox
1. Control Parameters (Transaction OBAY)
» Procedure
» The procedure for payment processing. The system currently only supports
the procedure LOCKBOX.
» Record Format
» The standardized record format of the file which you receive from the bank.
The only supported formats are BAI, BAI2 and IDOC. For record format BAI
only, you must also tell the system the length of the document and the
maximum number of invoices which can be contained in record types 4 and 6.
For the BAI format, record type 6 contains the detail per check. If there are
more than 3 invoices being paid by a check, then a record type 4 is required.
Record type 4 is the overflow record. The BAI data needs to conform strictly to
this format creating a new ‘overflow’ record only when the prior record is filled
with the number of entries indicated in the configuration. For the BAI2 and
IDOC formats, it is not necessary to specify this information.
» G/L Account Posting Type
» You have two options when posting to the GL. You can choose to post one
line item per check in both the clearing account and the GL bank account or
you can choose to post one line item per check in the clearing account and
only one line item for the total lockbox amount in the bank account. This
reduces the number of postings to the GL bank account. As of release 4.6,
you will also have the option to post one line item per batch. In the case where
you have a file with three batches, each containing 50 checks, you would have
150 line items to the clearing account and 3 line items to the GL bank account.
It is generally accepted to enable this compression on the GL account either at
the bank or the batch level.
» Partial Payments
» The “Partial Payments” option is not recommended for customers with high
volume. This box changes the default behavior of the program to post partial
payments rather than creating residual items. The result is an “on account”
posting with a reference to the original. This increases the number of open
items on the customer account since nothing was cleared. Note that new SAP
customers are typically accustomed to ‘partial payments’ in their view of the
lockbox cash application. Residual item creation and the clearing of the initial
customer invoice offers similar processing and capability along with the
reduction of open items on the customer account. Additionally, the link is
maintained between the residual item created and the original customer
invoice from which it was created.
» Insert Bank Details
» The execution of the lockbox program allows you also to create a batch input
session which will update your customer master records with bank account
information, allowing the system to ‘learn’ customer bank information and
improve processing statistics.
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2. Posting Data (Transaction OBAX)
» Destination / Origin
» The Destination and Origin can be almost anything and are agreed upon with
the lockbox bank as to their values. In some cases one of them may be the
ABA number of the lockbox bank and the destination may be a cash account to
which lockbox remittances are eventually transferred. They are both contained
in record 1 of the file. The destination is in fields 4 to 13 and the origin is in
fields 14 to 23.
» House Bank / Account ID
» If the lockbox is receiving payments which are of a currency other than the
company code currency, then you have to create a house bank and account id
for the lockbox account and specify the alternate currency in the house bank
account. Canadian companies may have a US dollar lockbox for example.
Note that lockbox accounts for each currency of receipt need to be configured.
You can not have multiple currencies in the same file.
» Bank (G/L) Account / Bank Clearing Account (A/R)
» The automated lockbox posting program uses a two-step posting process. In
step one, it posts to a GL account which is a bank account (House Bank /
Account ID) and also to an AR clearing account commonly called an ‘unapplied
cash’ account. In step two, the program attempts to clear a customer open
item. If successful, it clears the customer open item and also the item in the
clearing account (unapplied cash) which was posted in the first step. *** If you
are using the cash management module, then the GL account in the “Bank
(G/L) acct” field should contain a clearing account for incoming cash rather
than the actual GL account for the bank.
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» Partner No. – Use the ABA number to designate the partner number for the
house bank.
» Partner Profile
» Header Information
» Partner Type – “B” for Bank
» Classification
» Partner Status – “A” for active
» Post Processing: Permitted Agents – The user entered in this area will
receive messages in his or her inbox if there are problems with the
import.
» Typ – “US” for User
» Lang. – “EN” for English
» User – user id for the SAP system
» Inbound Parameters
» Message Type – “LOCKBX” for Lockbox
» Inbound Options
» Process Code – “LOBX” for lockbox
» Trigger Immediately – the inbound IDOC is processed immediately
» Post Processing: Permitted Agents – The user entered in this area
will receive messages in his or her inbox if there are problems with
the import.
» Typ – “US” for User
» Lang. – “EN” for English
» User – user id for the SAP system
4a. ***EDI Port – an EDI port must be created in the system. This topic
is not covered in this document.
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» Applied: The customer was identified and the check has cleared all document
numbers provided.
» No further processing is necessary. You can not look at the payment
advice because the system automatically deletes it.
» Partially Applied: The customer was identified and the check has cleared some
of the documents. The remaining amount is posted on account for further
manual processing.
» To process: choose the check and then press the post button. Clearing is
done via standard SAP processing.
» On-Account: The customer was identified but none of the documents could be
found. The full amount of the check is posted on the customer account for
further processing with via payment advice.
» For this status, you must first change the payment advice. Select the check
and you can insert or delete clearing information. You can also classify
deductions with reason codes. After the changes, the advice must balance
to zero. Save the advice and then post it.
» Unidentified: The customer was not identified. These are truly ‘unapplied cash’
and indicate inadequate customer identification either by MICR / Account
number in the lockbox data or via invoice remittance information. The check
remains in the unapplied payment clearing account. The payment advice is
used to clear the item once the customer is identified.
» This is similar to the on-account status. You must first identify the customer
in the payment advice before making other changes.
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» If you place an “X” here the program will generate a file in which all the
amounts paid in the invoices differ by $100 from the actual invoice amount. In
other words, the customer is paying $100 less on each invoice.
» Deduction not related to invoice
» If you insert an amount here, the program generates line items on the file for
that amount which do not have a document number associated to them.
» Credit Memo
» If you place an “X” here, the program creates credit memos on the customer
account which are half of the invoice amounts. No credit memo appears on the
file.
» Credit Memo with Number
» If you place and “X” here, the program generates credit memos with numbers
and puts them in the file also.
» Check Difference
» If you place an “X” here, the program generates line items which total more
than the check amount.
» Run the Lockbox import program, using the filename which you chose for the test
tool. Since the file is in the UNIX directory, make sure the “”PC upload” box is not
checked.
Menu Paths
The menu paths for setting up the lockbox:
» Financial Accounting Bank Accounting Business Volume Payment
Transactions Lockbox Define Control Parameters
or
Transaction Code OBAY.
» Financial Accounting Bank Accounting Business Volume Payment
Transactions Lockbox Define Posting Data
or
Transaction Code OBAX.
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» Financial Accounting Bank Accounting Bank Accounts Define Lockbox
Accounts at House Banks
or
Transaction Code OB10.
» Financial Accounting Bank Accounting Bank Accounts Define House
Banks
or
Transaction Code FI12.
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a name for the batch input session.
8. The “Partial Payments” option is not
recommended for customers with
high volume.
9. Press the save icon.
10. Financial Accounting Bank
Accounting Business Volume
Payment Transactions
Lockbox Define Posting Data
11. Press the “New Entries” button.
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17. Financial Accounting Bank
Accounting Bank Accounts
Define Lockbox Accounts at House
Banks
18. Press the “New Entries” button.
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20. Financial Accounting Bank
Accounting Bank Accounts
Define House Banks
21. Choose the appropriate house bank 22
from the list.
22. Press the DME button.
23 24
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25. Press the New Entries Button.
29
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31. Go back one menu.
32. Highlight your new entry and press
the Inbound Parameters magnifying
glass.
33. Press the New Entries button.
35
34. Leave Partn.funct., Message Code,
and Message function blank.
35. Enter “LOCKBX” for the message 36
37
type.
36. Enter “LOBX” for the process code.
37. Check the Syntax check box. 38
38. Choose the Trigger immediately
radio button.
39. Enter the data for the user who will 39
be receiving error messages in the
inbox.
40. Press Save.
41. Accounting Treasury Cash
Management Incomings
Lockbox Import (RFEBLB00)
42. Check then “Import into bank data 42
storage” to update the appropriate 44
tables which store bank file data. 43
43. Click on “PC upload” if you are 45
uploading the file from your PC.
46
44. Enter the path of the file you are 48 47
going to import.
49
45. The procedure is “LOCKBOX”.
46. The Input record format is “BAI”, 50
“BAI2”, or “IDOC”. 51
47. Choose the search rule for the
invoice numbers from the drop down
menu.
48. Check the “Enhanced invoice check”
box if you wish to use it.
49. Choose the algorithms for checks
with and without advice.
50. Click on “Assign value date” if you
want the postings to have an
associated value date.
51. Enter a business area and / or profit
center if you wish.
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52. Accounting Treasury Cash
Management Incomings
Lockbox Post (RFEBLB30)
53. This program is used for the EDI
Process. EDI files are imported into
the system and stored in the bank 53
buffers. This program is then run to
post. Follow the suggestions above
except that you enter the destination,
origin, and statement date rather
than the lockbox procedure.
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56. Transaction SE38. Program name
RFEBLBT2.
57. The function of each of the fields is
explained in the previous section.
Related Documents
Appendix A – Tolerances and Reason Codes
Note 100943 Creating Lists of Exits
SD _ AR Line Item Enhancement Example
SD _ AR Line Item Enhancement Example
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Appendix A – Tolerances and Reason Codes
Overview
Tolerances
The use of tolerances is required by the system for clearing purposes. Tolerances can be set up
for users and for Customer/Vendor payments. You can set up blank tolerance groups for
customers, vendors, and users so that newly created customers and vendors will automatically
be assigned this tolerance group. The system requires at least one tolerance group per company
code. If you set up a blank tolerance group, then you don’t have to maintain that field in the
customer and vendor master records. You can also set up a blank tolerance group for users.
This way you don’t have to assign each user to a tolerance group. Users who are not specifically
assigned to a tolerance group in transaction OB57 are automatically assigned to the blank
tolerance group. Both sets of tolerances work together when clearing open items through the
lockbox processing. The stricter of the rules will always control whether the item is cleared or not.
Reason Codes
The “4” record in the BAI Lockbox file may contain an external reason code indicating the reason
for the payment difference. This external reason code must be linked to an internal reason code
which is used to charge off the payment differences to a separate account. This allows you to
clear customer items completely rather than having items posted on account which need to be
post processed. If the payment difference is within the tolerances set, the difference will be
posted to the charge off account. The external reason codes are linked to internal reason codes
per a conversion version. The conversion version is assigned to the customer master record on
the payment transaction screen.
Components
1. Define Customer/Vendor Tolerances (Transaction OBA3)
» Permitted Payment Differences
» This section refers to the total payment. In other words, you could be receiving
one check which is paying 10 invoices. The total amount of differences for all ten
invoices has to be within these tolerances.
» Example:
Permitted Payment Differences
Amount Percent
Gain 100.00 5.0 %
Loss 100.00 5.0 %
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» The two fields amount and percent work in conjunction. Given the configuration
above, and an invoice of 1000. The 5 percent would be used since 5 percent of
1000 is 50 which is lower than 100. The actual payment could be between 950
and 1050 to be within tolerance.
» Tolerances for Payment Advices
» This section refers to each invoice. In other words, each invoice is checked
against these specifications. This section and the one described above work
together, further restricting the clearing procedure.
» The fields work in conjunction exactly as the other set.
» Example:
Tolerances for Payment Advices
Amount Percent
Outst.receiv.from 100.00 5.0 %
Outst.payable from 100.00 5.0 %
» It is possible that you could have 3 invoices which each are within tolerance
and then be out of tolerance for the entire payment. Given the configuration
above and 3 invoices for 1000 each. The payment received is for 880
(customer deducted 40 from each invoice). Each invoice is within tolerance
because it is less than the 5 percent (50). Adding up the 3 invoices, however,
we have a difference of 120. This is not within tolerance for “payment
differences” because it is more than the 100 (amount). This is less than the 5
percent (150) but the program always uses the lower amount. In the example
above, the percent was used because it was lower; in this example, the amount
was lower.
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» The two fields amount and percent work in conjunction. The lower limit is the one
which takes affect. Given the configuration above and an invoice for 3000. The
amount of 200 would be used since 10 percent of 3000 is 300 which is higher than
200. The actual payment could be between 2800 and 3200 to be within tolerance.
» Tolerances defined here work with tolerances defined for customers and vendors.
Again, the strictest tolerance will be used in the clearing procedure. Given the
configuration above for both users and customers/vendors, the parameters in the
customer/vendor tolerance configuration would be used since they are more
restrictive than the configuration for the users.
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8. Change Customer Master Record ( Transaction FD02)
» In the company code data, payment transaction screen, enter the conversion
version and tolerance group for each customer.
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8. OBBE – Define Reason Codes
9. Check the “Charge off” box for each reason
code you create.
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14. OBCS – Assign Internal Reason Codes to
External Reason Codes
15. Assign internal reason codes to external
reason codes by conversion version.
18
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OSS Note 45436 – Lockbox Transactions
R/3 note no. 45436 19.01.2000 Page 1
__________________________________________________________________
_____
Number 0045436
Version 0001 from 19.07.1996
Status Released for customer
Set by Gerhard Hafner on 19.07.1996
Language EN
Short text Lockbox / Advice: List of all transactions, tables
Long text
Symptom
This note contains a list of all the tables and transaction codes that
were used by the lockbox program.
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o OBCW/T053D: Reason codes for clearing according to pay.advice
Valid releases
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