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Process documentationOverdraft Protection

 

Some banks do not allow their customers to overdraw their checking account at all, or if certain criteria are fulfilled. If the available amount on a checking account is not enough at the end of a posting day to execute all the debit postings received during the posting day, the payment items that can be returned are returned. This can, for example, mean the return of checks (PF) or debit memos. Charges can also be levied for the return.

However, the account holder may have another checking account that has an available amount that would cover the posting. This account holder may also have other accounts that could also be used. To ensure that the posting in this case is still possible, the Overdraft Protection function enables you to determine which other accounts, and in which sequence, funds can be transfer posted to the checking account that is not sufficiently covered. You can do this according to the product or the account.

In the Overdraft Protection function, the account that receives a sum of money from one or more other accounts is called a funded account. The accounts from which the money is transferred to the funded account are called funding accounts.

The report Execute Overdraft Protection is available for determining the funding and funded accounts and for triggering the cash transfer. You can, for example, schedule the report in end-of-day processing.

You define contract relationships in a master contract to assign funding accounts to a funded account.

Process Combinations

Note Note

You can combine this process with other processes in Master Contract Management. For an overview of all combination options, see Master Contract Management (FS-MCM).

End of the note.

Prerequisites

Communication Between Logical Systems

The Overdraft Protection function requires the connection of an account-managing system and a payment order-managing system to Master Contract Management (FS-MCM). In the standard system, Account Management (FS-AM) is connected in both cases. You cannot connect another account-managing system. Master contracts and participant accounts must be in the same logical system.

For more information, see Communication with Logical Systems.

Settings in Customizing for Account Management (FS-AM)

  • To use the Overdraft Protection for a funded account, choose Start of the navigation path Item Management Next navigation step Basic Functions Next navigation step Transaction Types and Transaction Type Groups Next navigation step Maintain and Assign Transaction Types for Payment Items End of the navigation path and activate the check object Overdraft Protection.

    Note Note

    The check object Overdraft Protection checks the following:

    • Has the funded account been assigned a rank?

    • Is the available amount exceeded by the posting?

    • Is there an outstanding account order in the DispoOffice (FS-PCO-AM) because of an overdraft protection problem with this account?

    End of the note.

  • To control the further processing of the payment item if the result of at least one of the checks by the check object Overdraft Protection is positive, you have made the relevant settings under Start of the navigation path Item Management Next navigation step Posting Control Rules End of the navigation path.

    Note Note

    You can set up different system responses for the checks of the Overdraft Protection check object. To do so, proceed as follows:

    1. In the Customizing activity Define Error Types, define three error types.

    2. In the Customizing activity Assign Error Types, assign the corresponding result numbers.

    3. In the Customizing activity Define Main Rule Set, specify the required first and final responses for each error type.

      For more information, see Example: Rules for Posting Control in Overdraft Protection.

    End of the note.

  • To ensure that the transfer amount stays reserved on the funding accounts until the posting in Account Management, you have made the required settings under Start of the navigation path Item Management Next navigation step Prenote Next navigation step Assign Amount Reservation Types to Prenote Types End of the navigation path.

  • To enable a payment order to be created for the credit transfer from the funding to the funded account in Account Management, you have made the required settings under Start of the navigation path Order Management Next navigation step Payment Order Next navigation step Assign a Payment Directive Type with Transaction Types and Medium/PaytMeth End of the navigation path.

  • To assign the same funding account to more than one funded account, choose Start of the navigation path Product Management Next navigation step Product Definition Next navigation step Account Product Next navigation step Create Account Product End of the navigation path or Change Account Product and then grouping attribute Posting Data. Specify whether the ranking is to be displayed or hidden in the dialog processing of the funded account on the Posting Data tab page. You cannot change the ranking in the account.

Settings in Customizing for Master Contract Management (FS-MCM)

  • Under Start of the navigation path General Settings Next navigation step Payment Directive Types Next navigation step Define Payment Directive Types End of the navigation path, you have created one payment directive type and assigned it to the process result category Overdraft Protection under Assign Payment Directive Types to Process Result Categories.

  • Under Start of the navigation path General Settings Next navigation step Amount Reservation Types Next navigation step Define Amount Reservation Types End of the navigation path, you have created one amount reservation type and assigned it to the process result category Overdraft Protection under Assign Amount Reservation Types to Process Result Categories.

  • Under Start of the navigation path Master Contract Next navigation step Overdraft Protection Next navigation step Define Types of Funding Accounts End of the navigation path, you have specified which types of account are allowed to be debited in overdraft protection.

  • Under Start of the navigation path Master Contract Applications Next navigation step Overdraft Protection Next navigation step Define Basic Amounts End of the navigation path, you have specified whether a minimum amount is to be taken into account in the calculation of the transfer amount, and which level amount is to be taken into account if the transfer amount is to be calculated incrementally.

  • Under Start of the navigation path Master Contract Applications Next navigation step Overdraft Protection Next navigation step Define Transfer Rules End of the navigation path, you have specified whether the transfer amount is to be the same as the overdraft amount or whether fixed amounts are to be transferred in increments. You also specify whether and when the system is to consider overdraft protection charges, and which exception handling applies if the available amount on the funding account does not cover the transfer amount.

  • Under Start of the navigation path Master Contract Applications Next navigation step Overdraft Protection Next navigation step Assign Transfer Rules to Funding Account Types End of the navigation path you have specified which transfer rules are to apply for which types of funding account.

  • To assign the same funding accounts to more than one funded account, choose Start of the navigation path Product Management Next navigation step Product Definition Next navigation step Master Contract Products Next navigation step Create Master Contract Product End of the navigation path or Change Master Contract Product and then feature attribute Overdraft Protection, and specify the value range for the ranking sequence of the funded accounts.

Executing a Mass Run for Overdraft Protection

The conditions named in the Integration section of the system documentation for the Execute Overdraft Protection report have been met.

Process

Master Data

  1. Create a master contract. Choose a product for which the Overdraft Protection feature attribute is activated. For more information, see Creating Master Contracts.

  2. Choose the Contract Relationships tab page and assign the funded and funding accounts. For more information, see Editing Contract Relationships for Overdraft Protection.

  3. Check the details on the Overdraft Protection tab page. For more information, see Editing Overdraft Protection.

Flow data

  1. During the posting day of the current posting date for the payment transaction, execute the postings incurred on the funded account in Account Management (FS-AM). For more information, see Creating Payment Items.

    Note Note

    You normally post the payment items first that cannot be returned.

    End of the note.

  2. When you post payment items, the system runs formal and material checks. If the material checks find one or more errors in the three checks above for check object Overdraft Protection, the system displays the Log Display dialog box.

  3. To post the payment item despite the errors, for example, because the payment item cannot be returned, choose Force (Force) Force.

    To continue processing the payment item according to your settings in the posting control rules, choose Rule Set (Rule Set) Rule Set. If you are using the Posting Control Office (FS-PCO-AM), the system generates an account order of the subcategory Postprocessing/Posting Control (05) for each posting day and account. You can display the account order in the Posting Control Office to monitor the processing progress.

Mass Run

The system executes the mass run Execute Overdraft Protection at the scheduled time, for example, during end-of-day processing.

Result

If the available amount of the funding account was sufficient, all postings are made without overdrawing a funded account.

If the available amount of the funding account was insufficient, the amount by which the available amount of the funded account was exceeded, was kept to a minimum.

Example

See Example: Rules for Posting Control in Overdraft Protection.