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Customer Bad Debts
Customer Bad Debts
Product Companies/Service Providers, using SAP, have a large customer base . Out of them some
may delay or default for payment, after the invoicing is done.
This leads to doubtful receivables and ultimately, if not payed , a bad debt.Lets understand this with
the below example.
A company has done a credit sale to a customer. Suppose the customer has gone bankrupt or has
been liquidated.In that case,first of all the
Then after a particular time frame, it will create a provision for a certain percentage of the
SAP provides specific functionality to map and handle this entire scenario.Given below are the
detailed steps.
1. Setting up a Special GL indicator and creating and assigning a particular GL account to it.
t code: FBKP
Maintain a Special GL indicator(say D) , which is to be maintained as the special gl account for BAD
Debt provisioning.
t code:OB04 .
If 3 is maintained there, it would mean after 3 months of the item is due, this
Is 3 is maintained in Months1 and 50 is maintained Pec1, it would mean after 3 months of the item is
due,
3. Define the Debit and Credit accounts for Provision for Doubtful Receivables
t code : OBXD
maintain the Bad Debt expense account in debit section and a Provision Account in Credit section
3. Now run F103 .
It will create transfer posting , with the above provision method entered on selection screen .
Lets see the accounting entries created for the same.
Customer Dr 8000
Sales Cr 8000
Now if this has crossed the time line and is due for reclassification
If number of days in arear ,has crossed the time line and is due for provision posting
Customer Account Cr 8000(it will clear the Special GL account item of step 2)
Then run F104 again. It will reverse and clear the entry of step 4.
In the above entry, we have to knock off the customer spl gl entry and debit an expense account.
Then run F104 again. It will reverse and clear the entry of step 4.
F103 and F104, can set up as monthly batch jobs to handle the monthly doubtful receivables
and bad debts, if any.
This is how Doubtful receivables & Bad Debt are handled in SAP. Please provide your valuable
comments and suggestions.
Regards
Rudra