Settlement Of Tour Advances Domestic/Foreign
1) Settlement of advance will be done by the Accounts Department based on the
Travel Expense Statement submitted by the employee, which is approved by the
Concerned Department Head.
2) Expenses Account DR
Cash/Bank Account DR (if, refund)
Employee Advance Account
Cash/Bank Sub ledger Account
CR (if, payable)
3) Banking Operations - Maintenance Of Bank Master
4) A House Bank is a combination of a Bank and a Branch. Account id is the
account number. A house bank can have multiple account IDs.. There could be a
main account as also payable account, which will be defined as separate account
ids. General Ledger accounts have to be created for each combination of a house
bank and account ID. The bank master details are to be provided by HZL.
5) General Ledger accounts have to be created for each account ID in the
house bank. Bank Account Master data will be maintained by the Finance
6) Each house bank and account ID combination shall have one main general
ledger account and several sub accounts mainly based on broad transaction types.
These sub accounts are necessary to facilitate automatic bank reconciliation
process in R/3 system.
7) The accounting entries will be generated automatically according to the
posting rules attached to the Transaction type. The following accounting entry
is passed by the system in respect of cheque deposit on account of collection
from domestic customers.
Bank cheque deposit account Debit
8) In this case, a bank sub account is selected based on the transaction
code entered by the user. The customer account is cleared i.e. invoice is
cleared against the receipt. In respect of any other deposits, the relevant
accounts to be credited will depend on the nature of transaction.
9) Payment against bills for collection. Based on the bank advices falling
due on a particular day one payment advice is made debiting the vendors and
Cheque Deposit - Customer Receipts
10) All cheques received from customers shall be accounted at the point of
receipt. The entry posted shall be
Bank Sub account Dr
Customer Account Cr
Cheque Deposit - Other Than Customer Receipts
11) All other receipts will be accounted through the Incoming Payment
Transaction of the Accounts Receivables module.
Cheque Bouncing – Other Than Customer Receipts
12) Based on the information of cheque bounced from the Bank, the accounts
Department will pass accounting entries for the cheque that have been bounced.
The procedure to handle bouncing of a cheque has been discussed under the
13) Reset the clearing document – If the document has been cleared i.e. an
open outstanding item has been cleared against an incoming receipt, then the
clearing document has to be reset to its original status of open item. This
process is known as reset of cleared document.
14) Reverse the entry passed for cheque deposited earlier – Once the document
has been reset it will be reversed. The following accounting entry will be
FI Customer DR
Bank cheque deposit account CR
15) In case of cheques being damaged while printing, the concerned cheques
no. has to be voided and the payment will be rerun.
16) The Bank reconciliation process is based on the entries passed through the
Bank sub account and main account. The process is dependent on the Bank
Statement received from the Bank that will be entered into SAP. Accounting rules
are to be defined for each transaction type and posting rule for posting
accounting entries as per bank statement. Bank statements to be uploaded into
17) Bank Main account balance is the actual balance as per the bank statement
whereas the Bank sub accounts denote the reconciliation items. These sub
accounts show those entries, which will flow from the sub account which are not
cleared in the bank statement.
18) Adding or subtracting the Bank sub accounts will help in preparing the
Bank reconciliation statement.
19) The following scenarios would explain the reconciliation process:
- Cheque received from customer
- Cheque issued to vendors
- Cheque received from Other than Customers
- Direct Debits in Bank Statement
- Direct Credits in Bank Statement
- Fund Transfer between Bank Accounts
Cheque Received From Customer
20) Accounting entry at the time of cheque deposit entry
Bank Cheque deposit account Debit
21) Accounting entry after cheque has been cleared in the Bank statement Main
Cheque deposit account Credit
22) The clearing criteria for updating the bank main account and bank sub
account will be amount and document number which will be captured in the
allocation field of the bank sub account. The items, which have not been cleared
in the bank statement, will remain open in the bank sub account and will form
part of the bank reconciliation statement.
Cheque Issued To Vendors
23) Accounting entry at the time of cheque issue
Vendor account Debit
Bank cheque payment account Credit
24) Accounting entry after cheque has been presented in the Bank
Bank cheque payment account Debit
Main Bank account Credit
25) The clearing criteria used for updating vendor account and Bank cheque
payment account will be amount and cheque number. The cheques presented to the
bank and are cleared are transferred to the bank main account. The remaining
cheque issued will form part of the bank reconciliation statement.
Direct Debit In Bank
26) Direct debit instructions will be given to the bank for example, LC payments
or certain bank charges are directly debited in the Bank Statement. In this case
accounting entry is passed only after the entry is passed in the bank statement.
Vendor / Expense Account Debit
Bank clearing account Credit
Direct Credit In Bank
27) Customer receipts are sometimes directly credited in Bank. E.g. export
receipts. In this scenario accounting entry is passed only at the time of bank
statement entry. The following accounting entry is passed
Bank clearing account Debit
Customer account Credit
Main Bank A/c Debit
Bank Clearing A/c Credit
Bank Fixed Deposits
28) HZL has a practice of converting any amount above Rs. 1 crore in its Main
bank account, to a fixed deposit subject to a minimum of Rs. 1.01 crores. The
FDR number can be filled in one of the fields available in the accounting
Cheque Management / Cheque Printing Cum Advice
29) The function of cheque management will enable printing of cheque through
SAP. Cheque series will be defined for a combination of a Company code and Bank
Account. Cheque numbering will be sequential order.
30) Cheque series for automatic payment has to be in sequential order. Cheque
printing facility will be available for the bank account.
Cash Management / Liquidity Analysis
31) The day-to-day treasury process in a company includes a number of
transactions. This includes determining the current liquidity using bank account
balances (cash position), determining open receivables and liabilities
(liquidity forecast), manually entering planned cash flows (payment advice
notes), through to clearing bank accounts, that is, collecting multiple bank
account balances on one target account.
32) The main objective is to ensure liquidity for all due payment
obligations. It is also important to control and monitor effectively the
incoming and outgoing cash flows.
33) This section shows you the overall liquidity status of your company by
displaying together the cash position and the liquidity forecast. The cash
position is used in Cash Management to show the value-date-dependent bank
accounts and bank clearing accounts, as well as the planned cash flows (payment
advice notes). The liquidity forecast comprises the incoming and outgoing cash
flows, as well as the planned items on the sub-ledger accounts.