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Bad debt configuration is done in SAP through 'value adjustment'. You can create a special GL transaction with a new reconciliation account for posting the value adjustment. When it is clear that the bad debt is no more collectible, pass a manual entry 'expenses for value adjustment Dr.' and 'valud adjustment Cr.'
Define Methods: SPRO / Financial Accounting / Accounts Receivables & Payables / Business transactions / Closing / Valuate / Reserve for bad debts - OB04- Double click define methods - Select New entries button
Co.code: XXXX - Select with template button G/L A/c:XXXXXX Co.Code : XXXXAccount group: Administration Select P & L Radio buttonShort text: Bad debts Long text: Bad debts - Select control tab button Current currency: INR- Select only local currency check box - Select line item check box, Sort key:001 Field status variant: G001 - Save
SPRO / Financial Accounting / Accounts Receivables & Payables / Business transactions / Closing / Valuate / Define Accounts for Reserve & Bad debtsChart of Accounts: XXXX
Select rules tab button Accounts are determined based on - Select Debit/Credit check box 40/50- Select provision method check box- Save
Double click Special G/LAccount Type Special G/L Special G/L Indicator D E Reserve Reserve for Bad debts
Chart of Accounts
Accounting / Financial Accounting / Accounts Receivable / Periodic processing / Closing / Value / Receivable transfer posting (Gross)
Customer A/c:XXXXXX Provision method: XXXXSpecial G/L Indicator for Debit Rec: E (Reserve for bad debts)Select create batch input session check box
- Batch input session name: SAPF103 - Posting Key:09 Posting document: DA - F8From the menu Select -> System -> Batch Input -> Session- Select batch input session: SAPF103 Select process - Select display errors only V - Select process button - Exit Batch input
You need to create 1. one alternative recon account for Special GL indicator "E" 2. One expenses account for bad debts and 3. one for provision on Doubtful debts account.
1.Define MethodsHere you need to define methods means after how many months client want to reclassify as bad debts and at percentage for how many months.
2.Define Accounts for Reserve for Bad DebtHere you need to assign bad debts expenses account and provision account.
User end transactions: 1. Run F103:It transfers the normal open items to special gl E.Entry:Customer account SP gl E debitedCustomer account
2. After F103 you need to F104 for bad debts postingBased on the percentages maintained for how many months. System will automatically calculates the bad debts
Notes:
1. SP GL indicators- You can use any of the existing available indicators 2.OBXY in case of customers-Assign these indicator for the combination of account type and customer reconciliation account. You also need alternative reconciliation account to capture these transactions 3. OBXT in case of vendors.
Both are maintained or entered manually. There is no customization. You need to create three GL accounts. One in Balance sheet as "Provision for Bad Debts" and other two in P&L.
1st one will be bad debt account, wherein you need to actual post the value which is non-recoverable.
2nd will be the contra for the balance sheet account. At the end of the month/ quarter etc., the company while creating the reserve, should pass the following entry: Dr. A/c 2 (P&L) Cr. Balance sheet A/c
Before creating the fresh, the earlier entry should be revered. When actual bad debt happens, then after management approval, please pass the following entry: Dr A/c 1 (P&L) Cr. Customer (Clearing the open line item)