In the future this post will be maintained here.
What are lockboxes?
Payment collection accounts for customer payments.
Both payments and remittance information are collected by banks.
The payment/remittance information is keyed into an electronic file.
The electronic file is transferred to the lockbox owner nightly.
Two formats for the files BAI or BAI2.
Most banks will support either, at company’s request.
What is the difference between BAI and BAI2?
BAI format does not separate out the incoming check line items by invoice subtotal reference. Instead, one check total amount simply has all invoices listed underneath it. When BAI files are processed in SAP the entire check amount must match perfectly (or within configured payment difference tolerances) the total amount for all invoices listed. Otherwise, the entire check will enter into SAP as “On Account” (customer is identified by MICR) or “Unprocessed” (customer is not identified).
BAI2 format splits the check total into separate invoice references and associated payment amounts. This allows for checks to have a “Partially Applied” status in which some identifiable payments within the check total will be matched and cleared, while others will be placed on the customer’s account.
The BAI2 format results in a higher hit rate. Hit rate is defined as the percentage of payment-to-invoice matching.
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Lock Box Config:
Master Data Settings
General Ledger Accounts:
XXXXX has three lockbox clearing accounts:
Company Code 1000 – G/L account 1201005, First Union Bank
Company Code 1000 – G/L account 1201006, PNC, Bank
Company Code 2000 – G/L account 1201008, Wachovia, Bank
General Ledger Account Master Record Settings:
Cash G/L accounts exist for each bank. For example account 1105012 is for PNC Bank. If you look at the G/L account master record for this account (Accounting -> Financial Accounting -> General Ledger -> General Ledger -> Master Records -> Display, transaction FS03) you will notice the ‘Relevant to Cash Flow’ field is checked.
Customer Master Record Settings:
In order for the lockbox program to identify a customer the payment MICR must be populated on the customer master record in the General Data: Payment Transactions screen. The remit-to lockbox assignment must also be specified. Regarding the tolerance group assignment, XXXXX only has one configured that is a blank customer tolerance. By defining a blank tolerance group the tolerance group field may remain blank on each customer master record but the tolerance settings are applicable. The tolerance configuration will be reviewed in the next few slides. Finally an alternative payer should be entered on a customer master record if another customer account will pay the bills for the customer.
Lockbox Assignment on Customer Master Lockboxes are assigned on customer master records and determine which remit to address is printed on the customer’s invoices
When an incoming cash payment does not exactly pay the referenced open item(s), the system will create a residual item back on the customer’s account or write-off the difference if tolerance limits are configured.
In SAP tolerance limits are set for users and customer accounts with the stricter limits applying.
SPRO -> Financial Accounting -> Accounts Receivable and Accounts Payable -> Business Transactions -> Manual Payment Receipt -> Define Tolerance Groups for Employees
This transaction is used to create tolerance groups for users. The tolerances are defined by company code and at a minimum there must be one assigned to each company code otherwise no postings can occur in the company code.
Amount per Document – The maximum amount that can be posted in an accounting document.
Amount per Open Item Account Item – the maximum amount that can be posted to a customer or vendor account.
Cash Discount per Line Item – the maximum cash discount percentage that can be applied to a line item.
Amount, Percent, Cash Discnt Adj. To (Both Revenue and Expense) – the amount field contains the maximum amount of a customer overpayment (Revenue)/underpayment (Expense). The percent field is the maximum percentage rate difference posted by the system. The lower limit between the amount and percentage applies.
Configuration: Define Tolerances (Customers/Vendors)
SPRO -> Financial Accounting -> Accounts Receivable and Accounts Payable -> Business Transactions -> Incoming Payments -> Define Tolerances (Customers/Vendors)
SPRO -> Financial Accounting -> Accounts Receivable and Accounts Payable -> Business Transactions -> Outgoing Payments -> Manual Outgoing Payments -> Overpayment/Underpayment ->Define Tolerances (Customers/Vendors)
This transaction is used to configure customer tolerances. To change a tolerance select the company code then press the Details icon.
Configuration: Define Reason Codes
Transaction OBBE is used to configure reason codes by company code. All new reason codes must be configured in each company code.
Configuration: Define Text : Transaction OB56 is used to configure the text that appears on a line item based on the reason code entered.
Configuration: Define Accounts for Overpayments/Underpayments : Transaction OBXL is part of the automatic account assignment. The GL account for overpayments/underpayments is maintained here
Configuration: Define Posting Keys : Transaction OB41 is used to configure posting keys. Posting keys are two-digit numeric keys that control the entry of document line items. Specifically it controls the account type, debit/credit posting, and layout of entry screens.
There are three lockbox settings:
Defining control parameters
Defining posting data
Financial Accounting -> General Ledger Accounting -> Bank-Related Accounting -> Bank Accounts -> Define Lockbox Accounts at House Banks
In this transaction, you define your lockbox accounts at the house banks. Thus, on the outgoing invoice you can inform your customer of the lockbox to which payment is to be made. By specifying this, you can optimize the payment transactions.
To configure the lockboxes first specify the lockbox links (company code; key of the lockbox to which the customer is to pay; house bank ID; lockbox number at your house bank). Second enter a remit to address that will appear on the customer invoice.
Define Control Parameters:
SPRO -> Treasury -> Cash Management > Business Transactions -> Lockbox -> Define Control Parameters
The top “Record format’ settings are unnecessary for BAI2 format, and should be left blank.
Procedure – LOCKBOX (currently the only supported procedure in standard system)
Record Format – BAI or BAI2
Record Format Parameters: (Required for BAI Only)
Document # length – length of the document # used to locate the open item
Number of document numbers in record type 6 – maximum # of documents in detail record
Number of document numbers in record type 4 – maximum # of documents in overflow record
G/L Account Postings: Identifies whether G/L Posting is created.
G/L Account Posting Type: (1) = Posting / Check or (2) Posting / Lockbox
Incoming Customer Payments: Identifies whether to post to customer accounts also.
Insert Bank Details: Create batch session to update customer record with new bank details.
ADDBNKDETAIL – creates batch input session that if executed will update the MICR number information on customer master records.
Define Posting Data:
Treasury -> Cash Management -> Business Transactions -> Lockbox -> Define Posting Data
The lockbox is defined with respect to a ‘Destination’ and ‘Origin” identifier combination. Each lockbox must have its own unique Destination and Origin combination, and also must be defined for a single company code in configuration. The bank must transmit the file with the Destination, Origin and Lockbox identifiers in the exact format as they have been created in SAP lockbox configuration. Otherwise, the file will be improperly read by the lockbox and posting will not properly occur.
Company Code – enter the company code for which the lockbox transmission applies
Bank Account Number – enter the bank (g/l) account for bank account posting
Bank (Payment) Clearing Account – enter the lockbox clearing account
Bank Posting Doc Type – enter the document type for bank account postings (e.g. SA)
Cust. Posting Doc Type – enter the document type for customer (A/R) postings (e.g. DZ)
Posting Key: debit G/L – enter the PK related to g/l postings (i.e. 40)
Posting Key: credit G/L – enter the PK related to g/l postings (i.e. 50)
Posting Key: credit Customer – enter the PK related to customer postings (i.e. 15)
Posting Key: debit Customer – enter the PK related to posting residual items (i.e. 06)
Execution of Lockbox Program
The lockbox program can be accessed using transaction FLB2 or program RFEBLB00.
In the PRD environment a variant exists for each lockbox file. For test purposes it is easiest to copy the PRD variants, changing only the location of the lockbox file. However, Before executing the lockbox program please confirm that each of the fields in the above slide is completed as indicated.
Import into Bank Data Storage – this field should be selected so the lockbox file will be imported into the bank storage data. This ensures that the same lockbox file cannot be accidentally imported more than once (based on Origin, Destination, Date and Time values).
PC Upload – this field should be selected if the lockbox file resides on the users PC rather than in a UNIX directory.
Lockbox File – enter the location of the lockbox file in this field. The location may be either on the users PC or in the UNIX directory.
Procedure – this field should always be populated with LOCKBOX.
Input Record Format – this field should always be populated with BAI2.
Invoice Numbers – this field should always be populated with a ‘1’. This field offers four standard open item identification algorithms.
1 – match on document number (BELNR)
2 – match on reference number (XBLNR)
3 – match on document number first, if not found then on reference number
4 – match on reference number first, if not found then on document number
Enhanced Invoice No. Check – this field should not be selected. If selected it allows postings to be made across customer worklists.
Algorithm: checks with advice and Algorithm: checks without advice – these fields should be populated with 001. These fields determine whether cash that does not find an appropriate open item should be posted as ‘On Account cash’, or be applied against oldest open items on the account.
Account assignment fields – these fields should be left blank. The values entered in the fields are defaulted on the postings created by the lockbox program.
Print Control – this field should be selected so the lockbox reports will be output.