1. Tell me about FI Organizational structure?

Ans:

Client

Operating Concern

Controlling area1 Controlling Area 2

Co. Code 1 Co. Code 2

Bus area 1 Bus area2 Bus Area3 Bus Area 4

2. How many Normal and Special periods will be there in fiscal year, why do u use special periods?

Ans: 12 Normal posting period and 4 special periods are in the fiscal year which can be used for posting tax and audit adjustments to a closed fiscal year.

3.Where do you open and close periods?

Ans: PPV is used to open and close the periods based on a/c types considering GL Accounts. Tr. Code. OB52.

4.What do you enter in Company code Global settings?

Ans: 4 digit Alphanumeric key. Name of the company City Country Currency Language Address

5.What is document type, and what does it control?

Examples.Ans: Document type is nothing vouchers containing line items. Several business transac! tions can be identified within a particular document type. It controls the document number ranges. It controls the Header part of document IT controls the line item level of the document Helps filing of physical document

6. What is posting key and what does it control?

Ans: These are special classification keys. Two character numerical key it controls the entry of line items. Posting key determines Account type, Debit/credit posting, Field status of transaction.

7. What is field status group, what does it control?

Ans: FSG is mandatory field in ! GL Creation. You use this field to define which fields are displayed when you post business transactions to a G/L account. A field may have one of the following statuses. - Suppressed - Display - Optional - Required

8. What is chart of account and how many charts of accounts can be assigned to a company?

Ans: Chart of account is a list of all G/L accounts used by one or several company codes.For each G/L account, the chart of accounts contains the account number, account name, and the information that controls how an account functions and how a G/L account is created in a Company code.You have to assign a chart of accounts to each company code.

This chart of accounts is the Operating chart of accounts and is used for the daily postings in this company code.You have the following options when using multiple company codes. You can use the same chart of accounts for all company codesIf the company codes all have the same requirements for the chart of accounts set up, assign all of the individual company codes to the same chart of accounts.

This could be the case if all company codes are in the same country.In addition to the operating chart of accounts, you can use two additional charts of accounts If the individual company codes need different charts of accounts, you can assign up to two charts of accounts in addition to the operating chart of accounts.

This could be the case if company codes lie in multiple countries.The use of different charts of accounts has no effect on the balance sheet and profit and loss statement. When creating the balance sheet or the profit and loss statement, you can choose whether to balance the co! mpany codes which use different charts of accounts together or separately.

9. What does definition of a chart of account contains?

Ans: chart of account key Name Maintenance language Length of the GL Account Number Controlling Integration Group chart of accounts (Consolidation) Block Indicator.

10. Can one COA be assigned to several companies?

Ans: yes. One COA can be assigned to several companies.

11) What is account group and what does it control?

Ans: Account group determines which fields you can configure on the G/L master record. It is necessary to have at least two one for B/S and another one for P&L a/c. It controls the Number ranges of GL A/C. The status of fields of the master record of GL belongs to company code area.

12) What is reconciliation account; can you directly enter documents in that a/c?

Ans: When you p! ost items to a subsidiary ledger, the system automatically posts the same data to the general ledger. Each subsidiary ledger has one or more reconciliation accounts in the general ledger. We can’t use reconciliation account for direct postings.

13) How do you control field status of GL master records and from where do you control?

Ans: Field status variant is maintained all FSGs.

14) What are the segments of GL master record?

Ans: - COA Segment A/C group Nature of account Short text GL a/c long text Trading partner Group Account Number - Company code segment Account currency Tax Reconciliation a/c for a/c type OIM,LID,FSG.

15) What does Field status group assigned to a GL master record controls?

Ans: It controls the account assignments that are made to the account. Specifically the field status group controls whether postings to cost centers, internal orders, profitability segments and so on are required, not allowed (suppressed), or optional.

16) What is Country and operational chart of account? Why do you use group chart of account?

Ans: Operational chart of account – Day to day activities It is mandatory. Country COA – It’s used for legal specific requirement of each country. It’s additional and optional. Group COA used for consolidation of Company codes. This is for group consolidation purpose.


17) What are all the segments in a Customer/Vendor master record?

Ans: Segments in Customer Segments in Vendor - General Data segment General data segment - Company code segment Company code segment - Sales area segment Purchasing organization Segment.


18) What is open line item management? What do you mean by clearing open line items?

Ans: Open item management is further reconciliation function. OIM allows you to display the open and cleared items and amounts in an account. OIM should be used if an offsetting entry is made for every line item posted in the account. The a/c is reconciled and cleared against another account. Ex. Salary clearing account and GR/IR Clearing account.


19) What is residual payment and part payment?

Ans: Residual payment it clears original invoice with incoming amount and create new line item for remaining outstanding amount. Partial payment it leaves the original invoice amount and creates new line item for incoming amount.


20) What is internal and external number ranges?

Ans: Internal Number Ranges: Doc. No will be provided by the system automatical! ly in serial order allotting the next available progressive number. The number must be in numerical. External Number ranges: Doc. No will be given manually by the end user. System will not lock no automatically in this case. User can pick the number randomly. Number may be an alpha numeric.

Difference between MTS and MTO

MTO - Make to Order

Make-to-order production with capacity checking enables vendors to trigger production of a requested product as soon as a sales order reaches the system. An automatic process checks machine capacity, schedules production, and determines the requested product’s availability date.

This enables vendors to make immediate, reliable offers and commitments to their customers for the requested quantities and delivery dates. While particularly well-suited to high-tech manufacturers and makers of industrial machinery and equipment, this method also addresses the requirements of other make-to-order manufacturers.

MTS - Make to Stock

Make-to-stock production is designed for manufacturers that usually operate on the make-to-order model – configuring their finished goods after sales order entry – but that nevertheless manufacture the components of the finished goods in a make-to-stock process.

The SAP best practice definition describes how manufacturers can accurately predict the future demand for components, communicate with suppliers of critical parts, and plan the production and distribution of finished goods, all based on actual material and capacity restrictions.

Comparison of FI and FI-CA

FI-CA: The business partner is not confined to a role on the debit side or on the credit side. This role can change in the course of time. For example: with a supplementary pension public sector there is the contribution phase and the pension payment phase.

FI: A business partner is created as a customer or vendor, which fixes its role and the functionality available with it at the outset.

FI-CA: The contract account does not automatically exist in a one-to-one relationship with a business partner and several other partners are also permitted for one account.

FI: It is only possible to have several accounts for a business partner with separate account agreements, by creating parallel customer and vendor master records.
There is no possibility of keeping one account for several business partners. A common view to the accounts of several partners is only supported in subareas (e.g. via the worklists).

FI-CA: The document of the contract accounts payable and receivable represents an all but complete business transaction relevant to accounts. It is not necessary to generate several documents if different company codes or posting data are addressed in this business transaction.
The document does not directly serve to reconcile the G/L account transaction figures.

FI: The FI document only reflects one segment of a business transaction which affects a company code and a posting date. The FI documents give a direct explanation of the general ledger transaction figures.

Information on FI-CA (Financials and Contract Accounts)

The term FI-CA stands for “Contract accounts receivable and payable.“ FI-CA contains the range of functions needed by different industries or projects for their accounts receivable and payable management. Currently, these industries include public sector, utilities and telecommunications companies.

The common factor among these companies is a multitude of customers, which means even more open items. The number of customers in each system may go into the millions, and the number of open items several times that.

Such volumes of data can be processed by FI-CA because the memory space required for storing open and cleared items was reduced and critical activities such as posting, paying, dunning and returns processing were accelerated.

The FI-CA documents provide for the current account assignments from the following application components:

• The general ledger. Here it is the company code, business area, G/L account.
• The overhead costs Controlling and the Profitability Analysis (CO-PA). Here it is cost center, order, project, Profit Center, profitability segment.

The documents update FI-CA posting totals which are subdivided according to the account assignments named above. However, because the FI-CA documents often only differ from each other with regard to amount, business partner and contract account, a large summarization effect arises in the FI-CA posting totals. So experience from IS-U shows that several hundred thousand FI-CA document items meet on a few hundred totals records.

The FI-CA posting totals form the basis for generating G/L documents, via which not only the general ledger, but also, by transferring the corresponding Controlling account assignments, the different areas of Controlling are updated.
In addition to the account assignment characteristics of G/L accounting and Controlling, the FI-CA posting totals can be grouped according to a freely definable reconciliation key.

This reconciliation key is stored:

• in the FI-CA document header
• in the FI-CA posting totals
• in the document header of the general ledger document as external reference

This makes it possible to understand from which FI-CA documents a general ledger transfer document has been formed. This is a way in which, for instance, a reconciliation between contract accounts receivable and payable and the general ledger for a complete payment run, billing run or a given pile of FI-CA documents can be executed.

The FI-CA documents provide for the current account assignments from the following application components:

• The general ledger. Here it is the company code, business area, G/L account.
• The overhead costs Controlling and the Profitability Analysis (CO-PA). Here it is cost center, order, project, Profit Center, profitability segment.

Integration

The documents update FI-CA posting totals which are subdivided according to the account assignments named above. However, because the FI-CA documents often only differ from each other with regard to amount, business partner and contract account, a large summarization effect arises in the FI-CA posting totals. So experience from IS-U shows that several hundred thousand FI-CA document items meet on a few hundred totals records.

The FI-CA posting totals form the basis for generating G/L documents, via which not only the general ledger, but also, by transferring the corresponding Controlling account assignments, the different areas of Controlling are updated.
In addition to the account assignment characteristics of G/L accounting and Controlling, the FI-CA posting totals can be grouped according to a freely definable reconciliation key.

This reconciliation key is stored:

• in the FI-CA document header
• in the FI-CA posting totals
• in the document header of the general ledger document as external reference

This makes it possible to understand from which FI-CA documents a general ledger transfer document has been formed. This is a way in which, for instance, a reconciliation between contract accounts receivable and payable and the general ledger for a complete payment run, billing run or a given pile of FI-CA documents can be executed.

It is thus in a way a subledger of FICO. FI-CA, though not a complete subledger accounting system, it is always a component of an industry solution or a project solution.

FI-CA is first and foremost a component of the following industry solutions:

• Utilities (IS-U)
• Insurance (IS-IS/PP)
• Public sector (IS-PS)
• Tele communication (IS-T)

FI-CA mainly covers the functionality of those areas in which at least two of the industries reveal the same type of requirements. Individual requirements from exactly one industry are to be achieved as an industry solution on the basis of the FI-CA.

UNDERSTANDING LOCK BOX


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Payment advice Processing

Matching of customer open items	The lockbox program uses detailed information from the payment advice to automatically search and match customer open items. The document number on the payment advice is matched against the document number in the customer open item file. Therefore, accurate payment data is necessary for automatic clearing to take place.
Payment Advice Status	If the checks were applied or partially applied, the advice is deleted from the system after processing. If the check was unprocessed or placed on account of customer, the advice is kept on file for further processing.
Post Processing	The post process function entails reviewing the status of the checks applied through the lock box function. User must manually clear any checks that were on-account of customer or not applied to customer account. The Lockbox overview screen details the number of checks in each category. Depending on the status of the check, the user determines what needs to occur to apply checks. On account: If the bank keyed in the correct invoice number, the Lockbox Import Program posts the payment on account. In the post processing step, you access the payment advice and correct the document number and upon saving the changes, the post process function clears the open item, deletes the payment advice and sets the check status to applied. Partially Applied: Checks that are partially applied may require further processing. Ex: Check may have paid 5 invoices, but one was in correctly keyed. The first 4 invoices would clear. The payment amount for the 5th invoice would be put on-account and would have to be post processed to clear. Unprocessed: Any payment that could not be identified either by customer MICR number (check) or the document number would remain Unprocessed. Once the payment is researched and the customer and invoice is identified, it would be applied during post processing.

What configuration needs to be done?	Control Parameters: It determines the import format BAI, BAI2 & ANSI and the types of postings generated by the lockbox program. These control parameters are needed for importing lockbox file sent by bank. Posting Data: Company code, Bank Information, G/L accounts for posting and clearing, document types and Posting keys.
RFEBLB30 or FLBP transaction	Lock Box data, Processing parameters (Procedure & Algorithm) Account assignment (Profit center), output control and Mode of call transaction.

Understanding Lockbox

Difference between EDI 820 and 823:

In general EDI 820 formats will be used to send information to Vendor furnishing details of payment for his supplies. From business standpoint, EDI 820 information comes from customer as the business is vendor to its customer. In fact EDI 820 is not a lockbox format but can be used in place of lockbox for customer open item processing. This information however is not a real payment but only a remittance advice.

Where as lockbox format is an exclusive format that comes from bank confirming the payments received from customer. This is real payment information which got credited in business account at Lockbox /Bank. Besides this basic difference between these two formats some other differences can be summarized as under.

1. EDI 820 will have one to one information. Each customer will send remittance information to the business. EDI 823 format will have several customer information in one format.
2. Customer can not use EDI 823 format where as Bank can use EDI 820 format.
3. EDI 820 is only an advice but 823 is a payment.
4. Technical settings viz., Partner profiles, Basic type, Message type, function modules used in SAP are different between these two.
5. Level of information will be different. EDI 823 will have Total number of checks involved, total payment amount involved, break up of checks and amount per batch, per customer etc will not be available in case of EDI 820.

BAI vs. EDI in Lockbox:

Both the formats are acceptable and can be used in SAP for processing customer open items. However the earlier one is (BAI) is file based and the later format is (EDI) is idoc based. File based is batch mode and EDI is real time information. BAI can not be made as real time process but EDI can be made as batch process.

EDI technology requires mapping tool. It creates intermediate document holding the information for further process. On the other side BAI format doesn’t require this.

As far as processing and of clearing customer open items in SAP is concerned, whether the format is BAI or EDI system will follow same transactions. FB01 > FBE1 > FB05. In either of the case if information is not sufficient to clear open items, it is available for manual process.

Some additional advantages of EDI are:

• Data Accuracy
• Reduce Technical Complexity.
• Lowe Personnel needs.
• Accelerates information exchange.

LOCKBOX PROCESS - DATA FILE TO SAP OPEN ITEM CLEARING

What Bank will do?	Bank Receives the payments, create a data file of the customer remittance information and payment amounts, and deposit the checks into client bank account. On regular basis, Client company receives this data file for processing to update in their accounts.
What lockbox data file contain?	Depending upon the choice of services with the Bank, the lock box file will contain information viz., Customer name, Customer Number, Customer MICR number ( Bank routing and Account Number), Check amount, Invoice number, Payment date, Payment amounts and other information.
Lockbox Data Flow	As shown in the following picture, customers send their payments to a lockbox. Then bank collects the data and sends (either through EDI 820 and 823 formats) to R/3 users EDI server (standard Process). The server translates the message using as standard EDI interface into an IDOC (Intermediary documents) and sends it to the SAP Server.
What happens in SAP server	Once the message is received and stored in SAP table, a program is clicked (RFEBLB30 or FLBP transaction) to check the information stored in bank statement tables and create payment advices with Payment amount, invoice numbers and customer number.

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Understanding Lockbox

Objective of this document is to explain the meaning, purpose, advantages and disadvantages of the lockbox. This document also explains various types of formats that can be used to process the lockbox data.

What is a lockbox?

A company can create accounts called ‘lockbox’ accounts at its bank (or banks) that act as payment collection accounts for customer payments. The company then informs their customers that all open item payments for their accounts must be submitted to one of the established bank lockbox accounts. The bank collects these payments along with the customers’ remittance information that indicates what open items the customer payments intend to clear. Data entry clerks at the bank manually enter the information into an electronic file for transmission to the company to which the lockbox account belongs. These files are typically transferred nightly to the various lockbox owners (companies). The files adhere to one of two standard banking industry transmission formats: BAI, BAI2, EDI820 and EDI 823.

Advantages of Lockbox:

Lockbox process has several advantages. Some of them can be illustrated as under.

• Avoid Manual handling of checks
• Timely processing of Checks
• Easy reconciliation
• Reduction of manpower cost
• Avoid clearing Errors

What is BAI?

The standards for lockbox transmission files are defined by the Bank Administration Institute (BAI). Founded in 1924, the BAI organization is a partnership composed of its own BAI membership, a Board of Directors, various banking industry advisory groups and a professional staff. The organizational mission is “to help bank administrators achieve high levels of professional effectiveness and to help solve significant banking problems.” Activities include the definition of industry file formats, such as lockbox transmissions. BAI and BAI2 are the two defined lockbox transmission formats, however, BAI is considered ‘outdated’ by the BAI organization and is no longer supported (ie. standards are no longer updated or improved). Nonetheless, many banks still offer transmissions in the old BAI format.

BAI vs. BAI2?

BAI and BAI2 formats differ in their level of information detail. BAI does not separate out the incoming check line items by invoice subtotal reference. Instead, one check total amount simply has all invoices listed underneath it. Thus, in BAI format files, the entire check amount must match perfectly (or within configured payment difference tolerances) the total amount for all invoices listed. Otherwise, the entire check will enter into SAP as:

• an “On account” posting (if the payment and invoice totals don’t match), or
• An “Unprocessed” posting (if no customer account and documents could be identified from the transmission).
• In these scenarios, your Accounts Receivable cash application clerks will have to perform manual application to clear payments against open items on the proper accounts.

Conversely, BAI2 splits the check total into separate invoice references and associated payment amounts. Thus, within a large batch, BAI2 format files will allow a “Partially applied” status in which some identifiable payments within the check total will be matched and cleared, others will land on account. As a result, your ‘hit rate’ percentage of payment-invoice matching from each transmission is likely to be higher when using BAI2 rather than BAI formats.

Electronic Data Interchange:

Network transfer of structured electronic data from one computer application to another using standard message formats. EDI is described as the interchange of structured data according to agreed message standards between computer systems by electronic means. This standard format is nothing but a Set of rules, agreed upon, accepted, and voluntarily adhered to, by which data is structured into message formats for exchange of business and operational information. Lockbox related formats are Edi 820 and 823.

EDI 820:

The 820 Payment Order/Remittance Advice transactions can be used to make a payment, send a remittance advice, or make a payment and send a remittance advice. The 820 transaction can be an order to a financial institution to make a payment to a payee. It can also be a remittance advice identifying the detail needed to perform cash application to the payee’s accounts receivable system. The remittance advice can go directly from payer to payee, through a financial institution, or through a third party agent.

EDI 823

The 823 Lockbox formats are sent by bank as confirmation of payments received from customers of lockbox owner. EDI 823 format contains information like Bank details of lockbox service provider, total quantity of checks in each format transmission, total amount involved in total checks, number of batch involved ( batch represents maximum quantity of checks in each lot). Further break up like, customer name, customer bank routing number, customer bank account number, check number and amount, number of invoices paid, amount per invoice, discounts for each invoice, deductions if any involved and credit memos etc.

Information available in these formats are generally used for clearing customer open items in SAP depends upon the business requirement. Following EDI configuration is required to read the data from corresponding format and process customer open items.

Format	Idoc type	Message type	Process code
EDI 820	Pexer2002	REMADV	REMA
EDI 823	FINSTA01	LOCKBOX	LBX

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