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Sale using bank guarantee

Former Member
0 Kudos

Hi All,

How to map bank guarantee in SAP.

How to map the below scenario:

Customer submits a bank guarantee for Rs 100000 and has credit limit for 50000.

Total credit limit is Rs 150000.

Customer places an order for Rs 75000 and defaults for the payment.

How SAP will use the bank guarantee for the default payment.

If after realisation of BG a new BG is issued by bank as Rs 50000 only.

How to map the new BG in system for customer.

Thanks in advance

Regards

MKS

Accepted Solutions (1)

Accepted Solutions (1)

Former Member
0 Kudos

Hi Manish,


Please follow the below process to complete the requirement


Process

  • Now let’s see how this works by taking an example into consideration

Example:  A new customer”13119” was created with credit limit 50,000 INR. Therefore my Credit Master (FD32) will look as follows. No sales value is assigned yet as no sales order is created in the system


  • If I Create a sales Order for this customer below 50,000 INR, system will allow me to create the sales document without any problem. But if my order value exceeds 50,000 INR System will block the sales order using the credit management component

  • In this case, it is not possible to deliver this sales order as it is credit blocked. Now the credit master looks as follows


  • But if customer provides a payment Guarantee ( BG) we should be able to process the sales order, as payment is guaranteed by the Bank.

Example: Let’s say customer is providing a payment guarantee worth 100000 INR, we need to create a financial document in the system to represent that value and attached into the sales document.

Please note, this financial document will not change the credit limit of the customer neither it will post any value into FI.

  • As soon as the financial document is attached to a sales order, system will not consider that sales order value for credit calculation. It will be totally handled under the financial document management component

Create financial document:

Tcode: VX11N

FOR BG

  • In the Create Financial document screen, enter the details like
      • Financial Document category
      • Financial Document Type
      • Company Code
  • Click Enter
  • The following Window will be displayed
  • Enter the below details
  • Sold to Party
  • Ship to Party
  • Bank Country
  • Bank Key
  • Financial Document Value,
  • Currency
  • Payment Terms

  

  • Click on Dates/Delivery dates and enter the below fields
  • Opening Date
  • Validity End Date


  • Under the” Banks” tab we can maintain Opening bank and Negotiating bank etc.. as shown above
  • Click on “Status” tab
  • Under the tab “Status” we need to maintain the relevant status of the financial document.
  • The following window will be displayed

Example: In order to use the BG Document in Sales Orders, we need to have the status “D - Document is is available and can be used” attached to the document

    

Save the financial document

assume financial document created  "82"

Using Payment Guarantees in Sales Orders

  • Now we can use the financial document (BG) in sales order (Header or Item) In the previously created sales order, we can go to Header or Item level Billing Tab
  • Attach the relevant BG document to the sales order line item

  • Now we should be able to save the sales order without blocked by the credit management (As payment is guaranteed by the bank)

  Now we look back to the credit master record of the customer, it will be as follows(Compare previous FD32 screen with below) This is because my sales order was covered by BG #82, and therefore credit management component is not taking the value into consideration


  • Now if we look the financial document master, we will be able to see the usage of the document against sales orders.

We can view the same in graphical from as well

NOTE: User can decide whether a particular sales order is covered by a BG or Not.

Example: If customer place another sales order (Which is not covered by BG), then based on the sales order value, it will be blocked/unblocked by the credit management.



Hope this will helpful....


Thanks,

Anil.G

Former Member
0 Kudos

Hi Anil,

Thanks a ton..I will check the above solution in my system and get back to you.

Regards

MKS

Answers (1)

Answers (1)

moazzam_ali
Active Contributor
0 Kudos

Hi Manish

I think this is LC process. You know financial document concept in SAP SD? We create this with VX11N. Please read some threads and SAP help documents on this and come again with your thoughts on this. There is lot of information available in Google on this.

Thank$

Former Member
0 Kudos

Hi MoazzaM,

Thanks for your reply.

LC process i have not worked but read a lot on google.

I have a specific requirement to link the bank guarantee value in case of default payment cases.

In case of default payment bank guarantee is consumed and to get the whole process to materialise with bank it takes 7 to 10 days. During thid time sale to that customer is not secured.

Bank provides a reinstatement letter for new BG value around 15 days later to above period.

So it takes around 20 days after the credit days expired. During this time sale is on risk.

The new BG value can be less than the original value.

How to map the above scenario within SAP SD is my issue.


I hope  had clarified.


Regards


MKS

moazzam_ali
Active Contributor
0 Kudos

Hi

Since your company is not sure about the value of new BG which I am taking as LC so I think your company should stop doing business with that customer. This is for two reasons.

Old payment of that customer is already defaulted.

Customer has not presented any new BG/LC yet.

What you have studied about financial documents is the standard process and you have to convince your client to use SAP best practice. You can't convince or modify SAP as per client's scenario all the time.

I am sorry if I understood wrong but this is what I understood from your explanation.

Thank$

Lakshmipathi
Active Contributor
0 Kudos

You are talking about Revocable Letter of Credit which, I don't think, any Business are encouraging this.  Even all Bankers are insisting on an Irrevocable Letter of Credit against which, the issue whatever you had indicated would not occur.  Ensure that your client are transacting with Irrevocable Letter of Credit only.

G. Lakshmipathi

Former Member
0 Kudos

Hi MozzzaM,

Thanks for your reply.

I will rephrase.

Since customer is defaulted; BG is submitted in bank.

After BG is realised in company revenue.

New BG is issued by bank that can be of the same as previous value or a value lower than that.

How to link this new BG value with Credit Management.

I am searching the standard way to adjust the Credit Limit with the new BG value which is given by bank after the default payment is realised.

Hope I am able to clarify.

Regards

MKS

Former Member
0 Kudos

Hi Lakshmi,

Thanks for ur reply.

Can we think of a standard solution for below.

Since customer is defaulted; BG is submitted in bank.

After BG is realised in company revenue.

New BG is issued by bank that can be of the same as previous value or a value lower than that.

How to link this new BG value with Credit Management.

I am searching the standard way to adjust the Credit Limit with the new BG value which is given by bank after the default payment is realised.