This chapter looks at special G/L transactions and explains how to disclose them in SAP R/3 using alternative reconciliation accounts.

At the end of this chapter, you will be able to:

• Demonstrate an understanding of special G/L transactions
• Explain various technical factors related to special G/L transactions, including guarantees (automatic offsetting entry (statistical), down payments (free offsetting entry), and down payment requests (noted items)
• Configure special G/L transactions for down payments, down payments received, and down payment requested
• Define tax clearing accounts for down payments
• Define alternative reconciliation accounts for customers and vendors

Special G/L Transactions

Special G/L transactions are part of the Accounts Receivable (AR) and Accounts Payable (AP) transactions needing special disclosure requirements in the financial statement. Due to their nature, special G/L transactions are posted to special subledgers and to the general ledger in the SAP ERP system. The advantage of maintaining special general ledger transactions is to meet the separate disclosure requirements. When customizing special G/L transactions, you use a special subledger account linked to special G/L accounts using a special G/L indicator to make postings to alternative reconciliation accounts (special G/L accounts) possible.

Special G/L transactions include down payments, bills of exchange, and other transactions. In SAP R/3 special G/L transactions can be distinguished between business relationships and technical factors. This is represented in Figure 16-1.

First you will be looking at the distinctions between technical factors represented in special G/L transactions and then you’ll look at the steps involved in customizing special G/L transactions in SAP R/3.

Technical Factors

SAP differentiates between the different special G/L transactions based on the nature of their treatment. These distinctions are classified into three categories, referred to as technical factors:

• Noted items
• Free offsetting entries
• Automatic offsetting entries

Noted Items

Noted items include down payment requests and bill of exchange payment requests. Noted items have no impact on the general ledger. Since no postings are made in the G/L accounts, noted items are purely for informational purposes and serve only as reminders. The system automatically reminds users that the down payment request exists for the account. The system doesn’t make open item balance checks or offsetting entries. Only one line item is updated when a noted item is created.

Noted items are treated as line items in the open item account, so you should activate the line item in the G/L master record for G/L accounts 119000 and 196000 (these are the G/L accounts you define in Appendix A for your special G/L transactions). You can include down payments in the payment program and dunn overdue down payments using the dunning program.

Free Offsetting Entry

An example of a free offsetting entry is a down payment that’s been received. Depending on the type of posting involved, free offsetting entries generate proper postings in the general ledger since they are part of accounts receivable/payable. Special G/L transactions related to free offsetting entries will automatically debit or credit special G/L reconciliation accounts once they occur.

Automatic Offsetting Entry

Typically, an automatic offsetting entry is a guarantee of payment and is termed a statistical posting because it’s not displayed in the financial statements. Automatic offsetting entries are only displayed as notes to the financial statements. Since they form part of the automatic offsetting entries, entries are made in the same offsetting account. Offsetting entries accounts are defined in the IMG (implementation guide), which makes it possible for the system to make automatic offsetting entries. Once an open item is cleared in the account, the system will automatically clear the item in the offsetting account.

Configuration of Special G/L Transactions

You look at down payments made, down payments received, down payment requests, and guarantees in this exercise. No additional configurations are needed for the bills of exchange and other special G/L transactions. The settings for guarantees supplied by SAP are sufficient.

Down Payments

Down payments are a kind of short-term finance. It is a normal business practice for business partners to obtain short-term finance by way of down payments without accruing interest. For example, a manufacturer may not be able to finance its production and may request a down payment before production begins or during or after production. Accounting practices separate down payments from the normal business receivables and payables and display them separately on the balance sheet.

There are several factors that give rise to down payments under the normal course of doing business. Payables or receivables arising from the purchase of an asset or from providing a service can be financed through down payments. Down payments are disclosed on the balance sheet as assets or liabilities. If the transaction is a receivable, it is treated as an asset and debited accordingly. On the other hand, if the down payment is payable, it is a liability and it is credited on the balance sheet. Upon the delivery of goods or the performance of a service for which the down payment was made, the accounts involved need to be cleared and the down payment is no longer displayed on the balance sheet.

Down Payment Received

Down payment received is an advance payment made to you by your customers as a down payment in anticipation of the provision of goods or services to your customer. Only minimum settings are required here, because SAP comes with a predefined setting for down payments. In this exercise, you define reconciliation accounts for customers’ down payments. Your specifications will make it possible for the system to automatically post down payment transactions to a special G/L reconciliation account instead of the normal receivable G/L reconciliation account.

To define the reconciliation accounts for down payments, follow this menu path: IMG: Financial Accounting (New) Accounts Receivable and Accounts Payable Business Transactions Down Payments Received Define Reconciliation Accounts for Customer Down Payments. Or use transaction code OBXR.

The Maintain Accounting Configuration: Special G/L List screen is displayed (Figure 16-2). This screen contains the list of special G/L transactions.

Select Down Payment from the list of items displayed on the screen by clicking on it. Then click the Details button on the top-left side of the screen.

The Chart of Accounts Entry dialog box pops up. Enter your chart of accounts (CA90) in the Chart of Accounts field and click the Continue button at the bottom of the screen to go to the Maintain Accounting Configuration: Special G/L Accounts screen. It holds the input field where you will assign the reconciliation account and special G/L account to your down payment (Figure 16-3).

Enter G/L account 119000 in the Reconciliation Account field and special G/L account 170000 in the Special G/L Account field (these are the G/L accounts you created in Appendix A). Enter A into the Output Tax Clearing field. This specification allows the system to post output tax elements arising from down payments to the output tax clearing account. SAP comes with two tax types: A for output tax and V for input tax. You can access these tax types by using the matchcode or the search function that appears when you click on the Output Tax Clearing field. When you click on the matchcode or the search function, a list of tax types is displayed. Select tax type A and then save your work.

You can display the down payment for customer properties to see if the standard settings supplied by SAP meet your requirements. Click the button on the top-left side of the screen. The Maintain Accounting Configuration: Special G/L – Properties screen appears (Figure 16-4).

Once you are satisfied with the settings for the down payments, save your configuration.

The next step in this exercise is to define the reconciliation accounts for the customer down payments.

Down Payment Requests (Customer)

As mentioned earlier, a down payment is a form of short-term finance. It can also be an engendered commitment from a customer, especially when the integrity of the customer is in question. Down payment requests are normal business practice when advance payment is requested prior to the commencement of a business transaction.

To define the reconciliation accounts for customer down payment requests, follow this menu path: IMG: Financial Accounting (New) Accounts Receivable and Accounts Payable Business Transactions Down Payments Received Define Reconciliation Accounts for Customer Down Payments. Or use transaction code OBXR.

The Maintain Accounting Configuration: Special G/L List screen is displayed. Select Down Payment Request from the list of items displayed on the screen and click the Details button on the top-left side of the screen.

The Chart of Accounts Entry dialog box pops up. Enter your chart of accounts (CA90) in the Chart of Accounts field and click the Continue button at the bottom of the screen to go to the Maintain Accounting Configuration: Special G/L Accounts screen. This is where you assign the reconciliation account and special G/L account to your down payment request (Figure 16-5).

Enter G/L account 119000 into the Reconciliation Account field and special G/L account 196000 into the Special G/L Account field. Enter planning level type FF (Down Payment Request) in the Planning Level field.

Save your work.

The final step in defining customer down payments is to define the tax clearing account.

Define Account for Tax Clearing (Customer Down Payments)

The tax entered for the down payment will be posted to the tax clearing account you define in this activity, and this tax rate typically depends on your country’s legal specifications. To define the account for tax clearing for customer down payments, follow this menu path: IMG: Financial Accounting (New) Accounts Receivable and Accounts Payable Business Transactions Down Payments Received Define Account for Tax Clearing. Or use transaction code OBXB.

The Configuration Accounting Maintain: Automatic Posts – Procedures screen is displayed. From the Procedure list, select and click the Choose button. The Chart of Accounts Entry screen pops up. Enter your chart of accounts ID (CA90) in the Enter Chart of Account field and click the Continue button to proceed to the Configuration Accounting Maintain: Automatic Posts – Rules screen. Click the Output Tax Clearing checkbox (Figure 16-6). By activating output tax clearing, you will be able to specify the tax type and the G/L account you want for down payments.

Click the Save button. The Configuration Accounting Maintain: Automatic Posts – Accounts screen is displayed. Enter Output Tax type A in the Output Tax Type field and enter the appropriate G/L account for Output Tax Clearing on down payments (170010) in the Account field (Figure 16-7).

Save your work.

Down Payment Made

Down payment made is an advance you pay to your vendor as a down payment in anticipation of receiving goods or services. For example, you might make a down payment on your current assets. Before customizing the down payment made, make sure that you have created the appropriate alternative reconciliation accounts for down payments. You do this in “Appendix A, Chapter 16, Customizing Special G/L Accounts.”

In this exercise, you will define vendor down payments, which are managed in the G/L. The settings you specify here will make it possible for the system to automatically post down payment transactions to a special G/L reconciliation account instead of to the normal receivable G/L reconciliation account.

To define the reconciliation accounts for down payments, follow this menu path: IMG: Financial Accounting (New) Accounts Receivable and Accounts Payable Business Transactions Down Payments Received Define Reconciliation Accounts for Customer Down Payments. Or use transaction code OBXR.

The Maintain Accounting Configuration: Special G/L List is displayed. This screen contains a list of special G/L transactions represented in SAP. To specify the special G/L account that the down payment transaction will be posted to, select Down Payment on Current Assets from the list of displayed special G/L transactions on the screen and click the Choose button on the top-left side of the screen. You can also just double-click the option from the list in Figure 16-8.

The Chart of Accounts Entry dialog box pops up. Enter your chart of accounts (CA90) in the Chart of Accounts field and click the Enter button to confirm your entries. The Maintain Accounting Configuration for Special G/L Accounts screen is displayed. Enter G/L account 213000 in the Reconciliation Account field and the special G/L account 159000 in the Special G/L Account field. Enter Input tax type V in the Input Tax Clearing field (Figure 16-9). When you enter the tax type into the input clearing field, the system can automatically post input tax elements arising from down payments to the input tax clearing account.

Save your work. You can check the default specifications for the special G/L payment properties to see if the standard settings are adequate. To do this, click the button on the top-left side of the screen.

Down Payment Requests for Vendors

Vender down payment requests need to be customized when a vendor requests payment from you before commencing a business transaction. To customize vendor down payment requests, follow this menu path: IMG: Financial Accounting (New) Accounts Receivable and Accounts Payable Business Transactions Down Payments Made Define Alternative Reconciliation Account for Down Payments. Or use transaction code OBYR.

The Maintain Accounting Configuration: Special G/L List screen is displayed. This screen contains the list of special G/L transactions. Select Down Payment Request from the list by clicking on it and then clicking the Details button on the top-left side of the screen. The Chart of Accounts Entry dialog box pops up. Enter your chart of accounts (CA90) in the Chart of Accounts field and click the Continue button. The Maintain Accounting Configuration: Special G/L – Accounts screen is displayed. Enter G/L account 213000 in the Reconciliation Account field and enter the special G/L account 196300 in the Special G/L Account field. Enter Planning Level Type FF (Down Payment Request) in the Planning Level field (Figure 16-10). The planning level helps to control cash position and provide liquidity forecasts in cash management.

Save your work.

Define Account for Tax Clearing (Vendor Down Payments)

Depending on your country’s legal specifications, the tax entered for down payments will be posted to the tax clearing account you define here.

To define an account for tax clearing for your vendor down payments, follow this menu path: IMG: Financial Accounting (New) Accounts Receivable and Accounts Payable Business Transactions Down Payments Made Define Account for Tax Clearing. Or use transaction code OBXD.

The Configuration Accounting Maintain: Automatic Posts – Procedures screen is displayed. From the Procedure list, select Input Tax Clearing on Down Payments by clicking on it and clicking the Choose button. The Chart of Accounts Entry screen pops up. Enter your chart of accounts ID (CA90) in the Enter Chart of Account field and click the Continue button to proceed to the Configuration Accounting Maintain: Automatic Posts – Rules screen. Click the Input Tax Clearing checkbox. Click the Save button. The Configuration Accounting Maintain: Automatic Posts – Accounts screen is displayed. Enter Input Tax type V in the Input Tax Type field and enter the appropriate G/L account number (159010) for input tax clearing on down payments. Click the Enter button and then save your work.

Guarantees

A bank guarantee is a legally binding document issued by a bank or other financial institution on behalf of a client to a third party (supplier) to enable the client to obtain goods or services from a supplier on credit for an agreed time period. A bank guarantee is a type of short-term borrowing. It is a formal assurance by the bank to make payments to a supplier in an event where the client fails to meet their part of the debt obligation. Banks normally request some form of collateral or security from their clients before issuing them a letter of credit in order to safeguard the bank’s assets.

In this activity, you will define guarantees for customers and vendors and walk through the steps involved in defining accounts for an automatic offsetting entry.

Define Alternative Reconciliation Accounts for Customers (Guarantees)

Alternative reconciliation accounts for customers are guarantees received from customers as payments toward services offered or goods delivered at a specific future date. Customizing the alternative reconciliation accounts will allow you to perform the specifications of the account that guarantees received are posted.

To specify the alternative reconciliation account for customers for posting guarantees, follow this menu path: IMG: Financial Accounting (New) Accounts Receivable and Accounts Payable Business Transactions Postings with Alternative Reconciliation Account Other Special G/L Transactions Define Alternative Reconciliation Account for Customers. Or use transaction code OBXY.

The Maintain Accounting Configuration: Special G/L – List screen is displayed. Select Guarantee from the displayed list of items and click the Choose button at the top left to go to the screen where you will maintain accounting configurations. The Chart of Accounts Entry dialog box pops up. Enter your chart of accounts (CA90) and click the Enter button. The Maintain Accounting Configuration: Special G/L – Accounts screen is displayed. Enter G/L account number 119000 in the Reconciliation Account field and account number 196100 in the Special G/L Account field (Figure 16-11).

Click the Enter button or press Enter on your keyboard to confirm your entries and then save your work.

Define Alternative Reconciliation Accounts for Vendors (Guarantees)

Guarantees made to vendors are posted to the alternative reconciliation accounts you set up in this exercise. Follow this menu path: IMG: Financial Accounting (New) Accounts Receivable and Accounts Payable Business Transactions Postings with Alternative Reconciliation Account Other Special G/L Transactions Define Alternative Reconciliation Account for Vendors. Or use transaction code OBXT.

The Maintain Accounting Configuration: Special G/L – List screen is displayed. To configure a guarantee for a vendor, double-click the guarantee on the list. The Chart of Accounts Entry dialog box pops up. Enter your chart of accounts (CA90) and click the Enter button on the bottom-left side of the screen. The Maintain Accounting Configuration: Special G/L – Accounts screen is displayed. Enter G/L reconciliation account 21300 in the Recon. Acct field and G/L account 196400 in the Special G/L Account field. Save your work.

The final step in this exercise is to define accounts for automatic offsetting entries for customer and vendor guarantees.

Define Accounts for Automatic Offsetting Entry

By defining accounts for automatic offsetting entries, you are simply specifying the G/L accounts that the system will post the offsetting entry to for special G/L transactions. These are based on account type, special G/L indicator, chart of accounts and reconciliation accounts. Follow this menu path: IMG: Financial Accounting (New) Accounts Receivable and Accounts Payable Business Transactions Postings with Alternative Reconciliation Account Other Special G/L Transactions Define Accounts for Automatic Offsetting Entry. Or use transaction code OBXS.

The Enter Your Chart of Accounts dialog box pops up. Enter your chart of accounts ID in the Chart of Accounts field. Confirm your entry by clicking the Enter button to proceed to the Configuration Accounting Maintain: Automatic Posts – Rules screen. Click the Account Type/Special G/L Indicator checkbox. This setting allows the system to automatically post special G/L transactions to the appropriate special G/L accounts. When you click the Save button at the top of the screen, the Configuration Accounting Maintain: Automatic Posts – Accounts screen appears. This is where you assign the G/L accounts for the automatic offsetting postings.

Use the information in Table 16-1 to update the Account Type/Special G/L Indicator and Account fields (Figure 16-12).

Click the Enter button on the top-left side of the screen and save your configuration.

Summary

This chapter looked at special G/L transactions in detail by comparing special G/L transactions with the normal G/L transactions. It explained various forms of special G/L transactions covered in SAP ERP, such as down payments, bills of exchange, and guarantees. You learned about the technical factors they belong to (noted items, free offsetting entry, and automatic offsetting entry). You also learned how to configure down payments (down payment made, down payment received, and down payment request) and how to check the properties of standard down payment settings supplied by SAP to see if they meet your requirements. You also learned how to define tax clearing accounts for down payments and learned about the specifications of the accounts special G/L transactions are posted to.

Finally, you learned what a guarantee is. You learned about alternative reconciliation accounts for customers/vendors and defined accounts for an automatic offsetting entry.

The next chapter explains how to create vendor/customer master records, post invoices and credit memos, hold and park documents, post incoming and outgoing payments, post down payments, display balance/line items, print correspondence, execute dunning notices, process manual outgoing payments/automatic payments, and perform cash journal postings.