Dunning Letters In SAP

Dunning in SAP is the process to send reminders to business partners from whom payments are due. SAP allows the messages which are sent to range from simple reminders to strong messages indicating legal action. SAP makes use of payment terms to identify the credit period that is offered to a particular customer and subsequently the line items for which the payments are due. The Dunning process picks up these items and sends a message to the concerned business partner reminding about the due payment.

The Dunning program makes use of the Dunning areas to identify the entities for which the Dunning is to be carried out. It is not necessary to carry out Dunning for a company code. Dunning can be carried out for a smaller entity within a company code like a sales organization. The Dunning program also allows the Dunning charges to be imposed to customers who have delayed the payments. Interest calculation is possible in the Dunning program for the payments which have been delayed.

CREATE A DUNNING PROCEDURE

The Dunning procedure defines the parameters which are used for selecting the customers and vendors which are dunned and the reminder messages which are to be sent to them. It is used to define the Dunning frequency or the interval with which the vendor and customer accounts are dunned. The Dunning procedure also defines the number of Dunning levels to be used for a particular customer or vendor.

Different messages are sent to the business partners at different Dunning levels. The tone of the messages can move from a gentle reminder to one indicating legal action as the Dunning level increases. Grace period can be provided to customers to provide them with time to make the payments depending on their past payment record and overall credibility. The Dunning procedure is defined at the client level and is therefore available to be used in multiple customer masters.

The customers can be grouped together according to the credit terms and similar Dunning procedures can be assigned to them. This saves the effort required to define a separate Dunning procedure for each and every customer. A Dunning procedure also allows the minimum amounts to be defined so that a customer is dunned only for documents with a substantial amount of pending payment. This prevents the customers from getting reminder messages to make payments for petty amounts.

ASSIGN THE DUNNING PROCEDURE TO THE CUSTOMER MASTER

The Dunning procedure is assigned to the customer master by navigating to the Implementation Guide menu path shown below using the transaction code XD02. The Dunning procedure is defined in the correspondence tab of the customer master. The parameters defined in the Dunning procedure are used to dun all the customers to which the Dunning procedure has been assigned.

CREATE A DUNNING PROPOSAL

The Dunning proposal is created before carrying out the actual Dunning run. The Dunning proposal acts as a simulation of the actual Dunning run. It shows the customers that will be picked up for the actual Dunning run and the messages that will be sent to them. The Dunning proposal can be reviewed and edited before carrying out the actual Dunning run. The Dunning proposal assigns a Dunning level for each open item for a customer.

The Dunning level determines the tone of the message that will be sent to the customer. The Dunning proposal and the Dunning run can be carried out by executing the transaction code F150 from the SAP easy access menu. The Dunning history is not created at this point because the Dunning proposal is only a simulation and does not result in actual printing of reminder messages.

Only the customers for whom the Dunning procedure has been assigned in the correspondence tab will be included for a Dunning proposal or a Dunning run. Other customers for whom the Dunning procedure has not been defined will never be included in the Dunning proposal or in the Dunning run. The Dunning proposal, being only a simulation can be deleted any number of times.

 

EXECUTE A DUNNING RUN

Once the Dunning proposal has been edited as required the actual Dunning and can be carried out. This will result in issuing messages to the customers that are picked up in the Dunning run. The content of the message will be decided by the Dunning level assigned to the document which is picked up in the Dunning run. The documents which have been due for payment for a longer period are assigned a higher Dunning level, and the corresponding reminder messages are harsher in their tone. Once a Dunning run is executed, the Dunning history for a customer is recorded. The Dunning history can be used to view the messages that have been sent to a particular customer for a particular document and the corresponding action that needs to be taken to recover the payments.

 

• CHECKING THE LOG FILES: The Dunning run creates a job log and an application log. The job log shows any possible errors which may have occurred during the Dunning run due to which the job may have got cancelled. It also shows whether the Dunning run was completed successfully. The application log contains additional information about the Dunning run which was executed.
• PRINT DUNNING NOTICES: The Dunning notices can be printed by defining application forms individually for each company code. The Dunning forms can be defined for each Dunning level also. A particular format is picked up for a particular Dunning level in a particular company code.
• REVERSING A DUNNING RUN: Reversing a Dunning run sets a reversal indicator in the Dunning history and restores the creditworthiness of the customer. A customer for whom documents have been dunned at a high level is assigned a low creditworthiness as he has failed to make the payments on time.