Dunning Procedure in SAP S - 4HANA

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SAP Dunning For Dummies

SAP S/4HANA FI Dunning Procedure for Customer Outstanding Invoices
The SAP S/4HANA Finance (FI) module offers a sophisticated dunning process to streamline
collection efforts for overdue customer invoices. This automated system helps ensure timely
payments, improves cash flow, and reduces the risk of bad debt.
Configuration Steps:
1. Dunning Key Creation: Dunning keys act as classifiers for various dunning scenarios. You can
define them based on factors like customer risk category, invoice age bracket (e.g., 30-60
days overdue), or invoice amount threshold. These keys allow you to tailor the dunning
process for different customer segments or invoice types.
2. Dunning Block Reasons: Grant flexibility by setting up block reasons to prevent dunning
notices for specific accounts or invoices. This could be useful for temporary situations like
ongoing disputes or payment arrangements.
3. Dunning Procedure Definition: This is the core configuration element. You define a multi-
level dunning procedure (typically 1-3 levels) with escalating urgency. Each level
encompasses:
o Intervals: The number of days an invoice remains overdue before triggering the next
dunning level. This allows you to define a gradual escalation pattern.
o Dunning Text: Pre-defined message templates for the dunning notices, tailored to
the severity level. You can customize these messages to include specific details
about overdue amounts, late payment penalties, and potential consequences of
non-payment. Leverage this feature to craft persuasive yet firm communication that
encourages prompt action.
o Dunning Charges: Define any late payment penalties or interest on arrears that get
applied at each dunning level. This discourages late payments and serves as a
financial deterrent.
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4. Dunning Run: The dunning program is typically run periodically (e.g., weekly) based on your
company's credit and collection policies. It automates several tasks:
o Overdue Invoice Identification: The program scans open customer accounts to
identify invoices that have exceeded their payment terms based on pre-defined
criteria.
o Dunning Level Assignment: Using the configured dunning procedure, the program
assigns the appropriate dunning level to each overdue invoice. This ensures a
measured approach, with friendly reminders followed by progressively firmer
messages.
o Dunning Notice Generation: The program automatically generates dunning notices
tailored to the assigned dunning level. These notices typically include details like the
overdue amount, the original due date, new payment deadline, potential late fees,
and clear instructions for settling the outstanding balance.
Benefits of Utilizing SAP S/4HANA Dunning:
• Automated Collection Process: The dunning process significantly reduces manual effort
required for collection activities, freeing up staff time for other tasks.
• Improved Cash Flow: By prompting timely payments and potentially applying late payment
penalties, the dunning process helps accelerate cash flow into your business.
• Reduced Risk of Bad Debt: Early reminders and a structured escalation process help
minimize the chances of customer delinquencies escalating into bad debt.
• Enhanced Customer Relationships: Clearly articulated dunning notices combined with the
option to define block reasons for specific situations can help maintain positive customer
relationships while ensuring collection efforts remain effective.
Additional Resources:
While I cannot provide specific links, you can find in-depth documentation on SAP's Help Portal by
searching for "SAP dunning".
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For further insights into managing dunning cycles within SAP S/4HANA, consider searching for "SAP
S4 HANA Dunning Stages".
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1.1.1 Define Dunning Areas

In this step, you can define your dunning areas. Dunning areas are used if several organizational
units are responsible for carrying out dunning within one company code. These organizational units
are referred to as dunning areas. The dunning area can correspond, for example, to a profit center, a
distribution channel, a sales organization or a business area.
The individual dunning areas can use different procedures or the same dunning procedure.
• The dunning areas with the required dunning procedures are to be entered into the
customer or vendor master record if you use different dunning procedures.
• Otherwise, the system uses the standard dunning procedure. The dunning area is then
entered in the line item. The system enters the dunning area into the master record
automatically with the corresponding data.
Note
The use of dunning areas is optional.
Requirements
If the field for the dunning area in the line item is to be ready for input, specify in the company code-
specific specifications for dunning that you want to dun separately according to dunning areas. Also
read "Setting up dunning program".
Activities
1. Define your dunning areas if you want to use them.
2. Make sure that you specify for the required company codes that you want to dun
according to dunning areas .
3. Make sure that the required dunning areas are entered into the master records of the
business partners with the dunning procedures, if you use different dunning procedures for
the individual dunning areas.
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1.1.2 Define Dunning Keys

Define your dunning keys in this step. With the dunning keys, you can limit the dunning level of an
item. Define either instead of or in addition to the dunning key whether the items with a dunning
key are to be displayed separately in the dunning letter.
Activities
Define your dunning keys.
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1.1.3 Define Dunning Block Reasons

Short text
Define and maintain the reasons for a dunning block.
Use
The key for a dunning block can be entered in an item or in the account of a business partner.
Blocked items or accounts are not considered for the dunning run.
Business Context
Dunning is methodical communication with vendors and customers that ensures that certain
required activities are performed to clarify the settlement of customers and vendors.
Sometimes, accounts subject to dunning are to be exempt from the dunning selection and the
dunning run.
You can configure these options using a reason indicator that explains why the provider is skipped.
The block reason can then be entered in the master data for the business partner master record.
Activities
1. In your department, find out why items or accounts are blocked for dunning.
2. Enter reasons for blocking under a key in the system.
3. You have the following options:
o Create new entries
o Copy existing entries and create new entries
o Change the reason description of an existing entry
o Display an entry
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1.1.4 Define Dunning Procedures

Short text
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Define the control of the dunning program, for example, which dunning procedure is to be used for
dunning, or which dunning charges are to be levied.
Use
Enter the settings that control the dunning program. You specify the following:
• Which company codes to include in dunning.

You specify these company codes when configuring the dunning program.
• With which dunning procedure you want to perform dunning.
Dunning procedures are company-code-independent and determine the dunning interval,
the grace periods for the due date determination, and the number of dunning levels. You
can also set the dunning level as of which you want to list all due items from an account for
the creation of the dunning notice.
• Which dunning charges are to be levied.
You can either specify a fixed charge or have the system calculate the charge on the basis of
a percentage rate you specify.
• As of which net payment due date a particular dunning level is reached.
• Which dunning notice you want to send to your customers.

You define one or more forms for this purpose.
Note
An account is only included in dunning if it contains a dunning procedure. If you want to exclude an
account from a dunning run as an exception, you can set a dunning block for it.
Recommendation
Before defining several dunning procedures and forms, you should check whether you can fulfill all
your requirements using one dunning procedure and one form.
For the last dunning level, you should select Always dun? This ensures that items at this level are not
skipped.
You can store the header and footer texts separately for your dunning notices. If your letter paper
already contains these specifications, you can remove the windows for these texts in the form you
define using SAPscript.
Activities
1.
2. Find out which company codes to include in dunning. Specify these company codes by
choosing Environment -> Company code data.
3. Find out which dunning procedure should be used and whether several dunning
procedures are necessary.
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4. Define your dunning procedures.

o To create new dunning procedures, choose New dunning procedure.
o To maintain the dunning levels, choose Goto -> Dunning levels in the dunning
procedure. Enter the number of days in arrears for each dunning level. The system
proposes values, which you can overwrite.
o To maintain the dunning charges, choose Goto -> Dunning charges in the dunning
procedure. First enter the currency and then enter the dunning charges for the
different dunning levels. If you want to define dunning charges dependent on the
dunnable amount, also enter the dunning amount. If you want to define charges in
other currencies, choose Edit -> Other currency.
o To specify minimum amounts for dunning notices, choose Goto -> Minimum
amounts in the dunning procedure. Enter the dunning level and the minimum
amounts and/or the minimum percentage rates. You can also specify a minimum
amount for the interest calculation for each dunning level.
o To determine sort fields, choose Environment -> Sort fields in the dunning
procedure.
5. Find out which forms should be used for dunning.
6. Create these forms and specify one or more forms for each dunning procedure.
7. Make sure a dunning procedure is entered in the master records of the business partners
who are to be taken into consideration for dunning.
Further notes
For more information about the dunning program, see the document
FI - Accounts Receivable and Accounts Payable.
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New procedure
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SFP
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1.1.5 Assign Dunning Forms

In this activity you specify the forms you want to use for the standard dunning procedure and the
legal dunning proceedings per dunning procedure, company code, and account type.
If the form type specified here is not supported by the dunning application, an error occurs during
output. Please check whether the application supports the required form type.
Requirements
The dunning procedure must be configured. To do this, use the Set up dunning program activity.
Further notes
For more information on dunning, see the "Configuring the Dunning Program" section of the FI
Accounts Receivable and Accounts Payable documentation.
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Data preparation for a dunning procedure in SAP doesn't involve extensive master data setup, but
rather ensuring your existing customer and open item data is accurate and complete. Here's what to
focus on:
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Customer Master Data:
• Customer Accounts: Verify that customer accounts have accurate contact information,
including mailing addresses and email addresses. This ensures dunning notices reach the
intended recipient.
• Payment Terms: Ensure each customer account has defined payment terms. These terms
specify the due date for invoices and initiate the dunning process when payments become
overdue.
Open Item Data:
• Open Invoices: Review open invoices for accuracy. Ensure they reflect the correct amount
due, invoice date, and reference information.
• Payment History: Verify the payment history for each customer. Identify any inconsistencies
or irregularities that might impact the dunning process.
Here are some additional points to consider:
• Dunning Procedure Configuration: While not strictly master data, ensure your dunning
procedures are configured correctly within SAP. This includes defining dunning levels,
intervals between dunning notices, and the content of those notices.
• Data Cleaning: Run data cleansing routines to identify and eliminate any inconsistencies or
errors within your customer and open item data.
By ensuring the accuracy and completeness of your customer and open item data, you can
streamline the dunning process and improve collection efforts.
1.2 Preliminary Steps
1.2.1 Define Accounting Clerk
Purpose
In this activity, you add, change, or remove accounting clerks. Add the user testing this script as an
accounting clerk, so that the user is able to test the Dunning letter activities.
Log on to the SAP Fiori launchpad as an Accounts Receivable Manager .

Open Define Accounting Clerks (S_ALR_87003335). The Change View "Accounting Clerks":
Overview displays.
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Choose New Entries. The Overview of Added Entries view displays.

Make the following entries and choose Save:
Company Code: 1210
Clerk: < Any 2 alphanumeric characters>
Name of Accounting Clerk: <Any Description>
Office User: <Your user id or user id of Accounts Receivable Accountant>
Note Office User is a mandatory field.
You created a new accounting clerk.
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1.2.2 Dunning Procedure

This field contains the key for the dunning procedure to be used.
KNB5-MAHNA
1 Export Master Data Business Partners
for Master Data Specialist - Business Partner Data
The Export Master Data app enables you to export a selection of master data to a local file.
Key Features
The business object Business Partner is supported.
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Master Data Governance Consolidation
With this app you can run a process to consolidate and harmonize your master data. This includes
steps for standardization, matching, best-record calculation, validation, activation, and replication.
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Enter Invoice Without Sales Order
Purpose
In this activity, customer invoices are posted in accounting and journal entries are created.
Log on to the SAP Fiori launchpad as an Accounts Receivable Accountant.

Open Create Outgoing Invoices (FB70). The Enter Customer Invoice: Company Code # view
displays.
Choose Company Code.
On the dialog box that displays, enter or verify your company code (1210) and choose Continue.
Make the following entries:
Customer: <customer number>
Invoice date: <Today’s date>
Reference: <any>
Posting Date: <Today’s date>
Amount: <any> and EUR.
Currency Key : <co.code currency>
Calculate Tax : Selected
Choose the Payment tab and enter the following:

Bline Date : Today’s date
Payt Terms: 0001
Payt Meth. : <optional>
Scroll down and enter the following in the line item table:
G/L Acct : 41000400 .
D/C : Credit
Amount in doc. curr.: <Check amount that was entered in the basic data>
Tax Code : <Sales Tax Code>
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Continue in the Items table and for the Profit.segment column, select the field button and an
Assignment to a Profitability Segment dialog box displays.
Enter the following:
Customer: <customer number>
Profit Center: <any>
Choose Derivation Continue to close the dialog box.
Choose Post to save. Journal Entry is posted.
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1.1.1 Create Dunning Notices
Purpose
In this activity, you create and schedule a dunning run and print dunning notices to customers. The
activity is considered automatic as the system selects the overdue open items, determines the
dunning level of the accounts in question, and creates dunning notices.
This activity finds items to dun for all customers assigned to a dunning clerk, accounting clerk, and a
dunning procedure.
Two dunning procedures are provided:
● 1001 - Dunning notice every 14 days, 4 dunning levels
● 1002 - Dunning notice, 30 days after the invoice has been created
Prerequisites
● Maintain customer master data, role FLVCU00 Customer Fin Accounting, Company Code1210,
Customer Correspondence tab:
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• Assign dunning procedure: 1001

• Assign Accounting Clerk and Dunning Clerk (if different, Dunning Clerk has higher priority):
01
• Dunning block isn't set for customer
• There are invoices past due
● Ensure that the Dunning history for the last dunning run is 14 days old or older, otherwise no
dunning proposal is created.
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Log on to the SAP Fiori launchpad as an Accounts Receivable Accountant. .

Open Create Dunning Notices (F150). The Dunning screen displays.
Enter the following required information:
Run On : <any date>
Identification: <Any identification>
and choose Parameter tab to continue.
Make the following entries:
Dunning Date: <date>
Documents Posted Up To: <date>
Company Code: 1210
Customer: 12100001
and choose Additional Log tab to continue.
Make the following entry: Customer: 12100001
Choose the Save button. The
Details have been saved for the run on…
notification displays.
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Choose the < (Back) button and then choose Schedule (Schedule dunning run (F7)) to schedule the
proposal run. The Output Parameters dialog box displays.
In the Output Parameters dialog box, make the following entries:
Output device: LP01
and choose Continue. The Schedule Selection and Print view displays.
In the Schedule Selection and Print screen, make the following entries:
Start immediately: X
and choose Dispatch. The
Dunning job F150-201XXXXX-Identification-1 was scheduled successfully
notification displays.
On the Status tab, you can now review the relevant dunning run status. To update the status, choose
Enter. Status shows:
Dun. selection is complete.
1 dunning notices generated. Of which 1 are to be sent.
To display the dunning list, choose Dunning List. In the Dunning List Variant dialog box, choose
Continue. The Dunning Proposal displays.
Choose Back (F3) button.
To schedule the update run, choose Dunning Printout.
The Output Parameters dialog box displays.
In the Output Parameters dialog box, make the following entries:
Output device: LP01
and choose Continue. The Schedule Print view displays.
In the Schedule Print view, make the following entry:
Start immediately: X
and choose Enter.
On the Status tab, you can now check the relevant dunning run status. To update the status, choose
Enter. Status displays that the Dun. printout is complete.
Dunning notices to customers are printed.
The dunning data in the customer master record and in the open items is updated with the relevant
dunning level and the last dunning date. The highest dunning level of all the open account items is
set in the master record.
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SAP Dunning For Dummies

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1.1.1 Define Dunning Areas

The use of dunning areas is optional.

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Mickaël QUESNOT © - Copyright

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1.1.2 Define Dunning Keys

Define your dunning keys.

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1.1.3 Define Dunning Block Reasons

Define and maintain the reasons for a dunning block.

o Copy existing entries and create new entries

o Change the reason description of an existing entry

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1.1.4 Define Dunning Procedures

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• Which company codes to include in dunning.

• Which dunning notice you want to send to your customers.

4. Define your dunning procedures.

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1.1.5 Assign Dunning Forms

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Customer Master Data:

Open Item Data:

Here are some additional points to consider:

1.2 Preliminary Steps