Dunning is a germany word whinch means a ” reminder to the party”. sometimes your business partner may fall behind payments, then you can send them a payment reminder or a dunning notice to remind them about theiur outstanding debts. you can use dunning program to dunn both the costumer and vendor.
it maybe necessary to dun vendors if they has a debit balance as result of credit memo. vendors with debit balances are subject to dunning. debit balances are the result of credit memos posted to the vendor account due to circumstances such as returned goods. once vendor credit memos exceed vendor invoice, the payment due will be shifted back to the vendor. therefore, dunning will be run to check for delinquent balances.
if a costumer is also a vendor, we can off set the account balances as a result of credit memo. dunning program select the overdue open items, determines the dunning levels of the account and creates a dunning notice. the SAP system allows you to use either the automatic dunning program which duns all overdue items in accordance with your selection criteria of if received you can dun individual costumer or vendors.
there are some attribute to control the dunning program and these attributes are configured according to the needs of the company. The attributes are :
- Dunning procedure : a predefined procedure specifying how costumer or vendors are dunned. for each procedures, user defined :
- Dunning frequency
- text for dunning notice
- number of dunning level
- Dunning Level
SAP has given totally 9 levels, the number of levels use is depend upon the client requirement.
- Dunning Areas
Represents an organisational entity that is responsible for dunning
All the dunning data is stored in a dunning proposal. Dunning proposal can be edited, deleted, and recreated as often as necessary until dunning clerk is satisfied with the result. you can skip this step. After the dunning run has been completed, you can print out the dunning notice straight away.
in just one step, dunning notice are printed and dunning data is updated in the master record and associated document.
Dunning notice indicate how far account balance are overdue and usually demand prompt payment. dunning messages can vary in severity depending on length of time that customer account is overdue.
Most of setting for dunning program are set in the dunning procedure, which can be accessed directly through the user side of the application. Several step in configuration are :
- Define dunning area
- Define dunning procedure
- assigning dunning procedure in costumer master
- sales posting
defining dunning area is optional. a dunning area is an organisational entity that is, a substructure of a company code that is responsible for dunning.
The dunning procedure controls how dunning is carried out. every account that is to be included in the automatic dunning process needs to have dunning procedures. one time account also have dunning procedure that is valid for all one time customer. the dunning procedure can process standard and/or special G/L transaction. for each dunning procedure :
- you have to specify the interval at which the account that use this procedure are to be dunned
- during the dunning run, the system checks whether the run date is at least this number of days after the date of the last dunning run.
- Maintain :
- Grace periods per line item
- Interest calculation indicator
- the dunning interval in days
- the minimum days in arrears (account) after which a dunning notice will be sent
in the activity of defining dunning procedure, you enter the setting the control the dunning program :
- Setting dunning procedure which determines the dunning intervals, grace periods and number of dunning levels
- setting the dunning charges
- setting the dunning notices
- assign dunning procedures in customer master
The number of dunning level represents the highest dunning level that is possible in this procedure. for each dunning level, you can specify that interest is to be calculated.
the minimum number of days in arrears is set as a default in the system : the system proposes the line item grace period as the first dunning level. for further dunning level, the system adds the dunning interval in days to the days in arrears of the previous dunning levels.
if you set the always dun option, a dunning notice will still be printed even if no changes have been made to the dunning proposal since the last dunning run. The item can be printed to give the customer/ vendor an overview of the overall account balance.
Expense / Charge
dunning charges are defined for each currency and depend on the dunning level. the dunning charge can be either a fixed amount or a percentage of the dunned amount. if you have defined a percentage dunning charge, you cannot enter a fixed dunning charge at the same time. you can set a minimum amount at each dunning level.
if the minimum amount of overdue items is not reached in a dunning level, the items in this dunning level are assigned to the next lowest level and the system checks whether a dunning notice can then be created in this dunning level. if you have specified a minimum percentage, the limit must also have been reached or exceeded.
The layout of the form is defined in the SAP script word processing tool using the key specified here. the dunning program can generate payment advice notes, dunning notices and payment forms.
in the company code dunning control screen, you can specify whether dunning notices are to be created separately by dunning area rather than by account for company code. if you choose this option, the dunning data in the business partner master record is updated according to dunning areas.