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!

This Blog continues to grow in popularity because YOU are sharing this Blog address. Please keep sharing! If you have a topic I can address, let me know. Let’s see if we can come up with an anwer!

IBC Education Store now Open!

These are good friends of mine. Their Organization ALWAYS produces the best SAP service and Instructors available anywhere! Bar None!
IBC is excited to announce the roll out of the IBC Education Store which can be found at https://www.ibcllc.com/course-catalog/.  Through our close partnership with the SAP Authorized Education Partner program, IBC offers the highest quality educational experience to our customers. Whether a customer is looking for a public class, virtual class or computer based product, the IBC Education Store is the place to get it all. The store offers educational products for all of SAP’s solutions including the SAP Business Suite, Business Objects, HANA and Sybase. There are six primary education offerings: classroom, virtual classroom, eLearning, Subscriptions, eAcademy and Online Knowledge Products.

“We are incredibly proud of what has been accomplished to bring this vision to reality. Many months of hard work went into the creation of this new channel. While IBC has been providing most of these products for years, the Education Store will provide our customers a simple and user friendly mechanism for identifying and purchasing the education they need.” Todd Barber, Managing Partner, IBC.

Integrated Business Consulting, LLC (IBC) is a Certified Small Business founded in 2003 with the goal of providing the most talented Enterprise Resource Planning (ERP) functional and technical experts in the Commercial and Federal industries. IBC has extended into other focus areas including State & Local Governments, Retail, Transportation, High Tech and Aerospace & Defense. IBC provides consultants with exceptional knowledge and experience in multiple ERP packages (SAP, CGI Federal’s Momentum Financials, and Oracle E-Business Suite), Business Intelligence, Quality Assurance/IV&V, and Management Consulting. Additionally, IBC has been an SAP Authorized Education Partner since 2010. As SAP’s primary provider of instructors since 2007, IBC has the largest staff of certified instructors in the program.

An SAP Training Thought before SAPPHIRE!

This morning, I was speaking with someone who had just started a new job and they were overwhelmed by the number of new products she had to supply and price for her Customers.

I reminded her that over the last 20 years, my attendees of SAP Courses have said usually on Monday afternoon:

“I will never get this”

“It is too complicated”

“There is too much to learn”

And so on.

On Friday of class, while they are zipping through some exercise, or building some freelance example, I remind them where they were on Monday and I usually say…”This is why they call it Training!”

Don’t forget that! I am also reminded of what I have been told is an old Indian proverb: You may eat an elephant, but you must do so one bite at a time!

I told the person that we should have several follow-up calls, but esp. one in 6 months or so and see if she still feels as frustrated.

I think she will be just fine.

Please keep writing with your Training and SAP Reporting questions. I answer them as quickly as I can. I am teaching an SAP Advanced Fianancial Configuration class next week so I might be a little slow getting back to you, but don’t give up! I will return your message!

By the way, there is a ton of valuable information and contacts to be made at SAP SAPPHIRE and ASUG meetings in May! Make a point to attend!

No reason to reinvent the wheel!

Inital Posting:SAP Training

Congratulations!

Part of the adventure of accepting an invitation to take part in an SAP Project is discovery. By including a search for the best SAP information by heading to the web, you have taken that important step.

Introduction.

My name is Stuart Welch; I live in the California desert, approximately thirty miles south of Palm Springs California in a town called La Quinta. My family chose La Quinta California because I was traveling with SAP nearly 75% of each month. As long as we located a home with a lower cost of living, downsized our home (2 out of 3 of my sons were either just completing college or had finished), a location with a good Airport facility and a low incidence of crime, we were well on our way! La Quinta California fit the bill.

I was employed by Prime Computer who purchased Computer Vision in the late 80’s. One of the challenges was to integrate these two sizable companies, both with an international presence, reduce the number of systems world-wide and establish a single version of the Truth. I was asked to join the SAP Worldwide roll out in 1992. The Project Team completed our SAP Training, set up a SAP Configuration War Room in Utrecht Holland and after several months of teeth gnashing and “thinking outside the box”, we went live between our US Facility, a Holland based Distribution Center and several European office locations.

I joined the Training staff of SAP Education in early 1994 and set up an early office in Waltham Massachusetts. I focused on SAP Finance and SAP Reporting. I later was certified in Waldorf Germany in SAP Business Warehouse. I earned the title of first SAP Platinum Consultant in the area of SAP End User Training and then SAP Reporting. I rejoined SAP Education as an SAP Platinum Instructor until the Boston Training facility was closed down following 9/11.

Almost immediately, SAP Education, through their SAP Education partner IBC, re-iniated contact and I have trained for another ten years as an Independent Instructor. I have also worked with many SAP Projects as a Training Consultant including the IRS and the AMTRAK SAM Project.

I learn something every time I lead a class. One lesson for example is that unless an SAP Client is willing to take the necessary steps to properly train their Project Team and the User Community, that SAP Project is almost certainly doomed to failure. Time after time, I have heard horror stories of Users leaving their office on Friday night only to find new unfamiliar SAP transaction screens on Monday morning.

I will cover additional lessons learned in some future postings.

Thank you and please feel free to comment!