Show TOC

 Payment Distribution

Purpose

This process enables the application and distribution of incoming payments, based on defined payment hierarchies and business rules on loan accounts.

This payment handling decides how incoming payments are to be applied to open and planned items of loan accounts based on bank-specific rules. The system applies the incoming payments automatically based on rules (automatic distribution) or manually by an officer (manual distribution). However, both distributions follow the same processes for checks and to obtain additional data.

You can choose between synchronous and asynchronous payments modes to process and reverse multiple payment distribution items (per clearing account).

Prerequisites

  • Payments are made to the clearing account.

  • To enable the payment distribution process, you have completed the following settings for Customizing in Account Management (FS-AM) by choosing Start of the navigation path Product Management Next navigation step Payment Distribution End of the navigation path :

    • Define Rules for Clearing Due Items

    • Define Rules for Payment Distribution

    • Define Derivation Rules for Payment Distribution

    • Define Payment Distribution Types

    • Assign Trans. Types and Reserv. Types to Paymt Distr. Types

    • Assign Transaction Types to Charge Categories

    • Define Number Range Interval for Payment Lots

  • To enable the Generic Accounts Payable and Receivable (FI-CAX) application component to communicate with FS-AM, you have completed the Customizing settings for the following IMG activities in Customizing for Account Management (FS-AM) by choosing Start of the navigation path Product Management Next navigation step Payment Distribution End of the navigation path

    • Define Transaction Types for Due Item Management System

    • Assign Trans. Types for DIM System to Paymt Distr. Types

Process Flow

The payment distribution process runs as follows:

  1. Receives payment distribution items from the Clearing Account system (Payment Distribution and Clearing Account in FS-AM)

    The Payment Distribution system in FS-AM requires payments distribution items to start the clearing process for open items. The clearing account system receives payment items from the Payments system, creates payment distribution item, and sends them to the payment distribution system. These payment distribution items contain the information in the payment items along with some additional relevant information.

  2. Forwards payment distribution items along with the payment lot ID and rules for clearing (Payment Distribution in FS-AM)

    The Open Item Management system in FI-CAX requires information about the payments made in order to clear open items. The payment distribution system in FS-AM generates a payment lot ID for a group of payment distribution items and forwards the IDs to the OIM system in a mass run (transaction /FSPD/IPD_MR1 - Execute Payment Distribution), along with the payment distribution items and the rules for clearing open items.

  3. Requests information to clear open items(Open Item Management in FI-CAX)

    The OIM system applies this information to clear the open items and s ends a clearing notification back to the payment distribution system.

  4. Clears open items based on different scenarios (Payment Distribution in FS-AM and Open Item Management in FI-CAX)

    Open items are cleared based on the specific requirements of the following scenarios:

    • Exact match (open item clearing)

    • Underpayment

    • Overpayment, including prepayment and curtailment

    • Payoff

    • Direct debit

    • Directive processing

      Note Note

      All overpayment rules are maintained in the product; hence, the payment distribution system first checks whether these rules can be applied in a particular overpayment scenario.

      Underpayment priorities are maintained in Customizing for payment distribution.

      End of the note.

    1. Exact match scenario

      The payment distribution system sends payment distribution items to the value of the exact amount of the open items in OIM. OIM clears all open items.

    2. Underpayment scenario

      The payment distribution system sends payment distribution items to a value less than the amount of the open items in OIM.

      OIM partially clears open items based on the underpayment rules provided by the payment distribution system. OIM next sends a request to the payment distribution system for a writeoff for the remaining items; the payment distribution system provides a writeoff.

      You can define payment tolerances for different payment categories at the product level. You do this either as a percentage of the due amount or as a fixed amount. If the expected payment falls within the tolerance limit, the system considers the payment as cleared and the unpaid balance is not considered for dunning.

    3. Overpayment scenario

      The payment distribution system sends payment distribution items to a value more than the amount of the open items in OIM.

      OIM clears the open items and sends a request to the payment distribution system for a writeoff for the remaining amount. Based on the overpayment rules, the payment distribution system provides a writeoff. (This situation applies in both the prepayment and curtailment contexts.) If the ruleset has been customized to perform prepayment, then the sorting sequence to perform prepayment would not depend on the customizing - Define Rules for Clearing Due Items. The sorting sequence for prepayment fetched from the overpayment capability of the loan account is as follows:

      • Prepayment Installment

      • Prepayment Charge

      • Prepayment Insurance Premium

      • Prepayment Repayment

      • Prepayment Interest

      • Prepayment Interest on Arrears

    4. Payoff scenario

      The payment distribution system receives a customer directive for a payoff (early closure of loan). The payment distribution system generates a payment order for the payoff.

    5. Direct Debit scenario

      The payments system creates a payment item by specifying the savings bank account details in the temporary report BCA_API_PAYMENT_SET_SND. (The savings bank account details must be originally specified when creating the loan contract.) The payment distribution receives this payment item as a payment distribution item from the clearing account system and processes it as in the Exact Match scenario.

    6. Directive Processing

      • Customer directive scenario

        The payment distribution system receives a customer directive on how to clear the incoming payment. For example, the customer could instruct the bank to use the incoming payment to first clear the principal followed by the interest. Or, the customer directive could ask for the prepayment amount to be cleared first followed by the open items. The payment distribution system (that is, the bank) reserves the right to overrule the directive. The payment distribution system sends the payment distribution items to FI-CAX along with the rules attached to the directive to have the open items cleared. The FI-CAX system clears the open items based on these rules and sends a notification back to the payment distribution system.

      • Bank directive scenario:

        A bank employee can create the bank directive in the transaction /FSPD/DIR_MAINTAIN - Edit Payment Distribution Directives. To link this directive to a payment distribution item, the employee must enter the External Reference Number and select the Overrule Rule Set indicator. This same external reference number must next be assigned to the payment distribution item for the item to be effective for clearing.

        The payment distribution system sends the payment distribution items to FI-CAX along with the directive to have the open items cleared. The FI-CAX system clears the open items based on the directive and sends a notification back to the payment distribution system.

    7. Payment Distribution Level

      • Finance project level: When customers have multiple accounts but a single clearing account, payment distribution is performed at the finance project level. In this case, several loan accounts are assigned to a finance project and payments are distributed to the different loan accounts based on the account prioritization in the following:

        • The customer exit Retrieval of Account Priority (under Customizing for Start of the navigation path Account Management Next navigation step Product Management Next navigation step Payment Distribution Next navigation step Business Add-Ins (BAdIs) Next navigation step BAdI: Retrieval of Account Priority End of the navigation path)

        • The IMG activity Assign Product Priority under Customizing for Start of the navigation path Account Management Next navigation step Product Management Next navigation step Payment Distribution Next navigation step Assign Product Priority End of the navigation path)

      • Business partner level: When customers have multiple loan and clearing accounts, payment distribution is performed at the business partner level. In this case, payments are distributed to the different loan accounts based on the account prioritization listed above.

  5. Updates payment distribution item status (Payment Distribution in FS-AM)

    The payment distribution system updates the Payment Distribution Items Results ad the Payment Distribution Items tables, based on information sent by the OIM system in its clearing notification.

  6. Generates reservation notes (prenotes) and payment orders (payment Distribution in FS-AM)

    If the payment distribution item is successfully cleared, the payment distribution system generates a payment order in the Order Framework. In the underpayment and overpayment scenarios, the payment distribution system additionally generates prenotes in FS-AM.

    Note Note

    In any scenario, if the payment distribution system encounters a failure during the clearing process, for example, if the posting date falls before the account opening date or if the rule set was not found, then the payment distribution system sends the payment distribution items to the Posting Control Office for postprocessing.

    End of the note.

Result

The payment distribution rules have been applied to payment distribution items.

See Also

The transaction /FSPD/RESULT_DISPLAY - Display Payment Distribution Results in the SAP Easy Access menu to view details about how the payment distribution items have been cleared.