Bill of Exchange Discounting

May 20, 2009 8:36 AM

Hello Experts,

my client want a Bill of Exchange Discounting .

So if u have some conguration and user t code.

Thanks

j
Helpful Answers by Kapil Malde, VENKATA V, Kapil Malde, VENKATA V, Kapil Malde

6278 Views

Average User Rating

(0 ratings)

Re: Bill of Exchange Discounting

VENKATA V May 20, 2009 9:03 AM (in response to Jemes Bond)

Hi Jemes,

The steps for Bills of Exchange Discounting is as follows:

1 Creation of 3 GL Accounts
a. Bills of Exchange Receivable A/c (Alternative Recon A/c) for Customers under Assets
b. Bank Bills Discounting A/c with Open item Management flagged under Liabilities
c. Discount Given A/c under the head Expenses
The first 2 accounts are Balance Sheet accounts and the last one is the P&L A/c

2. Define Alternative Reconcil.Acct for Bills/Exch.Receivable TCode OBYN. there you define
the Alternative Reconciliation Account for B/E Receivable against the Special GL W.
3. Define Bank Subaccounts TCode OBYK. There you define the Bank Sub Account for Bills
Discounting.
4.Assign the Discount Given account for automatic postings TCode OBXI

Once you do all these configurations, the flow of transaction would be as follows:
1. Post Customer Invoice. F-22
Customer A/c Dr.
To Sales A/c
2.Bills of Exchange Payment F-36
Customer A/c Dr. (Spl GL B/E Receivable A/c)
To Customer A/c Normal
3.Bill Discounting F-33
Bank A/c Dr
Discount Given A/c Dr
To Bank Bills Discounting A/c
4. On the due date if the bill is honoured, you have to reverse the contingent liability. TCode
F-20
Bank Bill Discounting A/c Dr
To Customer A/c Dr. (Spl GL B/E Receivable A/c)

Hope this helps you....

Regards,
Sreekanth....
Alert Moderator

Like (0)

Re: Bill of Exchange Discounting

Jemes Bond May 20, 2009 10:26 AM (in response to VENKATA V)

Hello Sir,

Thanks for quik reply.

I have to create 3 GL

at third step

a) Bank Ac b) Discounting

c) SGL ID- W

d) Customer Recon Ac

e) bank sub ac for liab.

which gl i have to maintain in (OBYK ) which GL BANK ac , Customer main recon ac or

Alternative Recon A/c , Bank Sub Account.

wating for reply

thanks

J
Alert Moderator

Re: Bill of Exchange Discounting

VENKATA V May 20, 2009 10:49 AM (in response to Jemes Bond)

Hi Jemes,

Like (0)

Say for example, you have following accounts:

1000 u2013 Normal Recon a/c for Customers
1100 u2013 Special GL Recon a/c for customers
1200 u2013 Bank A/c
1300- Bills Discounting A/c
1400- Discount Given A/c

In OBYN you have to link your alternative recon a/c against the spl GL W
It looks like this.

1000 u2013 1100

In OBYK you should link your normal Bank a/c in which you receive the amount to your Bills
discounting a/c
It looks like this

COA

1200

Discounting

1000

1300

In OBXI, you will give the account for discount given

It looks like this

1400

Hope this helps youu2026.

Regards,
Sreekanthu2026

Alert Moderator

Like (0)

Helpful AnswerRe: Bill of Exchange Discounting

Kapil Malde May 20, 2009 11:17 AM (in response to Jemes Bond)
Hi

You can create the special GL indicator for the Bill of Exchange. (assign BOE Receivable A/c)
Then Go to OBYH --> Define Accounts for Bill of Exchange transactions.
Double click on Bank Discount Charges (BDS). Define "Bill Discounting Charges A/c".

Go to SPRO > Fin. Acc (new) > Bank Accounting > Bus Transactions > BOE transactions >
BOE Receivable > Present BOE Receivable at Bank > Define Bank Subaccounts
Assign GL of "BOE Receivable - Contingent Liability A/c" in Discounting usage.

End User Transactions:

FB70
F-36

Invoice Booking
To record the receipt of Bill of Exchange

F-33 or FBW3

Discounting of Bill of Exchange

F-20 or FBW4

Reverse the bill liability on actual collection by bank

I hope this will clarify...

Regards
Kapil
Alert Moderator

Like (0)

Re: Bill of Exchange Discounting

Jemes Bond May 20, 2009 11:43 AM (in response to Kapil Malde)
Hello Sir,

Thanks for quik reply.

I have face one error in T code: F-20

Reverse bill liability by T-code f-20 hitting error ""Due by" date is in the future
Message no. F5478

Diagnosis
If the "due by" date is in the future, items where commitments still exist are also cleared.

Procedure
Check whether you have entered the date correctly.

Plz reply soon

thans

Edited by: Jemes on May 20, 2009 11:42 AM

Alert Moderator

Like (0)

Helpful AnswerRe: Bill of Exchange Discounting

VENKATA V May 20, 2009 11:44 AM (in response to Jemes Bond)

Hi Jemes,

While discounting the bill in TCode F-33, you would have given the Due Date for the bill to get
mature.

So, you should execute the TCode F-20 on or after the duedate which you have given in F-33.

Hope you understand and this helps you....

Regards,
Sreekanth....
Alert Moderator

Helpful AnswerRe: Bill of Exchange Discounting

Kapil Malde May 20, 2009 11:47 AM (in response to Jemes Bond)
Hi

Give the GL account of BOE Receivable A/c

Select usage as Discounting

Give proper due date in 'Due by' field.

Like (0)

Then it will give u open BOE items and you can select the BOE which you want to reverse.

In case of doubt pls revert back

Regards,
Kapil
Alert Moderator

Like (0)

Re: Bill of Exchange Discounting

Jemes Bond May 20, 2009 12:15 PM (in response to Kapil Malde)
Hello SIR,

4. On the due date if the bill is honoured, you have to reverse the contingent liability. TCode
F-20
Bank Bill Discounting A/c Dr
To Customer A/c Dr. (Spl GL B/E Receivable A/c)

when i giving Bank Bill Discounting gl

that time system gives erro:

Account 16018501 in company code 1000 is not a reconciliation account

Message no. F5355

Diagnosis
G/L account 16018501 in company code 1000 which is to be updated when posting to the
customer or vendor is not defined as a reconciliation account.

Procedure
Depending on the cause of the error you can

change the master record of the above-mentioned account and mark it as a reconciliation
account
change the customer or vendor master record and enter a different reconciliation account
there
for special G/L transactions, change the allocation of reconciliation accounts when configuring
special G/L transactions.

When i am giving gl field Alternative Reconcil.Acct for Bills/Exch.Receivable

that time system give erro:

No due items exist at the key date

wating for reply

thanks

Edited by: Jemes on May 20, 2009 12:14 PM

Alert Moderator

Helpful AnswerRe: Bill of Exchange Discounting

Like (0)

VENKATA V May 20, 2009 12:31 PM (in response to Jemes Bond)

Hi Jemes,

In F-20, Under bills of exchange selection, for GL Account you have to give the GL for bills
discounting account (1300 in my example) and useage as Discounting and in my example,
account 1000 and 1100 should be defined as customer reconciliation accounts.

I think you have not defined the account 1100 as customer reconciliation account. Check it
out.

Hope this helps you....

Regards,
Sreekanth....

Edited by: VENKATA SREEKANTH on May 20, 2009 12:30 PM

Alert Moderator

Like (0)

Helpful AnswerRe: Bill of Exchange Discounting

Kapil Malde May 20, 2009 12:34 PM (in response to Jemes Bond)
hi

You cannot change a normal account to reconciliation account retrospectively.

You will have to create the NEW reconciliation account and will have to replace the earlier
account.
While creating the reco account, tick the "open item management" field.

Then do the full cycle again.

Revert back in case of doubt.

Alert Moderator

Like (0)

Re: Bill of Exchange Discounting

Jemes Bond May 22, 2009 12:58 PM (in response to Jemes Bond)
Thanks for coopration.
Alert Moderator

Like (0)

Re: Bill of Exchange Discounting

subbu thota May 22, 2009 1:01 PM (in response to Jemes Bond)
About bills of exchange concept in Accounts Payable.

Bills of exchange may be defined as a commitment subscribed by your customer to pay a

certain amount on a given date upon presentation of the bill of exchange. They can be used
to materialize installment payments.

For example, you have accepted that your customer pays the invoice amount in 3 monthly
installments of 1000 USD each. You will issue 3 bills of exhange of 1000 usd each and
maturing in month in month m, m1 and m2. The bills of exchange will be sent to your
customer for acceptance(customer signs them).

Once accepted they will be returned to you. You will have to post accounting entries. But note
that even though the accepted bills of exchange can be considered as payment, you cannot
clear the outstanding customer invoice until the bills are effectively paid at maturity date. You
then have to post the bills of exchange as a special GL transaction.

Again once you have received the bills of exchange you may decide to discount them right
away with your bank and this is done with or without recourse. Depending on the option
choosen, accounting entries are different. by discounting the bills you receive payment of the
bill and this can be used to clear the outstanding customer invoice.

But note that until the bill is finally paid by the customer at maturity date you remain liable.
You account for this liability by making postings which will show the discounted bills of
exchange as a contingent liability. They do not show in the balance sheet itself but appear in
an appendix of the balance sheet.

Define Alternative Accounts for Bil/Exch receivables

T-code (OBYN)
Financial Accounting
General Ledger Accounting
Bank Accounting
Business Transactions
Bill of Exchange Transactions
Bill of Exchange Receivables
Post Bill of Exchange Receivables
Define Alternative Acct for BE receivables

Recon A/C: Normal Reco Acount

Special GL Account: Special GL Account for recording Bill of Exchange Transaction.

Define bank sub accounts

T-code (OBYK)
Financial Accounting
General Ledger Accounting

Bank Accounting
Business Transactions
Bill of Exchange Transactions
Bill of Exchange Receivables
Present B/E receivables at Bank
Define Bank Sub Accounts

Define B/E Payment Period (Protest Period)

T-code (OB86)

Financial Accounting
General Ledger Accounting
Bank Accounting
Business Transactions
Bill of Exchange Transactions
Bill of Exchange Receivables
B/E receivables: Reverse Contingent Liab
Define B/E Payment Period.

FOR POSTING THE TRANSACTION RELATING TO B/E

For Receiving the B/E from customer

(F-36)
Financial Accounting

Account Receivables
Document Entry
Bill of Exchange
Payment

For Discounting theB/E with the Bank

(F-33)
Financial Accounting
Account Receivables
Document Entry
Bill of Exchange
Discounting

For Reversing the Contingent Liabilities

(F-20)
Financial Accounting
Account Receivables
Document Entry
Bill of Exchange
Reverse Contingent Liability

with due