1. Unit 2: Banking Process Contents: Outgoing and incoming payments.
Payment means (cash, check, credit cards, bank transfer, BOE, payment wizard).
Deposits.
Clearing an account - by payments and deposits.
Bank statement handling and external reconciliations.
BOE - Bill of Exchange. This option is relevant for Italy, Portugal, Spain and France and activated by default.

2. Banking Process: Unit Objectives
After completing this unit, you will be able to:
List the basic steps in the banking process in a typical small business
Explain the consequences of each step on the involved G/L accounts
Perform the banking process steps in SAP Business One
Choose the appropriate option of bank statement handling according to the customer needs and localization.
Perform the steps of bank statement handling and external reconciliations in SAP Business One.

3. Banking Process: Course Overview Diagram
Topic 1: Handling Payments
Topic 2: Managing External Reconciliations in the Bank Account

4. Banking Process: Business Example
You are implementing SAP Business One at a new customer, OEC Computers.
Your main contact in the customer site is Maria the accountant.
You ask Maria about the way they handle payments and bank statement.
You then make a quick needs analysis and explain to Maria how SAP Business One can help her in handling and tracking the banking process in everyday work.

5. Handling Payments Banking Process Topic 1: Handling Payments
Topic 2: Managing External Reconciliations in the Bank Account

6. Handling Payments: Topic Purpose
After completing this topic, you will be able to:
List the steps of the payment process and perform them in SAP Business One including: Incoming Payments, Outgoing Payments, Deposits and the Payment Wizard
Explain the consequences of each step on the involved G/L accounts.
Adjust the appropriate payment scenario to the customer needs and localization. You need to make decisions together with the client accountant.

7. Handling Incoming Payments: Business Example (1)
The customers pay their debts, that is open A/R Invoices, according to agreed payment terms: Cash Basic, Installments, Net 30, etc.
Maria, the accountant at OEC Computers, deals with Incoming Payments every afternoon:
When registering an Incoming Payment you first choose the customer and then you choose the A/R Invoices the customer pays. Lastly, you record the payment means.
During the day OEC Computers employees created Incoming Payments for customers who shopped in the store point of sale or called the customer service center. So Maria needs to register the remaining Incoming payments and monitor the ones that were registered during the day.
Note!
In this example we use the manual payments process.
You have the Payment System and the Bank Statements Processing options that enable incoming and outgoing payments creation automatically and semi-automatically.
From the manual reconciliation screen, you can also deposit cash, check and credit card payments and post journal entries, or create payments.
For more details on these options refer to next slides.

8. Handling Incoming Payments: Business Example (2)
Maria enters Incoming Payments for checks received by mail.
She checks the credit card accounts (Visa and Master Card) to see the amount of credit card Incoming Payments issued in the store point of sale and in the customer service center during the day.
She checks the Cash on Hand account to see the amount of cash Incoming Payments issued in the store point of sale.
And she connects the company bank account on-line:
To see the amount of bank transfer Incoming Payments received from customers.
To make sure that Visa and Master Card transferred the credit card payments according to the agreement with OEC Computers.

9. Handling Incoming Payments: Business Example (3)
At the end of the day:
Maria enters a Credit Card Deposit in SAP Business One to record the payments Visa and Master Card transferred to the company bank account.
Then, she goes to the ATM located just across the street and deposits:
The money accumulated in the cash register.
The checks received today.
She issues Check Deposit and Cash Deposit in SAP Business One based on the ATM reference.
Now, Maria can go home.

10. Reflection Question:
A customer pays with check.
You deposit the check 2 days later.
When is the customer account being credited in SAP Business One?
When the incoming payment is entered.
When the check is deposited in the bank.
A/R Invoice
Incoming Payment
Deposit

11. Reflection Question: Answer
A customer pays with check.
You deposit the check 2 days later.
When is the customer account being credited in SAP Business One?
When the incoming payment is entered.
When the check is deposited in the bank.
A/R Invoice
Incoming Payment
Deposit
Debit
Credit
Customer
105
Income account
Debit
Credit
Check clearing account
105
Customer
Debit
Credit
Check clearing account
105
Bank account
The customer is not involved in the Deposit Journal Entry.

12. The Payment Process in SAP Business One – Sales
Incoming Payment: Payment Means
Check
Credit card
Cash
A/R Invoice
Incoming Payment
Clearing
Account
Deposit
Bank
Account
Debit
Credit
Clearing Account:
Check/ Credit card/
Cash
105
Customer
Debit
Credit
Clearing Account :
Check/ Credit card/
Cash
105
Bank Account
Incoming Payment: Payment Means
Bank transfer
A/R Invoice
Incoming Payment
Bank Account
When you issue an Incoming Payment the open invoice on the customer account is closed.
You can also issue an Incoming Payment that is not based on an invoice. for example, Payment on Account.
Cash, check, and credit card payment means are posted to a clearing account.
Note that the term “Clearing” is used in the US localization. In other localizations it could be: “Temporary Account” or “Suspense Account”. The instructor should use the term used in their localization.
When a customer pays using cash, check or credit card, you enter an Incoming Payment that generates the following automatic journal entry:
(The customer usually pays using one payment mean. It is, however, possible to pay using a combination of payment means in a single payment).
Debit on a clearing account - cash on hand/ credit card/ checks received.
Credit on customer account.
Cash: the system retrieves the cash on hand account from the Cash on Hand field on the Sales tab under Administration  Setup  Financials  G/L Account Determination.
Credit Cards: the system retrieves the credit card account from the G/L Account field in the credit card definition under Administration  Setup  Banking  Credit Cards.
External tools like point of sale system and authorization of credit card transactions can be integrated into the standard process.
Check: the system retrieves the checks received account from the Checks Received field on the Sales tab under Administration  Setup  Financials  G/L Account Determination.
You can change the default clearing account while issuing the Incoming Payment.
A Deposit document must be processed in order to transfer the funds from the clearing account to the house bank account and clear the clearing account.
The Deposit function in SAP Business One. Banking  Deposits  Deposit.
Bank Transfer: this payment mean does not involve a clearing account. The customer transfer the payment directly to your house bank. Debit on the house bank account, Credit on the customer account.
Debit
Credit
Bank Account
105
Customer

13. Structure of a Payment Document
Incoming / Outgoing Payments
Payment Document Header
Open Invoices, Credit Memos, and Journal Entries
Totals, Remarks
The screens for incoming and outgoing payments are almost identical. The screen is divided into the following parts:
The document header area
The area for selecting open invoices, credit memos and journal entries, and assigning the payment amounts
The area for entering remarks and displaying totals
To post an incoming payment, choose Banking  Incoming Payments  Incoming Payments.
To post an outgoing payment, choose Banking  Outgoing Payments  Outgoing Payments.
Add
Cancel
Deselect All
Select All
Add in Sequence

14. The Payment Document Header
Incoming / Outgoing Payments
Code
No. (from Series or Manual)
Name
Posting Date
Pay to
Due Date
Document Date
Reference
Contact Person
Transaction No.
Project
Vendor master record
Customer master record
In the document header, you choose the customer or vendor code for the payment. The system then copies the Name and the standard Contact Person from the master record.
The default value for incoming payments is Customer and for outgoing payments Vendor. You can create both incoming and outgoing payments for Customer, Vendor, or Account.
For incoming payments, the system copies the Bill to address from the business partner master record into the address field in the document header:
For outgoing payments: the system copies the default Pay to address. You can manually choose a different Pay to address or the bank of the vendor. Then you can check Display Invoices With Matching Billing Address to filter the open invoices displayed in the payment screen.
You can either enter the document number manually or have the system assign it automatically out of a document series.
The system proposes the current date as the Posting Date, Due Date and Document Date.
You can enter an external document number in the Reference field.
You can assign the payment to a Project or to a Distribution Rule for cost accounting.
When you post the document, the system automatically assigns it a Transaction Number (number of the journal entry) and displays it in the relevant field.
Add
Cancel
Deselect All
Select All
Add in Sequence

15. How To Determine the Payment Amount
Incoming / Outgoing Payments
Payment Document Header
 Display Invoices with Matching Billing Address
Sel.
Doc.
Installm. *
Total
Balance Due
Dis-count
Doc. Type
Total Payment 
101
1 of 2 *
200
180 IN
180 
101
2 of 2
100
100 2% IN 98 
202
1 of 1
-50
-50 CN
-50 
204
1 of 1 * 98 98 RC 98 
303
1 of 1 25 25 JE 25
 Payment on Account 25
Total Amount Due
205
Open Balance 25
The system displays the open invoices and credit memos with the installment number. If you select the BP Reference Number indicator in the Form Settings, the system displays the customer/ vendor reference numbers instead of the invoice number. This option is helpful when you enter outgoing payment and base it on the invoices number you received from the vendor.
Display Invoices with Matching Billing Address - Only available when an outgoing payment is created for a vendor. Displays in the table only invoices with pay to address/bank details identical to the address/bank selected in the Pay To field.
The document type field tells you the origin of the line (IN for A/R invoices, CN for A/R Credit Memos, PU for A/P invoices, PC for A/P Credit Memos).
An account may contain postings that are not invoices or credit memos (for example, journal entries or payment on account). The system only displays these transactions if you select the Display All Transactions indicator in the Form Settings. The system displays these transactions as blue lines below the invoices and credit memos.
An asterisk (*) after the invoice date indicates that the invoice is due. The system displays the invoice amount and balance due (invoice amount less any partial payments or credit memos) for each invoice. If cash discount applies (according to the business partner payment terms), the system deducts the cash discount from the due balance and proposes the final amount for payment.
To enter payments that cannot be assigned to an invoice select the Payment on Account indicator. The system then lets you enter the payment amount manually. For example, when you get a payment in advance.
To select an open invoice for payment, select the checkbox for the line. You can also enter a smaller amount as partial payment by changing the Total Payment amount column.
The system displays the full payment amount (sum of all selected lines in the table plus the manual entered amount) in the Total Amount Due field.
Add
Cancel
Add in Sequence

16. How To Specify the Payment Means
Determine the Payment Amount
Split the Payment Amount According to Payment Means
Possible Payment Means:
Check
Bank Transfer
Credit Card
Cash
After you determine the payment amount, you must specify the payment means for the payment. You can select one of the following payment means: Check, Bank Transfer, Credit Card, and Cash.
You can define a default account for incoming checks and cash payment means. Choose Administration Setup  Financials  G/L Account Determination  Sales tab  General tab  Checks Received and Cash on Hand fields.
You can define a default account for outgoing bank transfer payment means. Choose Administration Setup  Financials  G/L Account Determination  Purchasing tab  General tab  Bank Transfer field.
You can copy the total amount to an amount field by choosing CTRL + B or right-click the mouse and choose Copy Balance Due.
In most cases, the payer pays the amount in full using one means of payment. However, it is possible to split the amount among several means of payment. The system takes the details on the means of payment for incoming payments from the customer master records.
You can define a maximum amount for over and underpayments. This is relevant when small differences exist between the payment and the balance due. The process will be transparent to the user.
Choose Administration  Setup  Financials  G/L Account Determination. Choose the Sales tab to define the G/L account to be used in case of over or under payment. Do the same on the Purchase tab.
Choose Administration  Setup  Financials  Currencies, the following four columns define the max. amount to be posted as over or under payment:
Incoming Amt Diff. Allowed/ Outgoing Amt Diff. Allowed - for a specific currency, specify the maximum amount allowed for incoming/ outgoing payment differences. The field is enabled only if the amount in the Incoming/ Outgoing % Diff. Allowed field is zero, or if the field is blank.
Incoming % Diff. Allowed/ Outgoing % Diff. Allowed - for a specific currency, specify the maximum percentage allowed for incoming/ outgoing payment differences. The field is enabled only if the amount in the Incoming/ outgoing Amt Diff. Allowed field is zero, or if the field is blank. The base amount for the percentage calculation is the total amount paid, which is the sum of the amounts entered in the Payment Means window.
 When you post a payment, the system reconciles the payment with the selected invoices, and closes the transactions. If the payment was posted as Payment on Account, the invoices and the payment stay open. If a partial payment was made, the system adjusts the Balance Due appropriately.

17. Deposits of Cash and Checks
Customer
Cash on Hand
Bank OI 1 1 2 2
Open Invoice
Incoming Payment
Payment Means Cash
Cash
Deposit
Customer
Checks Rec.
Bank OI 1 1 2 2
Open Invoice
Incoming Payment
Payment Means Check
Deposit of Checks
If you take cash from your cash register or checks from your check drawer and bring them to your bank, you can use the Deposit transaction to post this transfer.
Choose Banking  Deposits  Deposit and select the Cash tab to post a cash deposit. Enter the cash on hand account that represents your cash register into the G/L account field. The system displays the balance in the Balance field. Enter the amount that you want to deposit into the Amount field. Enter the G/L account number that represents your bank account into the Bank Account field. If you try to deposit an amount greater then the account balance, the system will block you.
Choose Banking  Deposits  Deposit and select the Checks tab to post a check deposit. The system lists all checks which are not deposited yet in the table. Highlight the checks which you want to deposit. Enter the G/L account number that represents your bank account into the Bank Account field.
If you have selected the Reconcile Amounts After Deposit indicator, the system reconciles the debit and the credit line items on the cash on hand account or the checks received account with each other.
The debit line item on the bank account is always managed as an open item. This distinguishes it from the line items that have already been reconciled with the bank statement belonging to this bank account. The reconciliation finally closes the debit line item.

18. Handling Outgoing Payments: Business Example
OEC Computers pays open vendor A/P Invoices, according to agreed payment terms: Cash Basic, Installments, Net 30, etc.
Maria, the accountant at OEC Computers, deals with outgoing payments every morning:
She runs the Vendor Liabilities Aging report and enters today's date in the Due Date To field to display the open A/P Invoices to be paid today.
She then enters Outgoing Payments to those vendors.
OEC Computers pays using Bank Transfer or Checks according to agreement they have with each vendor.
Maria issues Outgoing Payments with Checks as Payment Means. She then prints the checks that are created automatically and sends them via mail.
She connects to the bank account and transmits Bank Transfers to the vendors online.
She then issues Outgoing Payments in SAP Business One with Bank Transfer as Payment Means to document those online Bank Transfers.
Note!
In this example we use the manual payments process.
You have the Payment System and the Bank Statements Processing options that enable incoming and outgoing payments creation automatically and semi-automatically.
From the manual reconciliation screen, you can also post journal entries, or create payments.
For more details on these options refer to next slides.

19. The Payment Process in SAP Business One – Purchasing
Outgoing Payment: Payment Means
Check
Credit Card
Cash
Bank Transfer
A/P Invoice
Bank Account/ Cash account
Outgoing Payment
Debit
Credit
Bank Account
202
Vendor
Note that the system does not involve a clearing accounts for manual outgoing payments for credit card, checks and bank transfers. Instead, the credit posting is done directly on the bank account.
An interim account can always be manually inserted in the G/L account field in the Payment Means. Then, when the payment is reduced from the bank, an entry should be entered to debit the interim account and credit the bank account.
The payment wizard can be used to automatically generate payments against the clearing account.
If you want to use clearing accounts automatically, you can use the Bank Statement Processing functionality (refer to the next slides) which can be set up to automatically post the transfer between the clearing and bank accounts. The same is true for the Cash and Bank add-on which is relevant for some localizations. Note that Cash and Bank is not available if the Bank Statement Processing functionality has been switched on.
Postings for Outgoing Payments:
Cash: Debit on vendor account, credit on cash on hand account or the bank account number.
Because most companies have multiple cash registers with one assigned cash on hand account each, you must manually enter the correct cash on hand account number.
Credit Card: Debit on vendor account, credit on bank account. You must manually enter the bank account number.
Check: Debit on vendor account, credit on bank account. You must manually enter the bank account number.
Bank Transfer: Debit on vendor account, credit on bank account. The system retrieves the bank account from the Bank Transfer field on the Purchase tab under Administration  Setup  Financials  G/L Account Determination.

20. Exercise – Incoming Payments and Deposits

21. The Payment Process in SAP Business One – Bank Account Reconciliation
Bank Transfer
Deposit
Deposit
Bank Statement
Deposit
House Bank Account
3 options for external reconciliation:
You can create payment documents while you reconcile the bank statement with the bank G/L account in SAP Business One.
Outgoing Payment
Outgoing Payment
Outgoing Payment
Incoming Payments, Outgoing Payments and Deposits post journal entries to the house bank account.
You need to reconcile those transactions with the Bank Statement and adjust where needed.
The Bank Statement serves as a legally binding notification instrument from the bank to its customers.
In SAP Business One you have three options for external reconciliation (For more details on each option refer to next slides):
Manual Reconciliation - from this screen you can create adjustments to close any discrepanices and bring the difference down to 0. For example, you can deposit cash, check and credit card payments that appear on the printed bank statement. You can also post journal entries, or create payments.
Reconciliation.
Bank Statement Processing - With this option, you manually enter a bank statement and reconcile the G/L account and at the same time post bank transfer payments.

22. The Payment Process in SAP Business One – Business Partner
A/R Invoice
Incoming Payment
Debit
Credit
Customer
105
Income account
Debit
Credit
Check clearing account
105
Customer
Internal
Reconciliation
A/P Invoice
Outgoing Payment
Debit
Credit
Vendor
202
Expense / Clearing account
Debit
Credit
Bank Account
202
Vendor
When you post a payment, the system reconciles the payment with the selected invoices, and closes the transactions. If the payment was posted as Payment on Account, the invoices and the payment stay open. If a partial payment was made, the system adjusts the Balance Due appropriately.
More details on internal reconciliations in business partners (system and user) will be provided in Unit 4 Financial Periods Process.
Internal
Reconciliation

23. The Payment Process in SAP Business One – Payment Wizard
Incoming Payments:
Bank Transfer
Bank Account
Outgoing Payments:
Bank Transfer
Checks
The Payment Wizard enables you to create outgoing and incoming payments in batches for bank transfers, checks and bills of exchange. The payments are created according to your selection criteria and payment methods.
Outgoing: check or bank transfer, incoming: only bank transfer
The Payment Wizard runs cover A/P and A/R documents and transactions that are not fully paid, credited, or reconciled and un-reconciled/allocated payments on account.
If the created payments are bank transfer payments or direct debit payments, the Payment Wizard creates the payment files in the correct country-specific.
The Payment Engine or other 3rd party add-on is required to create the correct files for the bank.

24. The Payment Wizard (1) Selection Criteria Recommendations
Payment Run
Sel.
General
Parameters
Business Partners
Selection Criteria
Document Parameters
Payment Method – Selection Criteria
Load
Recommendations
Saved Payment Runs
Save
Execute
The Payment Wizard enables you to create outgoing and incoming payments in batches for bank transfers, checks and bills of exchange. The payments are created according to your selection criteria and payment methods.
The Payment Wizard runs cover A/P and A/R documents and transactions that are not fully paid, credited, or reconciled and un-reconciled/allocated payments on account.
Each run of the payment wizard is identified by a payment run name and the date of the payment run.
When starting the payment wizard, you specify several selection criteria:
General parameters, such as the date of the next planned payment run, type (outgoing or incoming), payment means (check or bank transfer), and document series which are used to create the payment documents.
The business partners that the system checks for due invoices.
Selection criteria for the documents that the system includes.
The payment methods that the system uses.
Enhancements in 8.8 release –
- Added range for Due date criteria (tolerance days are still taken into account).
- Added filter criteria Document date.
- Enhanced processing of saved runs in locked periods.
Based on these selection criteria the system creates a recommendation report or a list of suggested payments. You can accept or reject the recommendations. You can save the recommendations and proceed at a later date, or you can execute the payments. The button Non-Included Trans. creates a list of all open items that could not be included in the payment run.
To run the payment wizard, choose Banking  Payment Wizard.
You should define defaults values for the payment wizard. Choose Administration  Setup  Banking  Payment Run Defaults. This data is used by default in every payment run.

25. The printed text must not be modified or crossed out.
The Payment Wizard (2)
Selection Criteria
Payment Run
Sel.
General
Parameters
Business Partners
Selection Criteria
Document Parameters
Payment Method – Selection Criteria
Recommendations
Report Printing
Document Printing
Payment documents
Payment File
Bank Transfer
Deutsche Bank
Checks
Check Printing
- Four*Hundred - €
- 400,-
When you execute the payments, the system automatically creates the payment documents for your accepted recommendations.
A payment usually includes the amounts of several invoices if you did not specify differently in the business partner master record (select Single payment indicator on the Payment System tab). The system always compares the cash discount that is currently valid with the cash discount that is to be valid at the date of the next payment run minus the number of tolerance days.
If the created payments are bank transfer payments or direct debit payments, the Payment Wizard creates the payment files in the correct country-specific format. If you need to create or adapt file formats you can use the Format Definition add-on. This SAP Business One add-on is a graphic tool that lets you define and modify incoming bank statement formats.
For more details on Bank File Formats and Creating Bank Files with the Payment Wizard, refer to the appendix.
If the created payments are check payments, they can print directly from the system under Banking  Document Printing or Banking  Outgoing Payments  Checks for Payment to print single checks. After the check is printed, the system assigns the check numbers. Once the process is complete, use the Banking  Check number confirmation to confirm the numbers assigned. To $
The printed text must not be modified or crossed out. X
Acc. No. X X X

26. Payment Methods as Main Control Instrument
Business Partner
Definition
Type
Payment Means
Outgoing
Deutsche Bank To
The printed text must not be modified or crossed out.
Acc. No. X €
- 400,-
- Four*Hundred -
Incoming
Payment Method
House Bank and Account
G/L Account
AP Invoice
With the payment method, you control the entire payment process.
Choose Administration  Setup  Banking  Payment Methods to define and maintain payment methods.
In the definition of a payment method, you define the following:
Type of payment and payment means (outgoing: check or bank transfer, incoming: only bank transfer).
House bank and the bank account that should usually receive or issue the payment made with this payment method. In the definition of the house bank, a G/L account and a G/L interim account (optional) is mapped to the bank account.
Validation checks that the system is to carry out before using this payment method, as well as amount restrictions.
Postings in relation with G/L interim accounts.
In the master records of the business partners, you must specify which payment methods you want to use with each business partner. In vendor master records of the vendors, you can specify payment methods with the type outgoing. In the master records of the customers, you can specify payment methods with the type incoming.
You can define a default payment method to assign to new Business Partners’ creation. Choose Administration System Initialization  General Settings  BP tab.
From the payment methods listed in the master records of the business partners, the system automatically chooses one, based on the settings in the Payment run. If you want to use a specific payment method for a certain invoice, you can also directly enter the payment method there.
If you want to use a different house bank for a certain business partner other than one specified in the payment method, you can enter the house bank directly in the master record for the business partner.
In the master records of the business partners, you can specify if you want to block payments. A payment block can also be made on invoice level.
Validation Options

27. Exercise – Payment Wizard (Optional)

28. Managing External Reconciliations in the Bank Account
Banking Process
Topic 1: Handling Payments
Topic 2: Managing External Reconciliations in the Bank Account

29. Managing External Reconciliations in the Bank Account: Topic Purpose
After completing this topic, you will be able to:
Explain the options for Reconciling externally a bank G/L account.
Choose the appropriate option of bank statement handling according to the customer needs and localization. You need to make decisions together with the client accountant.
Perform the steps of bank statement handling and external reconciliations in SAP Business One.

30. Managing External Reconciliations in the Bank Account: Business Example
Maria, the accountant at OEC Computers, has just received by mail a printed Bank Statement from the bank.
Maria asks you what is the most effective way for her to enter this Bank Statement in SAP Business One.
And how to reconcile the transactions the bank recorded for OEC Computers, with the transaction she recorded for the bank G/L account in SAP Business One.
You should take into consideration that OEC Computers pays and is paid using all payment means (check and cash deposits, checks for payments as well as bank transfer).

31. External Reconciliations
External Bank Statement
House Bank Account
External Reconciliation
Debit
Credit
2000
2000
3000
3000
Incoming Payments, Outgoing Payments and Deposits post journal entries to the house bank account.
You need to reconcile those transactions with the Bank Statement and adjust where needed.
You do not reconcile these open items until you receive the bank statement after the bank has actually made the payment.
When you perform an external reconciliation, you reconcile the open items of a bank G/L account in SAP Business One with the open items in an external account statement. In most cases, the account statement is received from a bank and the account to be reconciled is the associated bank account. The statement, however, can also be received from a business partner that wants to reconcile the business partner account in your books with its own account.
In SAP Business One you have three options for external reconciliation.

32. Options for External Reconciliation
External Bank Statement
House Bank Account
Manual
Reconciliation
Printed statement ending balance
Open transactions in G/L account
ANZ, Canada, South Africa, UK & USA
Option to deposit cash, check and credit card payments and post journal entries, or create payments.
Reconciliation
Manual
Automatic
Semi-Automatic
External statement transactions
Open transactions in G/L account
All Localizations
Option to post journal entries.
Bank Statement
Processing
* Austria, Belgium, Brazil, China, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Hungary, India, Irish Republic, Italy, Japan, Korea, Netherlands, Norway, Poland, Russia, Singapore, Slovakia, Spain, Sweden, Switzerland, and United Kingdom
In SAP Business One you have three options for external reconciliation:
Manual Reconciliation (supported in ANZ, Canada, South Africa, UK & USA) : With this option, you enter the ending date and balance from your printed bank statement. The system displays open transactions for the bank G/L account. You manually match them to the printed statement and clear the transactions from the account. The system tracks the difference between the statement ending balance and the cleared items from the G/L account. The system only allows you to reconcile the account when this difference is 0. From the manual reconciliation screen, you can create adjustments to close any discrepanices and bring the difference down to 0. For example, you can deposit cash, check and credit card payments that appear on the printed bank statement. You can also post journal entries, or create payments. The system keeps track of the statement balance for the next reconciliation. To use Manual Reconciliation, choose Banking  Bank Statements and External Reconciliations  Manual Reconciliation.
Reconciliation (supported in all localizations): With this option, you first import, or manually type the bank statement transactions into the system using the Process External Bank Statement function. To use Reconciliation, choose Banking  Bank Statements and External Reconciliations  Reconciliation. The system displays side-by-side the open transactions from the G/L account in SAP Business One and the imported or typed transaction from the bank statement. You can choose a reconciliation type: Manual, Automatic, or Semi-Automatic. These work in a very similar manner to the internal reconciliation types.
Bank Statement Processing (supported in Austria, Belgium, Brazil, China, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Hungary, India, Irish Republic, Italy, Japan, Korea, Netherlands, Norway, Poland, Russia, Singapore, Slovakia, Spain, Sweden, Switzerland, and United Kingdom): With this option, you manually enter a bank statement and reconcile the G/L account and at the same time post payments (the BTHF add-on is required to import bank file of a specific format which can be defined using the File Formatting Tool add-on). Choose Banking  Bank Statements and External Reconciliations  Bank Statement Processing.
Bank
Statement
Available for several localizations 
Reconciles the G/L account and at the same time posts bank transfer payments.

33. Bank Statement Processing – BSP
Bank Statement Processing automates the handling of bank statement transactions.
It is designed for businesses that intensively use direct Bank Transfer for Outgoing and Incoming Payments.
Bank Statement
Processing
Bank
Statement
Bank Statement Processing:
Enables you to generate incoming and outgoing payments:
Payment Handling – On Account, Partially or Fully Reconciled.
Payment from Customers
Payment to Suppliers – directly or via an Interim Account (Payment Wizard)
Payments with Exchange Rate Differences, Small Difference, Cash Discounts
Payment of Multiple Documents
Bills of Exchange - Country-Specific: Belgium, Chile, France, Italy, Portugal, Spain
Payment to Account:
Salaries
Sundry Expenses with Tax – e.g. Gas Expenses
Bank handling charges and interest payments
Perform internal reconciliation and identify which invoices have been paid.
Match externally between the payment in SAP Business One side and the bank side according to pre-defined matching criteria. Perform external reconciliation of transactions already posted in SAP Business One, for example, by manual payments or the payment wizard
Cash/Check Deposit to a Bank Interim Account
Bank statement reports
For detailed information on Bank Statement Processing and the Bank Transaction Handling Facility (BTHF) Add-on refer to the Bank Statement Processing – BSP landing page in the Channel Partners Portal.
You can also find useful information on Bank Statement Processing settings and working procedures in the Online Help

34. The key to the BSP functionality: Question
The highlighted row is one row out of many imported automatically from the bank. It represents bank transfer payment.
The non highlighted rows below represent existing invoices in SAP Business One
How does SAP Business One “know “which documents to apply to which payment?

35. The key to the BSP functionality
The key to the BSP functionality is the setup:
To use bank statement processing you must define the correct system settings for ensuring that automation occurs as required.
The settings you specify should complement the way the company works with bank statements and payment processing.
If you follow the setup guidelines, then the functionality should greatly improve and speed up the flow of tasks associated with bank statement processing.
It is important to emphasize that the efficiency of the bank statement processing is directly related to the accuracy of the system settings as relevant to the business
To use Bank Statement processing, choose Administration  System Initialization  Company Details  Basic Initialization tab, and select Install Bank Statement Processing. You can do this at any time.
Note:
Once you have activated this functionality, the checkbox is disabled and cannot be deselected. The Payment Engine for incoming payments and the Cash and Bank Add-on are then no longer available. It is not recommended to work with the other external reconciliation options: Manual Reconciliation, Process External Bank Statement.

36. The BSP from the Customer Point of View
The end user:
Import/
manually enter
bank statement
Bank
Statement
Bank
Statement
edit existing (draft) bank statement
View finalized bank statements
Create payments and accounting transactions
SAP Business One:
Perform internal and
external reconciliations
After SAP Business One has been configured, the customer can use bank statement processing:
The customer can automatically import or manually enter bank statements to perform internal and external reconciliations using the Bank Statement Details window.
He can edit existing (draft) bank statements
View finalized bank statements
SAP Business One creates automatically:
Payments and accounting transactions
Internal reconciliation
External reconciliation

37. Demo – Options for External Reconciliation
From the following slides, choose the option/s that suits your localization

38. Demo - Manual Reconciliation (1)
External Bank Statement
House Bank Account
Printed statement ending balance 
Open transactions in G/L account
Manual
Reconciliation
Option to deposit cash, check and credit card payments and post journal entries, or create payments.
Records are automatically created 
Process External Bank
Statement
Manual Reconciliation – This function enables you to verify and reconcile the transactions recorded in SAP Business One against the balance received from the bank and to create adjustments if required.
In localizations that use the Manual Reconciliation function, the Process External Bank Statement menu option is not displayed in the main menu.
The Process External Bank Statement option is not recommended to use since the Manual Reconciliation option creates a reconciled record in the Process External Bank Statement window (OBNK table).
Let us see how an external reconciliation is made. Go to Banking  Bank Statements and External Reconciliation  Manual reconciliation. The External Bank Reconciliation - Selection Criteria window opens.
Use this window to specify the parameters for the external bank reconciliation. In the Account Code field, you can choose the bank account for which you would like to process the external bank reconciliation.
Under the bank’s statement title, you can see fields related to the actual bank statement.
The Last Balance field displays the balance as you recorded it the last time you performed the external reconciliation.
Let’s say you have received the statement for your bank updated for today. Instead of detailing all the transactions appearing in the statement, you simply type the ending balance of the statement, according to a certain date.
Let us say you received an external bank statement for this bank, with an ending balance of XXX. The bank statement is updated for today, let us say, April 20th. Choose OK to open the Reconciliation Bank Statement window.
The table displays the open (non-reconciled) transactions as recorded in your books. That is, transactions recorded in Business One.

39. Demo - Manual Reconciliation (2)
External Bank Statement
House Bank Account
Printed statement ending balance 
Open transactions in G/L account
Manual
Reconciliation
Option to deposit cash, check and credit card payments and post journal entries, or create payments.
Records are automatically created 
Process External Bank
Statement
In the Statement Number fields, you can type the number of the bank statement you have received from your bank. The Last Statement Balance is the balance calculated automatically by the system.
Click the Display drop down menu to select one of the following options: All, Cleared, Uncleared.
Cleared – select to display the transactions chosen to be cleared in this event of reconciliation.
Once you reconcile the selected transactions they will not appear in this window anymore, unless you cancel the reconciliation.
To cancel reconciliations go to Banking  Bank Statements and External Reconciliation Manage Previous External Reconciliations.
The Type column displays the transaction type. DP stands for deposit.
The Payment column - displays the amount on the debit side in the transaction.
The Deposit column - displays the amount on the credit side in the transaction.
You can add columns to the table by using the Form Settings option.
Let us choose to clear two transactions. Under the Cleared column, select the boxes for each transaction you would like to clear with the current ending balance. You can see that the Cleared Book Balance field is updated according to the selected rows. The Difference field is updated respectively.
You can see that there’s a difference of X GBP (not more than 10) between the cleared transactions and the ending balance. In this case, we can create adjustments. Choose Adjustments to open this window.
You can choose to create documents from within this window. You can create journal entries, incoming payments, outgoing payments, checks for payment or deposits. In this case, we know that the X GBP difference is due to a certain fee that the bank charged the company. This can be reflected in a journal entry, so we leave the journal entry’s option chosen and choose OK.
The journal entry window opens, and allows us to create a journal entry for clearing this difference.
Type the required amount, select an offsetting account, and add the journal entry.
You can see that in the table, the adjustment journal entry was added automatically and selected as cleared. The difference is now zero.
It is possible to choose Save to save your preferences in this window before making the actual reconciliation. This allows you to check your transactions and the bank’s transactions again, to open the window again and reconcile after you are certain that your selections are correct.
Since we are sure that our selection is correct, we can choose Reconcile. The reconciliation has ended successfully.
A single record was now recorded in the Process External Bank Statement window. However, in localizations that use the Manual Reconciliation function, the Process External Bank Statement menu option is not displayed in the main menu. For this demonstration, we will now display it, using the Form Settings icon of the main menu window and open it.
Choose the bank account and you can see that the Process External Bank Statement window displays a row with the amount we have just reconciled for this bank account.
Since records are automatically created in this window, in localizations that use Manual Reconciliation, using this window as well, will cause a duplicity in the process, therefore, it should not be used.

40. Demo – Reconciliation (1)
External Bank Statement
House Bank Account  
Process External Bank Statement transactions
Open transactions in G/L account
Reconciliation
Option to post journal entries.
Manual
Automatic
Semi-Automatic
External Reconciliation – Banking  Bank Statements and External Reconciliation  Process External Bank Statement. The Process External Bank Statement window displays the transactions recorded by your bank. You can enter information manually or automatically import from a file.
These transactions should be reconciled with the transactions recorded in your books in SAP Business One.
In European localizations it is possible to import the external bank statement automatically using the Payment Engine Add-on and perform bank reconciliation using the Cash and Bank function (Payment Engine is an SAP Business One add-on used to import and process bank statements. It consists of the following two programs: Import External Bank Statements and Cash and Bank Book).
Let us enter few rows manually:
The first row represents a deposit you made to the bank. Enter a credit amount XXX GBP (make sure it matches a deposit recorded in SAP Business One).
The second row is for a fee charged by the bank for this deposit, and it’s on the debit side, for the amount of 5.99 GBP.
Now let us see how we reconcile these two transactions:
The reconciliation is performed using the Reconciliation window. Banking  Bank Statements and External Reconciliation  Reconciliation.
The External Reconciliation – Selection Criteria window opens.
Select how the system should process the external bank statement: for a G/L Account or a Business Partner. After selecting, you can choose the relevant G/L account or business partner. Let us choose the bank account.
You can perform Manual, Automatic, or Semi-Automatic external reconciliation.
For automatic and semi-automatic external reconciliations you need to define some parameters so the system “knows” how to reconcile the bank transactions recorded in your books against the transactions recorded by your bank.
With the Manual option you perform the reconciliation so you only need to define the Due Date To field. This means that all transactions whose due date is earlier than or identical to the displayed date will be included in the reconciliation. The current date is displayed be default.
We will demonstrate the Manual option. We click the Reconcile button.

41. Demo – Reconciliation (2)
External Bank Statement
House Bank Account 
Process External Bank Statement transactions 
Process External Bank Statement transactions
Open transactions in G/L account
Reconciliation
Option to post journal entries.
Manual
Automatic
Semi-Automatic
The External Reconciliation window displays the bank transactions recorded in your books in SAP Business One (on the left) against the transactions recorded by your bank (on the right). Reconcile between matching transactions and, if required, perform balancing transactions to match your data with the bank’s data.
In the Books side, find the deposit that was recorded in SAP Business One. On the right side, we have the open transactions in the external bank statement. Locate the row representing the deposit.
Since we have two transactions with identical amounts in the book side and in the external statement side, we can reconcile them. Double-click the rows to move them to the bottom tables. You can see that there is no difference, since the amounts are equal.
Now, in the external statement side double-click the row recorded for the fee. This row has no matching transaction on the books side. It was not recorded in SAP Business One since it was charged by the bank.
Next, click Reconciliation. The system displays the message: Reconciliation is not balanced. Create balancing transaction? Choose OK to open the Journal Entry window. Here you can see that the bank account with the amount of the fee is already displayed. Now simply select an offsetting account to complete the journal entry. Click Add.
The rows are reconciled.
Now let us go back to the Process External Bank Statement window and select our bank account. You can see that the Reconciled column displays the external reconciliation number for the two rows. This means that the two rows in the external bank statement are now reconciled. Reconciled rows cannot be cancelled or modified, unless the reconciliation is cancelled.
To cancel reconciliations go to Banking  Bank Statements and External Reconciliation Manage Previous External Reconciliations.

42. Demo – Bank Statement Processing (BSP)

43. Exercise – Options for External Reconciliation
Choose the option/s that suits your localization.

44. Review Question Which option would you recommend Maria to use?
And what if OEC Computers were located in Germany/ UK/ your localization?

45. Banking: Unit Summary Main Terms: Incoming Payments.
Outgoing payments.
Deposits.
Invoice is due (*).
Payment on Account.
Partial Payment.
Payment Means
Payment Method
Clearing Account.
Payment Wizard.
External Reconciliation – 3 options:
Manual Reconciliation
Reconciliation
Bank Statement Processing (BSP)