How do you write off a Bad Debt in SAP Accounts Receivable?

Every class, someone asks “How are we supposed to write off Bad Debt or unpaid Receivables in SAP FI?”

Tough question. Should be easy, but….

With the Individual Value Adjustments (IVA) in SAP, the transaction allows the user to change the reconciliation account to a Uncollectible Reconciliation Account until it is settled or a credit is issued and matched to the unpaid item. Well I think that is how they use the functionality in IAS or IFRS countries of Europe.

I seem to believe, our North American Accounting office’s accrue Bad Debt as some factor each month or quarter end as maybe something like a periodic percentage of Sales. The Accounting Manager bases that accrual amount on some historical bad debt expense.

Documents seeking approval circulate through an Enterprise allowing the write off and then someone says: How do we write off this Bad Debt?

I thought I have suggested is to first create a new document type, oh something like “BD” for maybe Bad Debt. Post the credit to the customer’s account (I will let you figure out what you should debit and credit) but then use the Account Clear transaction and clear the Bad Debt Credit against the unpaid Bad Debt item(s).

Sounds easy enough.

I prefer creating the accrual posting to the Bad Debt Accrual; create a new BD document type. Then use the Incoming Payment Transaction in Accounts receivable. Put in your new Bad Debt Doc type in the transaction header, use the Bad Debt EXPENSE account (instead of where you would normally put in your Bank G/L account number and put in the amount of the total write-off. Perform the posting as normal. Maybe even get fancy and use a little quick text to indicate that this is a Bad Debt Write off so there is no confusion! Save and Voila!

At the end of the month, search for your SAP doc types “BD” (maybe a Document List from FB)# as a selection and there is your total monthly or quarterly bad debt write off totals!

Post your accrual against the Bad debt expense as an adjustment (Please use something other than doc type SA) and you have a neat, clean bad debt write off with a nice audit trail and even a few reports you can run to recap your Bad Debt history.

If you have any other thoughts on how you would write it off, share and let us know!

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Changes to the SAP World? Do we really even need End-User Training anymore? Really: We have the cloud…Doesn’t that eliminate the need to train all of those transactional users?

Dear Reader,

Just maybe I am confused here. I posted an article on SAP and it’s future in the cloud.

They chatted about HANA, and trillions of bytes of info and clouds and hackers: but was there ever a mention of the uses?

Will someone still place a Sales Order, fulfill a purchase requisition, post an adjusting journal entry, create a production order?

Did anyone talk about what happens to the thousands, no millions of everyday users that create these transactions in SAP that are stored in these clouds? Where did everyone miss the boat that for every one project person I train, there are anywhere between a dozen and a hundred people just waiting to figure out how this works…How do they do their job?

At one time while I was in the SAP Platinum Consulting Group, I was the ONLY Platinum Consultant representing SAP End User Training and SAP Reporting. What is with that?

I will never forget the day I received a call from a large telecommunications company and with my little re-printed form in hand, I asked this question: How many end-users do you plan on training.

Their answer was simple but I fell off my swivel chair when they said calmly approximately 100,000.

I asked to put them on hold and went into my boss and said “We have a problem”

And when they replaced me with another entire firm, none of their “Trainers” had ever even run a single SAP Transaction.

That was a dozen years ago and every time I teach a class, I hear the same story over and over. I realize that SAP is a software developer first and foremost and an Implementer as required, but it seems that NO ONE has even attempted to do a satisfactory job at providing END USER TRAINING.

Whose is to blame? Are Enterprises in too much of a hurry to get SAP running? Are the End User Trainers falling short or are they overwhelmed?

Or maybe with the article I put in the previous post, all of my whining about training is past history and just not required any longer. Somebody let me know!

We know what this means to SAP in the Clouds, but what happens to the users on the ground?

SAP Takes It All to the Cloud

By QUENTIN HARDY

SAPVishal Sikka, of SAP’s executive board, was among those overseeing the rollout of a cloud-based product providing companies with fast computing and data retrieval.

SAP, the German software giant, is making one of the largest pushes into cloud computing yet seen from a large incumbent company. It may even be destroying its own business, in order to build for a new one.

SAP is famous for developing enterprise resource planning, or ERP, software. ERP is used to control complex manufacturing, run corporate functions like financials, or manage a company’s systems of supply. A few years ago SAP introduced HANA, a product that combines fast computing and data retrieval to better analyze how well a company is working. The product has been a big hit, and SAP has been proclaiming it the company’s future.

On Tuesday SAP said it would offer HANA as a cloud-based product, providing companies with access for the cost of a license. Prices were not disclosed. SAP has established a network of seven data centers around the globe to support the endeavor, a company official said, and will begin by deploying 30,000 computers for the network.

“We will do cloud-based ERP on a massive scale,” said Vishal Sikka, a member of SAP’s executive board and one of the people who oversaw the project. Of SAP’s regular product, he said, “At some point in the future, complex implementations should go away. All of our products are moving to HANA.”

SAP, along with companies that have agreed to test the product, already has 750 terabytes of data in the system, enough data to fill 750 million good-sized books. The company expects to have twice that amount in the system by the end of the year.

That probably is not all that much data, compared with the amount SAP touches the old-fashioned way, with conventional computer servers inside companies, but it is a decent start. As SAP builds the trust of big customers with its cloud, Mr. Sikka said, SAP will become a giant.

“We have single customers running projects that are bigger than the entire Salesforce.com cloud,” he said.

SAP has already been running both cloud and software as a service, or SAAS, projects, thanks to its acquisition of two companies, Ariba andSuccessFactors. With HANA in the cloud, however, SAP is moving much more into offering insight online, either directly to its customers, or as a service to end-users.

Mr. Sikka said SAP served some 220 utilities globally, who reach about 2.5 billion customers. The utilities could let the customers use HANA to model how much they were spending, and finding ways to cut their bills. “We realized we could do that for them with 2,000 servers,” he said.

Other uses of the data analysis tool might include real-time understanding of online customers, financial risk analysis or rapid insight into geologic information for energy companies, he said.

If SAP follows through on a fast build out to cloud computing, it could create some tension with Amazon Web Services, currently an SAP partner. AWS has recently made it clear that it wants to host a lot more corporate computing in its giant cloud.

And, as usual over the last couple of decades, the move will be viewed in terms of competition with Oracle, which is operating its own cloud services, but also offers a lot of servers and software for customers to buy and use inside their companies.

“Oracle – what can I say?” Mr. Sikka said. “The future is in open clouds, not proprietary hardware.”

11 Comments

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  • UnBelievable
  • Houston, TX

    And the clouds run on what? Vapor. I respect SAP and how they compete against Oracle but statements like that temper my enthusiasm for the company.

  • Priscilla Berry
  • Milwaukee, WI

    SAP does not specify just how they are going to provide Hana as a ” cloud-based product.” Are they going to rewrite Hana as a multi-tenant Native Cloud tool? Or are they just going to host it in the cloud as a Legacy Cloud tool?

  • maxvox
  • Rochester, NY

    That doesn’t excuse illiteracy. I’m a technical narrator and have corrected the usage many times. I’ve never been overridden by a client.

  • on-line reader
  • Canada

    When you cut through the marketing hype, it sounds like a return to the olden days of “Time Sharing Bureaus”. What the article doesn’t make clear is whether Company “A” will have any sort of access to the data from all the other companies it is sharing the Cloud with. 

    If Company “A” only can access its own data, you have to wonder if Company “A” would be better off hosting its own servers, or going with a generic provider. 

    And, of course, there are other issues such as privacy. A lot of Canadian companies/organizations, for instance, do not want their data hosted on a server in the U.S. because the privacy laws in the U.S. are a lot weaker than those in Canada.

  • Samir
  • Singapore

    Is it best for SAP to “buy” than “build”. “Big brotherly” statments on SFDC are good; It may not sell anymore as SFDC consumers simply love it; Its best to look out and see what’s working out there?? Anything build internally (minus ERP) had not seen any real value, mate.
    I see signals of a confused strategy….and usual “late” catch up over Oracle.
    Welcome “Big brother”. Start buying working innovations out there…..
    You have a lot of free cash. buy revenue every quarter…..

  • Jonathan
  • NYC
  • Verified

    Yes, and when hackers break in and see the undisclosed real-time financials of publicly-traded companies, what happens then?

    • Lois Ginter
    • Madison, WI

      Not to mention employees’ SocialSecurity numbers, home addresses, and bank account numbers.

    • DipB
    • San Francisco

      So hackers cannot break into financial institutions, firewalled computer networks, government databases ? You guys must be living under a rock. There have been many high profiled hacking of heavily firewalled computer networks including defense departments, banks, sony playstation servers. Cloud computing actually provides higher level of security by pool security resources and providing the highest level of encryption at the data center level.

  • maxvox
  • Rochester, NY

    The caption under the photo on the business page should read “on premises”, not “on premise” software. Resident software is on the business’s premises, or property.

    • maxvox
    • Rochester, NY

      Update: Kudos to The Times for eliminating the erroneous content.

    • ochowie
    • Ohio

      Unfortunately, on premise the industry term.

SAP needs more Training, not less!

SAP needs more Training, not less!

It is probably not my business. Well, of course, it is not my business, but SAP has decided to lay off more Instructors. And Senior Instructors at that. I am guessing we will be stuck with newer people with less SAP experience.

But is that so important? They sell, you buy it, change some names and off you go. Without training, I think SAP Customers will use about 10% of the power in their Enterprise hands. It is just like that new car with 50 buttons and you can use 6 buttons to make the car run. A new amplifier (do they still make those?), with 50 buttons that you have no idea what you can do.

My position is that the Project Team should be chosen from my best, isolated from the day-to-day operations and allowed to learn SAP. Then, with the help of strong SAP Consultants, together they set up an SAP Environment. Train all the Users to put SAP to the test and use it.

Then after everyone knows what SAP can do, after they know the other 90% of what this incredible SAP tool can bring to the Enterprise: tear it down and then set it up correctly. Implement the other 90%, once you know what it can do.

I am not naïve but I realize how little of SAP people actually utilize. If an Enterprise utilized as much of their 10 million dollar investment in SAP as they do in the macros of their 300 dollar Excel worksheets, Enterprises would explode with the ROI they would receive.

I have often thought about starting a group of Consultants and Trainers who would go in AFTER an Enterprise went “live” on SAP and then go about setting up the rest of the system. And with the Trainers on hand, on-going Course Instructions would keep Users informed of the latest enhancements to their work environment.

Think about just how little of the SAP tool you have implemented and how important Project and User Team training can be. Interview everyone you bring in to implement and train in your new SAP world. Call ASUG for suggestions. Attend SAPPHIRE.

Hey, if you are looking for some PRIME SAP Instructors to bring into your Project, now is the time to grab them up. In the days to come I will ask some to put their information here.

Do your project the greatest jutise by finding the best Instructors you can afford. You will be more than rewarded. Then you can consider your SAP Mobiles and HANA and Z programs and other fancy sexy SAP. Let’s get the house built first and a strong, strong foundation.

As you, I look forward to your comment and please share this little blog post!