Accounts Receivable (A/R)

Question 1

What’s the difference between **residual payment **and part payment methods of allocating cash?

Answer 1

These are the two methods for allocating partial payments from customers.

As an example, Invoice A123 $100; the customer pays $60

Partial payment: The $60 offsets the invoice, leaving a remaining balance of $40

Residual payment: The full invoice is cleared for $100 and a new invoice line item is booked for the reaming balance of $40

Question 2

What are the correspondence types in AR/AP?

Answer 2

Correspondence types are different outputs which can be printed and sent to your business partners based around either vendor or GL information

Popular correspondence types include customer statements, payment notices, and line item lists.

Within most common AP/AR functions (such as **Display vendor line items) **below there is the option to generate correspondence requests.

At the end of each working day these can be printed together as a batch and sent out

Question 3

What is dunning in SAP?

Answer 3

Dunning is the process by which payment chasing letters are issued to customers. SAP can determine which customers should receive the letters and for which overdue items.

Different letters can be printed in SAP depending on how far overdue the payment is; from a simple reminder to a legal letter

The dunning level on the customer master indicates which letter has been issued ot the customer

Question 4

What are reason codes used for in the Accounts Receivable module and what are the factors to be considered in their configuration?

Answer 4

Reason codes are tags which can be assigned to explain under/overpayments during the allocation of incoming customer payments. They should not be confused with void reason codes used when outgoing checks are generated

During configuraiton the following are determined:

• Whether the items booked with these reason codes are to be flagged as disputed items for the purposes of credit management (disputed items do not increase a customer credit exposure)
• The type of correspondence (if any) to be generated for this reason code as a result of the under/over payment
• Whether a seperate line item should be created to charge off the payment differences to a seperate G/L account