1. Chapter 21 Dunning
Dunning is the process of notifying customers that an unpaid obligation has become past due.
Chapter Objectives
Understand the functionality and configuration of a Dunning Procedure and how it is executed in the Dunning Program.
Understand the Organizational Structure of Dunning Levels within a given Dunning Program and how parameters can be set for each of them.
Understand how to send dunning correspondence to customers and vendors through Dunning Letters.
Run the Dunning Program.

2. Dunning Organizational Structure related to Dunning: Client CLAA
Company Code
CCAA
Company Code
CCBB
Dunning Area
DA01
Dunning Area
DA01
Dunning Area
DA02
A Company Code can be divided into optional Dunning Areas based on different dunning policies or Organizational Units that are responsible for dunning (e.g., Sales Organization, Division or Business Area).
Based on user-specified criteria, Dunning Letters are generated for Customers with overdue open items, who are eligible for dunning.
Different Customers and Vendors can be dunned with different Dunning Procedures, which control how dunning is executed by the system.
Dunning Procedures can differ with regard to:
The number of Dunning Levels
Dunning Interval
Dunning Text
The input data for automatic dunning includes:
Fields in master records
Fields in open items
Configuration of Dunning Program
Online parameters for the Dunning Run
The Dunning Area is an optional unit in the Organizational Structure used to group Customers / Vendors for dunning. Each Dunning Area can represent
different dunning policies or Organizational Units responsible for dunning.

3. Dunning Procedure
The Dunning Procedure contains the configuration of a Dunning Program.
The Dunning Procedures can be tied to Dunning Areas or to a Customer / Vendor master record.
Dunning Procedure
Dunning Program
Configuration
Execution
Dunning
Levels
Minimum
Amounts
Dunning
Charges
Dunning
Texts
To set up a Dunning Procedure, the following must be specified:
number of Dunning Levels (1-9)
Dunning Texts
Standard Text can also be included in the Dunning Texts.
Basic Parameters of the Dunning Procedure

4. Configuring the Dunning Procedure
Frequency for running
Days in arrears after which a
Dunning Notice will be sent
Items that are overdue less or
equal to the grace period will not be dunned (works like a bonus period)
Dunning Procedure major parameters:
Dunning Interval
Number of Dunning Levels
Grace Period
Grace Periods per line item are taken into consideration during determination of the due date of the Dunning Run. An item whose days in arrears are less than or equal to the Grace Period will not be dunned.
The Minimum Days in Arrears refers to the number of days in past due for any item in a Customer Account. If any item exceeds that specification, all items in the Account are dunned, except for those in the grace period.
Public Holiday Calendar Key is a two-character code for the Public Holiday Calendar. The calendar must have first been created in configuration. Specifying a public holiday calendar key is the only way to ensure that the overdue items are not paid on a weekend or public holiday.
Grace Period
Minimum Days in Arrears
# Days in Arrears

5. Selecting Open Items to be Dunned
Grace Period: 4 Days
Minimum Days in Arrears: 8 Days
Items:
Due Amt. Status
1) -6 1,500 Not Overdue 2) Within Grace Period 3) Within Min. Days in Arrears 4) +10 5,400 Overdue 10 Days
Result:
Items 3 and 4 will be dunned. You will dun the account for Item 3 because there is another item that is overdue more than the minimum days in arrears.
If Item 4 did not exist, then item 3 would not be dunned.
If the longest overdue item exceeds the Minimum Days in Arrears (for the Account), the Account will be dunned.

6. Dunning Levels
Days in Arrears specifies the number of days an item must be overdue to be included in a particular level. More details about item selection follow on the next slide
The two methods for calculating interest on Customer Accounts are
interest calculation on the balance
interest for days overdue
Interest is calculated and included on the dunning letter. No interest charges are posted to the General Ledger.
The following must be defined for interest calculation:
Interest Calculation Types
General conditions for the Interest Calculation Types
Conditions dependent on the time and amount (if necessary)
Usage of reference interest rates (if required)
Forms for the Interest Calculation Types
If interest calculation is activated for a Dunning Level, the program charges interest only if the minimum interest amount is exceeded.
The Always Dun? indicator compels the program to print a Dunning Letter even if the same items will be dunned, but only if the Dunning Interval is reached.
The Print All Items indicator will cause the System to print all open items of an Account. For higher Dunning Levels, payment deadlines can be specified. This deadline can be printed in the Dunning Letter.

7. Selecting the Dunning Level
Overdue Item
Old Level
New Level = Old Level + 1
The Dunning Letter
A Customer / Vendor is always dunned for the first time at Level 1. An item can not be dunned at the next level until it meets that levels Days in Arrears setting.
Note: The manner in which the system determines whether an item should be dunned is impacted by the Dunning Level Days in Arrears setting and Min. Days in Arrears setting in the General Information section. The examples below illustrate how the system will determine if an item should be dunned:
Example 1
Minimum Days in Arrears: 7 days
Grace Period: 3 days
Dunning Level 1: 20 days
SAP will not dun until an item is 20 days overdue. It will then dun all items that exceed the grace period.
Example 2
Dunning Level 1: 6 days
SAP will not dun until an item is 7 days overdue. It will then dun all items that exceed the grace period.
The Dunning Level can only be upgraded one level at a time.
The open item with the highest Dunning Level determines the text in the Dunning Letter except when the Dunning program is configured to create a Dunning Letter by Dunning Level.

8. Minimum Amounts
Minimum Amounts define an overdue threshold of the total Account
Balance, which must be exceeded to reach a Dunning Level.
Dunning
Level
Minimum Amount
Minimum Percentage
Minimum Amount for Interest
Example:
Total Account Balance: USD 25,000,00
Configuration of Dunning Level 1: Min. Amount = USD and Min. Percentage = 5%
Dunning Balance Level 1: USD
Will be dunned? No, because USD >= Min. Amount but USD < Min. %
Minimum amounts are defined for a Dunning Level by Currency.
If the balance to be dunned for a Dunning Level is higher than the minimum amount and the minimum percentage then the System will trigger the corresponding Dunning Level.
The minimum percentage defines how much of the amount is overdue related to the total outstanding balance.

9. Dunning Charges
For each Dunning Level, it is possible to define an amount to be charged if the minimum amount for dunning is exceeded.
A Dunning Charge is used to cover the postage and handling of Dunning Letters.
Dunning
Level
Dunning Charge:
Static amount to be charged
Dunning Charge %:
Percentage to be applied to
the total of all overdue items
in the Account to determine
the Dunning Charge
For every Dunning Level, a Dunning Charge can be specified based on the overdue amount to be dunned.
Dunning charges are not posted to the General Ledger.

10. Dunning Texts Dunning Dunning Level Form
A form is set up using SAPScript and can be shared by more than one Dunning Level.
A Form must be specified for each Dunning Level. You can use the same Form for several Dunning Levels.
Forms are set up with the SAPScript word processing program, which is not covered in this class. Because SAPScript is not very user friendly, help with form maintenance from an individual with ABAP expertise might be necessary. Different Dunning Forms will be needed if the Dunning Procedures that are being used differ by:
Number of Dunning Levels
Line Item Layout
Number of lines of subtotals

11. Sending Correspondence to Customers / Vendors
Pre-Defined
Action
Trigger
Correspondence
In addition to dunning, it is possible to create various types of correspondence:
Interest on Account Balance: If the system calculates interest, the user can specify overdue and not yet paid, or those paid late.
Account Statements for Customers / Vendors
Messages for posting cash receipts, Bills of Exchange
In customizing, the following must be defined:
Correspondence Types that the client wants to use
Connection between print report and form
Standard Texts for the sections on the form that are Company Code-dependent
Print Report Variants
Report allocation for each Correspondence Type
Correspondence is tied to a report and the reports are tied to a specific form with a pre-determined layout
For balance confirmations, the following must be specified:
Form for the Letter of Confirmation, Error List, Results Table and Check List
Standard texts for the sections of the form which are Company Code-dependent
Reply address(es) for the Letter of Confirmation
Additional report selection possibilities (if necessary)
Report variants

12. Assigning the Dunning Procedure in the Master Record
Company Code Data
Correspondence Tab
All overdue items are dunned (according to the Due Date for net payment in the Payment Terms).
The Dunning Level depends on the:
Due date for net payment
Number of days in arrears
Dunning Procedure
Previous Dunning Level
A Dunning Procedure is assigned to each Customer / Vendor. If Dunning Areas are used, a Dunning Procedure is assigned to each Dunning Area to which the Customer / Vendor belongs.
The name of the Dunning Procedure must be set in the master record for the program to run or assign a Dunning Area to the master record. This Dunning Area must be assigned a Dunning Procedure.

13. Running the Dunning Program Step 1: Set Parameters
The Dunning Program examines the open items of a Customer / Vendor and, if overdue items exist, produces the appropriate notice.
Dunning Date
Documents Date
Company Code,
Range of Customer /
Vendor Numbers
Parameters for the Dunning Run must be defined. Based on the Run Date, Baseline Date and Payment Terms, the System selects the open items to be dunned.
The Dunning Letter that is created depends on:
The Dunning Procedure in the master record
Number of days in arrears of the items
The configuration of the Minimum Days in Arrears and the Dunning Level

14. Running the Dunning Program Step 2: Run the dunning program immediately or in batch mode
Dunning can be started
at a specific date and time
or it can be started
immediately.
Dunning notices can be created
immediately after the dunning
run. If this parameter is set it
is no longer possible to change
the dunning proposal manually
or to delete it.
The Dunning Program can be started immediately or it can be scheduled to run later, in batch mode.
The dunning data created can be changed (edit, block items or correct errors). If anything is changed, the old Proposal Log must be deleted before a new one is generated

15. Running the Dunning Program Step 3: Create and analyze Logs
It’s possible to create an additional log to analyze the dunning run.
A range of customer
and vendor accounts
has to be specified
The Dunning Program always creates a Dunning Log containing dunning statistics and, if blocked Accounts or blocked items exist, a corresponding list.
There is also the option to create an Additional Log, which will trace any errors.
The Proposal Log or the Dunning Log can be used as a test run.

16. Cross Company Code Dunning
This feature enables users to create one dunning notice that covers business partners that exist in different company codes. Likewise, data that would normally be spread over several company codes (and hence several correspondence letters) can now be grouped into one correspondence letter.
You can use cross-company code dunning to combine overdue items from several different company codes in one dunning run. The overdue items from accounts that exist in several company codes are dunned with one dunning notice. This eliminates the need to send a customer a separate dunning notice for each company code.
You can now group data from several company codes in a letter, or use the sender details from an alternative company code. If you want to create cross-company code dunning, you must assign the affected company codes to a common dunning company code. You can also use several dunning company codes. The dunning company code provides the sender details.
You can make the assignments for the dunning company code either in Customizing or in the dunning program.
The dunning procedure assigned to the account in the dunning company code is used. If a date has been specified for an account in the dunning company code, which marks it for inclusion in the legal dunning procedure, then the date affects the dependent company codes; however, the dunning frequency and dunning blocks are checked individually, not just in the dunning company code.
This feature is also available for cross-company code correspondence. The setup is similar except you will need to enable the cross-company code feature in each applicable correspondence type (via the IMG)

17. Dunning Block Reasons/ Dunning Key
Dunning Block Reasons are used to block a Customer / Vendor or an
item from being dunned.
The user specifies the Dunning Block Identification and a Description.
Dunning Keys are used to mark items that should not trigger a higher Dunning Level.
The user specifies the Dunning Key Identification and the Maximum
Level that can be triggered.
Blocking Reasons can be assigned in the Customer or Vendor Account or in the Line Item.
Dunning Keys can be used to mark specific items, such as residual items, that should not trigger a higher Dunning Level.

18. Incoming Payment
A payment coupon may be attached to a dunning letter or account statement.
Payment coupons can also be printed in a separate spool on dedicated forms.

19. Chapter 21 - Dunning Chapter Summary
Key Terms:
Dunning
Dunning Area
Dunning Procedure
Grace Period
Dunning Level
Minimum Amount
Dunning Charge
Dunning - The process of notifying customers that an unpaid obligation has become past due.
Dunning Area - An optional unit in the Organizational Structure used to group Customers / Vendors for dunning and each could represent
different dunning policies or Organizational Units responsible for dunning.
Dunning Procedure - A four-character alphanumeric code that contains the configuration of a Dunning Program and can be tied to Dunning Areas or to a Customer / Vendor master record.
Grace period - The number of days that a line item is in arrears (is past due), which, if not exceeded, will prevent it from being taken into consideration as due for dunning.
Dunning Level - Defines what type of dunning will be carried out by a certain Dunning Procedure and which conditions will result in using that Dunning Procedure.
Minimum Amount - A user-defined overdue threshold of the total Account Balance which must be exceeded to reach a Dunning Level.
Dunning Charge - The amount to be charged a customer for the expense incurred in dunning. They are not posted to the General Ledger.

20. Chapter 21 - Dunning Chapter Summary
Key Terms:
Dunning Letter
Dunning Program
Dunning Block Reason
Dunning Keys
Dunning Letters - The document sent to a customer / vendor that results from a Dunning Run. It contains a header, footer, main body (which contains text), line items, totals, and basic information.
Dunning Program - Examines the open items of a Customer / Vendor Account and, if overdue items exist, produces the appropriate notice.
Dunning Block Reasons - Used to block a Customer / Vendor or an item from being dunned.
Dunning Keys - Used to mark items that should not trigger a higher Dunning Level.