What is Dunning in SAP? Dunning Procedure in SAP FICO (UPDATED)

What is Dunning in SAP?

Reminding a business partner to pay (payment reminder) is called dunning in SAP. You can configure the dunning program to dun customers and vendors (if there is a debit balance resulting from a credit memo).

Parameters for Dunning in SAP

Maintaining dunning parameters that identify a dunning run is the starting point.

The other parameters include-

• The dunning date that we need to print in the dunning notice
• posting cutoff date for the selection of documents
• company code etc.

Once we enter the parameters, we can save & display the log to see if there are any errors. We can also display the dunning list, which contains the accounts and items that have selected for the current run, etc 

System Procedure for Dunning in SAP

DUNN Check

Step 1 – The system checks the DUNN Procedure and Last Dunned fields in the customer master and determines whether the arrear date falls in the past in order to consider it for the current run.

Account Check

Step 2 – Then it checks whether the account is blocked for cunningly searching for an entry in the Dunning Block Field in the customer master. If not blocked, these accounts are considered released for dunning in the current run.

Processing Open Items

Step 3 – Now, the program proceeds to process the open items of accounts that the system has released but were posted to on or before the date entered in the field Documents Posted Up To.

Checking Blocked Items

Step 4 – It then checks all such released open items to determine whether the system has blocked any of them for dunning. If not, it moves further to ascertain whether an item is overdue according to the date of issue, base date, payment condition and grace period.

Determining the dunning level

Step 5 – Further, for all the released open items released in the previous step, the program determines the appropriate dunning level, on the basis of the number of days an item has been overdue. It sets the highest dunning level to the account according to the highest dunning level of an open item of the account.

Even if there are different dunning levels associated with the different open items, the system stores this highest dunning level thus determined in the customer master.

Checking for debit balances

Step 7 – The program now checks each of these eligible accounts to ascertain whether the customer or vendor has a debit balance, considering all the open overdue items thus selected in that account.

• If not, then that account is not selected for dunning
• If so, the system checks the total amount to be dunned, the percentage of all open items more than the minimum amount or percentage defined in the dunning procedure that is being used
• If not, the accounts are not selected for dunning
• If so, the accounts are selected for dunning
• If not, the system proceeds to determine whether there are any new open items to be dunned
• If so the accounts are selected for dunning
• If so, the accounts are selected for dunning
• If not, it then confirms whether the dunning procedure in use allows for repeating the dunning at the same dunning level as that of the previous run.
• If so, the accounts are selected for dunning
• If not, the accounts are not selected for dunning
• The dunning program creates the dunning proposal list containing the accounts with the open items that are selected for the current dunning

You may edit the dunning proposal list in order to manually raise or lower the dunning level of an item or account and block or unblock an item or account or document from being dunned. You can also look at the log to confirm the changes you have made to the dunning proposal.

Still, if you are not satisfied or want to make further changes, you can edit the proposal. You may also display the sample printout of the dunning notice on the screen.

Dunning Key

The company code-independent dunning keys help you to limit the dunning level for an item, in addition to enabling you to control the display of line items separately in a dunning notice. We can define maximum 9 dunning levels .- Transaction Code-OB17.

Define Dunning Block Reasons – T Code-OB18

Dunning block reasons, which we can enter in the master record (Business Partner) or line item. A block key thus entered prevents that account or item from being dunned. 

In the dunning procedure, the program selects the overdue open items and determines the appropriate dunning level for the items and accounts. Then, it generates a dunning notice in a dunning run and saves the dunning data. It also includes the last dunned date, last used dunning level and others.

Further, You can dun all business partners with overdue items automatically or make selective dunning. You can also generate a single notice combining all the overdue items of a single business partner across company codes.

Let’s review the process of dunning in the SAP system.

Dunning Procedure in SAP FICO

Since the payment is part of SAP FICO, the dunning procedure becomes essential for having the amount on time. The process of dunning in SAP Finance is very systematic. It starts from setting parameters, making proposals, checking any issues or open items, deciding the right time of dunning and finally making modifications if any. The whole process makes the receivables in SAP HANA smooth and structured. let us learn how it goes step by step.

Maintaining Parameters

Maintaining dunning parameters (such as execution date and dunning run identifier) that identify a dunning run is the starting point. The other parameters include the following-

• The dunning date that you need to print in the dunning notice
• Posting cutoff date for selection of documents
• Company codes, etc.

Once you finish inputting the parameter, you can save and display the log to see any errors. You can also display the dunning list which contains the accounts and items that you selected for the current run. It also includes the blocked one.

Creating Proposal for Dunning in SAP

The second step is creating the dunning proposal wherein the dunning program determines which accounts and items to dun.

The system checks the Dun procedure and the last Dunned fields in the customer master. It helps to determine whether the arrear date ( the date of the last dunning run ) falls in the past to consider it for the current run.

Then further, it checks whether the account is blocked for dunning. It does so, by searching for an entry in the Dunning Block field in customer master.

If not blocked, then we consider that the system has released these accounts for dunning in the current run.

Checking Open items

Now, the program proceeds to process the open items of accounts that the system has released. However, it posts it on or before the date entered in the field “Documents posted UP TO.

It then checks all such released open items to determine whether any of them are blocked for dunning. If not, it moves further to ascertain whether an item is overdue according to the date of issue base date, the payment condition is a grace period.

Determining the appropriate level of Dunning in SAP

Then for all the open items that the system has released for dunning in the previous step, the program determines the appropriate dunning level. It is based on the number of days an item has been overdue.

It sets the highest dunning level of an open item of the account. Even if there are different dunning levels associated with the different open items. This highest dunning level (which determines the appropriate dunning text that we need to use and the relevant dunning form).

The program now checks each of these eligible accounts to ascertain whether the customer or vendor has a debit balance, considering the system selected all the open overdue items in that account.

In case the system selects all open overdue items in that account

• The system has picked the accounts for dunning
• the system checks the total amount to be dunned percentage of all open items more than the minimum amount or percentage defined in the dunning procedure that is being used.
• It ascertains whether the dunning level selected for the account or an item is higher than it was in the last dunning run.
• It ascertains whether the dunning level selected for the account or an item is higher than it was in the last dunning run.

In case the system Doesn’t select all open overdue items in that account

• Then the system didn’t pick that account for dunning
• The system proceeds to determine whether there are any new open items to dun
• It then confirms whether the dunning procedure in use allows for repeating the dunning at the same dunning level as that of the previous run.

Dunning Proposal list

 The dunning program creates the dunning proposal list. It contains the accounts with the open items that the system has selected for the current dunning.

Making changes in the List

You may edit the dunning proposal list to manually raise or lower the dunning level of an item or account. Though, you can also block or unblock an item or account or document from being dunned. You can look at the log to confirm the changes you have made to the dunning proposal.

If you are not satisfied or want to make further changes, you can still edit the proposal. You may also display the sample printout of the dunning notice on the screen.

Print the Dunning Form

Now you are ready to print the dunning notices. You can opt to use the same dunning form, irrespective of dunning levels. Or you can use different forms for different dunning levels with varying dunning text. You may also use a legal dunning form normally used as final notice.

Once you activate the print run, the program prints the dunning notices in addition to updating the important details like dunning level and last dunned date etc.

Document Reconciliation

This function is used regularly to check customer and vendor documents based on business transactions within a group and clear differences (if necessary).

Use of Document Reconciliation for Dunning in SAP

Document reconciliation is a tool that helps in finding individual posting documents that cause differences. Here are some uses:-

• It enables you to analyse and correct differences in business transactions between your company code and another company code on a key date.
• We can also use this functionality to maintain or check reference numbers for documents that belong together.
• Other than finding documents that have caused differences, document reconciliation also provides extended search functions for documents.
• It covers both automatic and manual assignment of documents.
• It further enables assigning uniform reference numbers for outgoing and incoming documents.
• Document reconciliation helps maintain our own personal settings in document display or search or assignment and through effective communication, updating global values for document assignment for several users.

Conclusion

This is how the Dunning in SAP works. Dunning is an important part of Accounts Receivable. It prompts vendors to make on-time payments of invoices. It also enables better client relations.

There is much more in the Dunning procedure. Such as dunning levels, dunning areas, dunning data etc. All these things complete the dunning in SAP.

A detailed SAP FICO training covers the complete dunning process in practice, thus helping you to learn this on the system.

Visit Page: SAP S4 HANA Finance Training