Explaining the Returns Processing

The payment run is explained in lesson 1 of this unit.

The payment run clears all open items and sends a payment medium file to the house bank.

The payments of a payment run, that can't be processed by the house bank, are sent back as returns in a bank statement file. The upload of this file in general ledger accounting creates a returns lot, which is processed in contract accounting similar to a payment lot.

The returns lot processing re-opens the originally cleared items and posts a returns document.

Returns are typically the result of expired accounts or insufficient funds in an account.

The returns lot stores incoming bank returns that have a common origin and that should be processed together.

The returns lot is processed either manually or automatically, if the returns are uploaded from an electronic bank statement file (see previous figure).

The returns lot can only be posted after it has been closed. The posting creates a returns document that is posted to a returns clearing account (in contrast to a reversal document).

The returns lot processing steps are controlled by the returns reason on item level.

1. The items, that have to be re-opened again, are determined. Then, the clearing is canceled and a returns document with the offsetting items of the payment document is generated.
2. The returns reason configuration controls the posting of bank charges in general ledger accounting, return charges in contract accounting and the passing of the bank charges to the business partner. Charges can be configured to be calculated graduated and to be posted statistically. The maximum difference between the returned amount and the original payment is the amount tolerated for automatic charges posting.
3. The returns reason configuration enables the generation of follow-up activities such as the setting of a deferral date in the open item, the setting of a payment lock or deleting of the payment method in the contract account, the creation of correspondence to the business partner and the creation of work items to inform the administrator.
4. The returns are stored in the returns history that can influence creditworthiness.

The posting logic of the returns lot is as follows:

1. The receivable posting in contract accounting creates - after reconciliation key transfer - a posting on the general ledger's receivable and the revenue account (tax is not shown).
2. The company-initiated payment run is triggered in contract accounting and clears - after reconciliation key transfer - the general ledger's receivable account against the bank clearing account and creates the outgoing payment medium.
3. The payment in general ledger accounting clears the bank clearing account against the bank account.
4. The incoming bank statement in general ledger accounting post the incoming returns on the bank account against the returns clearing account and creates a returns lot when it is uploaded. In this example, the returns total amount is 10 EUR higher than the original payment which is considered later as a bank charge.
5. The returns lot processing in contract accounting distributes all returns of the lot to re-open the items (clearing reversal) and - after reconciliation key transfer - in the general ledger's receivable account as well.
6. The difference amount of 10 EUR is posted in general ledger accounting on the returns expenses account against the returns clearing account.
7. The difference amount of 10 EUR is passed on to the business partner in contract accounting and - after reconciliation key transfer - on the returns receivable account against the returns revenue account in general ledger accounting.
8. The returns charge is posted in contract accounting and - after reconciliation key transfer - on the returns receivable account against the returns revenue account in general ledger.

Step 1 to 3 correspond to the payment run posting logic in lesson 1 of this unit.

Step 5 to 8 are executed in one single procedure.

Step 7 is not executed, if the returns reason doesn't allow to pass on bank charges.

Step 8 is not executed, if the returns reason doesn't allow to post return charges.