Lock Box

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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

Tolerance Settings

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

Transaction: OBA4

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.

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)

Transaction: OBA3
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.

LockBox setting

There are three lockbox settings:
Defining lockboxes
Defining control parameters
Defining posting data

Define Lockboxes:

Financial Accounting -> General Ledger Accounting -> Bank-Related Accounting -> Bank Accounts -> Define Lockbox Accounts at House Banks

Transaction: OB10

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

Transaction: OBAY

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
Posting Parameters:
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

Transaction: OBAX

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.

General Data
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
Posting Parameters
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.


FI AR – Post Invoice and clear payments / reports

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Create Receivable

a. Create Customer Invoice – FB70
b. Customer Line Item Display – FBL5N

Process receipts
a. Post Incoming payment – F-28
b. Customer Line Item Display – FBL5N

1-1 Transaction F-28 Incoming payments.
Document date:
document type
Bank data section:
The customer pays on bank account
Enter the amount of the open item document
1-1.1 Open item selection:
Enter the account of your customer.
1-2 Click on the process open items button!

1-3 First de-activate all the open items that are shown, if there is more than one open item.

1-4 Double click, or activate (is the same), on the open item document that is paid and in this way cleared.
1-5 Go the menu and select Document – Simulate
1-5.1 If the proposed document in correct, post the document by clicking the save button.

1-6 Write down the document number shown in the status bar: _______________

2 Go again to the customer balance transaction (FBL5N) and lookup the balance for your customer.
2-1 You should now see a crebit in the current period.
Double click the credit and see that the item is cleared.
Also double click on the debit of the period of the original document.

3 Go to the customer information system and process the line item report. (List of customer line items)
3-1 In the selection parameters enter the number of your customer.
3-2 Check the cleared items radio button. And fill in as clearing date today’s day.
3-3 Execute
3-4 You should now see the cleared customer line items.

Networks in PS

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Networks can be used to map the flow of different project activities as activities and relationships in the system. Networks allow you to use logistic integrations with materials management, production, plant maintenance, purchasing, capacity requirements planning and time scheduling.

Networks have one responsible person called an MRP controller. Networks are made up of activities. Technically networks are implemented as orders so some of their functions will remind you of production, maintenance or service orders. There are four different types of activity elements:

  1. Internal element
  2. External element
  3. Service element
  4. Costs element

In contrast to an activity, an activity element does not contain any relationships and is therefore not relevant for time scheduling . Using activity elements instead of activities you can keep a clear structure of the network as well as the time scheduling component of the network.

Subnetworks are networks linked to an activity of another network via assignment at the network header level. Several subnetworks can be assigned to an activity.

Milestones can be used to map events of particular importance, such as the completion of critical project stages. Milestones can be assigned to WBS elements. Planned date and planned percentage completion of the milestone can be determined by the Prog Analysis indicator.

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Work Breakdown Structure

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Why Understand Work Breakdown Structures?

Work Breakdown Structures were created by the US defense establishment for actual costing. However within SAP they are the critical elements within the SAP PS system. Understanding the WBS is important to understanding GPD (Grouping, Pegging and Distribution) which is a manufacturing solution for research and development, make-to-order and engineering-to-order environments. (More on GPD in the Appendix)


What is a Work Breakdown Structure?

Simply put, Work Breakdown Structures are “buckets” to which cost centers are assigned , allowing Lockheed to track the costs of its PBL contracts. Below is a sample of a simple WBS structure for the creation of a bicycle. “A WBS is not a project plan, project schedule or a chronological listing. It is considered poor practice to construct a project schedule (e.g. using project management software) before designing a proper WBS. This would be similar to scheduling the activities of home construction before completing the house design. It is not possible to recover from an improperly defined WBS without starting over[citation needed], so it is worthwhile to finish the WBS design before starting a project plan or project schedule Parts is not.

Simple WBS Structure for Building a Bicycle


WBS Capabilities

In a product-oriented WBS, functional categories of work may form “cost accounts” within a WBS element. Cost account managers are responsible for a functional area’s contribution to a WBS element. Cost accounts from several departments or functions may combine into one WBS element. Internal department planning for a cost account will be made up of individual work packages. A work package will typically have its own budget and schedule. Work packages should be small enough to be executed by individuals or small groups in a single department, and they should be of relatively short schedule duration. A small project might define a maximum work package size as two weeks of effort. Larger projects will assemble larger work packages that can be appropriately managed and controlled.” – SAP Help

WBSs allow you to map the structure of a project in SAP. The WBS is made up of WBS elements, which can be broken down further. Structuring the WBS is primarily answered by considering what you want to report on.

Dependent Configuration

Dependent configuration relates how a configuration one system affects another system. Here it involves other areas in SAP that are affected by WBS creation and use. One of the most important features of WBS usage is distinguishing between Plant Stock and Project Stock. Each material can be coded as several stock types. Typically Plant Stock is the more common, however in a project environment it becomes necessary to code at least some of the materials as Project Stock. Plant Stock vs. Project stock is broken down in the matrix below.

Plant Stock

Project Stock

For: planning collective requirements in warehouse material

For: individual project planning

Usage: Materials at subordinate BOM levels which are required in all projects can be planned and procured in the warehouse, independently of WBS elements. In requirements planning, all the requirements for a material are determined in one plant. Such procurement is made jointly, with no reference to a WBS element.

New Demand to A Location

Usage: In individual project planning, only individual requirements are planned – that is, materials which are required for a WBS element, are planned for that purpose, and procured with reference to the WBS element.


Assignment: The material is managed in general stock. It is not assigned to any particular project or sales order.

Assignment: In individual project planning, only individual requirements are planned – that is, materials which are required for a WBS element, are planned for that purpose, and procured with reference to the WBS element.

This procedure is used to plan the finished product and important components.

The material stock is assigned to a single WBS element in the project and is, as far as planning is concerned, available only for that WBS element. Stock is managed separately for each WBS element in a project definition.

Unlike general stock, you must specify the relevant WBS element, as well as the plant and storage location, in all goods movements involving project stock.

From: http://help.sap.com/saphelp_dimp50/helpdata/EN/49/7db835295f962de10000009b38f839/content.htm

Question: What costs will be allocated to a SAP PS Project?

Answer: We will want to allocate the costs of Purchase Orders, Stock Transport Orders and Service Orders to specific projects.

New Demand to A Location

Not New Demand to the Overall System

1. If there is sufficient inventory to cover the STO, a new demand is created at a location, however, this is not a new demand for the system. If one considers this a new demand then it is true to stay that an STO creates a new demand.

2. If there is insufficient inventory to cover the STO, a demand is created both at the location, and for the overall system.

What is Necessary to Tie Back to the PS PBL Project

A Network in SAP PS is a parallel hierarchy of the operations of a project rather than the financial areas of the project. The necessity is to tie the operational transactions (and their costs) back to the project. The transactions necessary to map to the PBL projects are:

  • Purchase Orders

  • Stock Transport Orders

  • Service Orders

“The grouping WBS element is the organizational unit which produces the goods and to which the material belongs. Requirements planning creates the replenishment elements (planned orders, purchase requisitions) which are assigned to the grouping WBS element. A separate planning section is managed for each grouping WBS element in the evaluations in inventory/requirements planning.”


A sample of WBS Elements in a project

From Project Management Academy:

Notice how the Project is the top of the hierarchy. A Work Package contains a WBS code along with costs. A Work Package is “..is a quantitative and qualitative description of an activity to be carried out in the project – for example, the work to be done and the result to be achieved for a clearly defined task within the project.”

Other Important Features of the WBS:

WBS Connections to Other SAP Transactions

WBS Links to Activities

1. The STO is tied in with MRP

1. If there is insufficient inventory to cover the STO, a demand is created both at the location, and for the overall system.

2. The procedure of converting purchase requisitions to Work Breakdown Structures can be monitored using PO history.

New Demand to A Location

2. A goods receipt can be planned in the receiving plant.


3. The system can run an availability check for the stock transfer.

3. The goods receipt (GR) can be posted directly to consumption.


The STO is both a type of Stock Transfer and a Purchase Order which has characteristics that closely map to the Transshipment in MCA, most notably its calculation of inventory movement based upon lead times. The STO is used to move materials between two Plants in SAP.

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PBL as a Trend in A and D

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PBL and Alternatives

Performance Based Logistics is a strategy for system support. Instead of goods and services a supplier is paid for a guaranteed level of performance and system capability. The supplier often has to guaranty the performance at lesser costs but has more control over all logistics elements. The performance is declared in Performance Based Agreements.”- Wikipedia

Performance Based Logistics can be in the commercial area of A&D or in the government/military. A quote from the 2006 Quadrennial Defense Review Report indicates the orientation of the Department of Defense regarding PBL.

“There is a growing and deep concern in the Department of Defense’s senior leadership and in the Congress about the acquisition processes. This lack of confidence results from an inability to determine accurately the true state of major acquisition programs when measured by cost, schedule and performance. The unpredictable nature of Defense programs can be traced to instabilities in the broader acquisition system. Fundamentally reshaping that system should
make the state of the Department’s major acquisition programs more predictable and result in better stewardship of the U.S. tax dollar. ”

PBL has become a strong trend among the management class of companies in the A&D environment. This paper discusses PBL and makes some educated guesses as to where PBL might be in 5 years from now.

Basis for PBL

PBL is introduced as a way to improve service levels and increase the responsibilities of supplier service parts management and in some cases service part service operations. In this way it may be viewed as a form of outsourcing where the part planning and management is moved from the client to the suppliers. In cases where the military is the customer, it can be seen as a light form of military privatization.

Supporting Case Studies

The outstanding case study for PBL in the A&D environment is Rolls Royce. While not called “PBL,” Rolls’ TotalCare engine service program is in fact a long term service contract where Rolls controls the engine service parts inventory and in a way goes beyond PBL by offering direct guidance and instruction when certain parts are due for maintenance. Rolls actively monitors over 3000 engines aggregating a strong level of service intelligence about engine maintenance. Rolls has by most accounts leveraged this capability to grow its market share, take business from larger competitors and reinforce the premium reputation of its industry leading engines.

Deviations Between the Strong Case Study and Other Projects PBL Clients and Environments

It would be a mistake to assume that the success at Rolls can be duplicated to every A&D supplier or can be generalized to other areas outside of engines. By comparison there were certain organization differences between Toyota and US manufacturing firms as well as geographic differences between the location of supplier base in Japan vs. the US that prevented other companies from ever duplicating Toyota’s success with JIT, regardless of decades of attempts across probably thousands of factories. What this means is that the case for PBL with Rolls must be observed in terms of how Rolls as a company, and Rolls business is different than other companies that want to implement PBL type programs. Some of differences are listed below:

  • Rolls is only managing a small proportion of the overall service parts of an airplane. They are providing 100% of the parts for the engines under the TotalCare program. This means that a 95% availability actually does mean a 95% availability for the engine as there are no other suppliers. However, this is not true with companies that provide the entire airplane. Therefore it must be considered that Rolls is solving a much more simple problem than a supplier that supplies the entire airplane would be.
  • Rolls appears to be on the outward edge of competence within the industry. Secondly, this is not a new philosophy for Rolls. Their “Power by the Hour” program, which is essentially similar to the TotalCare program dates at least back to the 1930’s. This means that Rolls has been organizationally oriented towards service for generations. This is not necessarily the case for other A&D suppliers.

The Expertise Required

Developing a PBL contract requires more than the capability to run an advanced service parts planning system like MCA or Servigistics. It also requires a way to cost the PBL contract. This is so the firm can determine the profitability of each contract and can use this information to adjust future contracts. SAP PS is an excellent way to cost the transactions associated with a contract. The difficulty comes in tying the specific transaction to the specific contract in question.

T – Codes – Project Month End – Result Analysis

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Transaction Description
CJR2 Plan Project Costs (EAC) and Revenue by Cost Elements

CJR8 Plan Project Revenue by Cost Element

CJ40 Plan Project Costs (EAC) at a Summarized Level

CJ42 Plan Project Revenues at a Summarized Level

KKA2 Execute Project Result Analysis for Individual WBS Element

KKAJ Collective Execution of Project Results Analysis

KKAL Display Project Results Error Log

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